The Future of DataDAOs
This is a summary of a talk given by Olaf Carlson-wee.
Decentralized Autonomous Organizations (DAOs) are distributed entities with ownership and governance represented by on-chain activities and participants. With the launch of Filecoin, we are seeing a very strong product-market for DAOs; in particular, DAOs that oversee and govern defi products and protocols. Filecoin has the ability to store deep, rich datasets, enabling DAOs on Ethereum and other chains to provision and leverage that information to support more expressive applications.
With the Filecoin network live and operational, we are seeing a strong product-market fit for DAOs. For the first time ever, we have natively on-chain, internet-based corporate structures that are supporting DeFi projects and protocols. Rather than being operated by a traditional business, these protocols like Compound, Uniswap, Yearn, and others have components of governance dictated by DAOs. Revenue goes to DAOs, and the DAOs manage the treasury, upgrade contracts, pay the open source developers, and more.
So far, DAOs have been viewed primarily as investment funds or venture funds. These types of DAOs have emerged and proven successful, but we’re seeing a particularly strong fit for these types of on-chain organizational structures with DeFi products. One of the limitations of the types of DeFi products that DAOs are sponsoring today on Ethereum is that Ethereum is effectively limited to mathematical logic. Due to the design of the network, you don’t have the ability to serve more complicated data to the end user. In general, these contracts are executing mathematical problems, so they serve very well for things like trading, lending, escrow, and other basic financial primitives. Over time, we’ve seen more advanced applications of these basic financial building blocks, but still very much limited to mathematical logic.
Today, none of the DAOs out there have the ability to do much more than these basic financial actions. With the launch of Filecoin, the ecosystem is exploring what types of businesses a DAO could build on top of Filecoin. We can refer to these types of organizations as DataDAOs.
Take, for example, very large datasets such as genomic or research databases with massive amounts of data. Filecoin is well positioned to store these datasets for long periods of time with plenty of redundancy. We can imagine a lot of different ways these datasets on Filecoin can be owned and provisioned by a DAO. We will likely see these DataDAOs be niche, industry-specific use cases that own huge swaths of market data and provision very rich datasets to people who want to trade on it.
The emergence of more flexible and expressive systems like Filecoin marks a way for people to access data through smart contracts in a way that was nearly impossible before. Prior to Filecoin’s launch, there was no efficient way to embed that information in Ethereum and build a smart contract system around it, let alone a DAO.
There is a tremendous amount of opportunity for Filecoin to enable smart contract-based applications and expand the universe of what’s possible. This isn’t competing with DeFi; it’s expanding the universe of all the various applications that could be embedded inside a smart contract system by using data storage and data access.