[AUTHOR’S NOTE - Decentralization is a good thing. The evolution of DAOs is a good thing. Collective human behavior and decision making is evolving at a rapid pace and is positively correlated to the rate of Web 3.0 innovations.]
DAOs are exiting the aircraft, and prices may follow - Refusing seatbelts and their traditional wrapped-DAO structures, brand name DAOs are transitioning to statelessness at a rapid pace. This is extremely relevant to founders in the race to decentralization. As DAOs and member bases expand and decentralize, moving to Web 3.0 statelessness becomes inevitable. However, there are inherent drawbacks including founder / team liability protection issues, access to service providers and lack of ability to pass KYC in statelessness, general partnership treatment and liability to the team and founders, treasury management approaches etc. Data shows that actual DAO governance participation is in the low single digits, where VCs and whales sway the vote. MakerDAO (DAI) did so over the last few months, and this structure is becoming more commonly discussed across CT, so anticipating this and relative price impact on governance tokens through the process should be top of mind.
Privacy toolbox for founders - With regulation inbound, tipping the hat towards the burning regulatory sun, and meeting compliance somewhere in the middle, will become an increasingly important topic for founders. Permissionless and now permissioned solutions are coming to market quickly (think Plaid for DeFi KYC) and user profile reputation protocols are a novel approach.
M&A, means, well, scrutiny - First fully coin-to-coin merger complete! Excited to see where this goes from a scrutiny standpoint, but expect this to be precedential in both structure and fallout (good and bad). Pay less attention to the fact that these layer 2s are landing softer than anticipated, and more so to this kicking off a flurry of coin-to-coin mergers (or C2C M&A - proprietary terminology, you are hearing it here first) and the tax and regulatory journey that follows.
Overall - Regulation is good and guard rails are necessary and will move to the center over time. Market sentiment will be polar in the near and medium term (through 2024+) and necessarily unpleasant during that time for most. This is where dedication to the long view and core focus captures value as the regulatory process unfolds. Garlinghouse is pumped, and Wells Fargo is committed, finally (important given market best AUM).
*Note, this does not constitute legal, accounting, or tax advice of any kind and should not be relied upon as such. Opinions are my own and are for discussion purposes only. This does not represent the views of Decentral Park Capital or its affiliates.
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