Business

What the media lacks in decentralized autonomous organizations

The New York Times: “Reality invades a utopian crypto vision.” Bloomberg: “The next crypto bust could be written DAO.” The guard: “Are blockchain-based DAOs really a utopian revolution in the making?

Seemingly every week, a different old-guard media outlet repeats the talking points of defenders of the status quo financial system who fear and mistrust the economic opportunities unleashed by the power of decentralized autonomous organizations (DAOs). While publications rightly acknowledge the unsurprising early growing pains of DAOs, this sort of hand-wringing misses the wood for the trees when it comes to the impact of DAOs.

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Rather than just being a “utopian” experiment, DAOs are a crucial tool in the development of a new decentralized finance (DeFi) system that has the potential to reach the 1.7 billion people worldwide who currently have no access to the traditional financial system. DeFi promises to give people everywhere access to a reliable and transparent financial system with clear traffic rules.

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The potential of DAOs

Additionally, while we’ve only scratched the surface of the potential that DAOs have to create a radically more transparent and equitable financial system, we’ve already seen projects emerge that offer real value to real people in the real world today.

An example is the war in Ukraine, where UkraineDAO, founded by Russian art collective Pussy Riot and Trippy Labs, raised over $6.75 million worth of Ether (ETH) that was donated directly to Ukraine’s defense efforts against Russia. While that amount may not change the balance of war, the rapid creation and scaling of the UkraineDAO demonstrates the power of decentralized financial technologies to coordinate a disparate global group of individuals around a single cause to achieve tangible results.

Related: Every Bitcoin Helps: Crypto-Powered Aid to Ukraine

But the value of DAOs goes beyond simply raising funds for noble causes under duress. In fact, many DAOs are already delivering sustainable value to participants around the world, even leveraging blockchain technology to address some of the most pressing challenges of our time like climate change.

DAOs are used today to support charities, remove barriers to crowdsourcing fundraising, give donors more control over how funds are used, provide low-cost borrowing, and support artists and musicians. All of this is designed to be governed by transparent smart contracts that give users control over the direction and governance of the organization.

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Other DAOs use new technologies to directly address human-caused climate change. KlimaDAO, a SubDAO of Olympus DAO to which I contribute, has developed an innovative mechanism to pull carbon credits from the Voluntary Carbon Market into the DAO’s treasury, effectively making the cost of carbon offsets skyrocketing and more expensive will build high-carbon businesses.

Related: Pandemic year ends with a tokenized carbon cap-and-trade solution

KlimaDAO has already done this locked more than 17 million tons of CO2 credits in the form of tokens, exceeding Croatia’s annual CO2 emissions. This type of project is realizing the promise of DeFi technology and pioneering a new avenue of climate activism that embeds environmental concerns into the fabric of economic activity.

As with any disruptive new technology, DAOs offer limitless opportunities for innovators to solve problems in new ways, but have also caught the attention of scammers looking for a quick buck. Scams like rug pulls, where a developer flees with funds invested in a project, are real issues in the DeFi ecosystem that need to be addressed. We are committed to strengthening the regulatory requirements that ensure DAOs are safe and secure to protect consumers.

Related: How to spot a rug pull in DeFi: 6 tips from Cointelegraph

But we cannot allow a few bad actors to distract from the truth that DAOs and the entire DeFi ecosystem are driving a much-needed disruption of traditional financial systems that have been predatory and exclusionary to our most vulnerable populations and detrimental to our planet. It’s time for mainstream media to look under the hood of DAOs and come up with a more truthful and nuanced picture that reflects what those of us involved in DeFi know: that the efforts we’re making today are for future generations will pay off.

This article does not contain any investment advice or recommendation. Every investment and trading move involves risk and readers should do their own research when making a decision.

The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Isfandiyar Shaheen is Founder and CEO of Wagmi Labi Inc. Previously, Asfi ran private equity firm Cyan Capital, served on the boards of public companies Engro Corporation and Engro Foods, helped found cell tower sharing company Towershare, which was acquired by edotco Group in 2017 was acquired, and co-created a plan to use fiber optics in power lines as Entrepreneur-in-Residence at Facebook Inc.