The rise of Web3 has paved the way for new business models that could shape the next phase of the Internet. For example, non-fungible tokens (NFTs) will play an important role in the open metaverse as the underlying assets that people interact with. Decentralized autonomous organizations (DAOs) are also bearing fruit in enabling community governance within virtual environments.
The growth of Web3 has essentially allowed NFTs and DAOs to flourish. For example, recent data from DeepDAO, a DAO statistics platform, shows that DAOs have seen 130x growth over the last year, reaching a market capitalization of $24.8 billion. In December 2021, DeepDAO discovered that the total assets under management (AUM) for the DAO treasuries listed on the platform increased from about $380 million in January to a peak of about $16 billion in mid-September. Non-fungible tokens are also on the rise as various crypto platforms and major organizations continue to implement NFT use cases.
Given this heightened interest, Cointelegraph spoke with Yat Siu |co-founder and chairman of Animoca Brands, a Hong Kong-based gaming and venture capital firm, during NFT LA to better understand the impact NFTs and DAOs will have on the future of the internet.
Cointelegraph: Thanks for joining me, Yat. Can you explain what she talked about during her fireside chat on NFT LA?
Yat Siu: Sure, I talked about the future of NFTs and briefly discussed why I think non-fungible tokens will usher in human creativity that is truly valued. Currently, the content that we create is an asset, which actually becomes a platform in itself because it is the data that we own. Regarding Web3, I think the idea of the open metaverse has now become permanent: it's powerful. It represents hope, along with the idea of fairness in a democratic way. To explain this, I compared the open metaverse to how people tend to view the United States. The United States stands for freedom of speech, natural rights, self-sovereignty, and more. I'm optimistic because people who build on Web3 are striving for a similar goal.
CT: What role do NFTs and DAOs play in Web3?
YES: NFTs are critical because they represent the assets and items of the Metaverse, or things we own. The way we govern this is through decentralized autonomous bodies. They determine our rights in the Metaverse.
Non-fungible tokens also present greater opportunities than physical items in the real world. For example, if I own land in The Sandbox, I now have the ability to not only build on what the Sandbox gave me as tools, but I can also have a third party come in and build a new idea and innovation. This means that we can create a Cambrian creative explosion because we can freely build and compose on assets that someone else has formed.
We have experienced small cases of this in Web2. Take YouTube, for example. Users can upload a video to that platform, but I remember Hollywood executives at first didn't think anyone wanted to see another person eating or dancing. Now, watch YouTube. YouTube proved that we can combine the culture of user-generated content with our own experiences. However, ownership does not belong to the creator in this case, it belongs to YouTube. Web3 gives this back to the end user, and NFTs are critical assets in this equation.
CT: There is an influx of DAO right now. How does Animoca decide what to invest in?
YES: From an investment perspective, we look at where value is being driven within DAOs. For example, if you look at ApeCoin (APE) or Sandbox (SAND), owning these tokens is a way of being part of a network effect and enhance those communities they represent. If you think The Sandbox will continue to grow, then it makes sense to have that token, since those people most likely care about the future of that community. You also see this in countries. For example, the United States is one of the most desirable immigration locations in the world. As such, the resources and systems within the United States are more valuable. If you have a stake in the United States, you'll do well in the long run as it's desirable, so having a vote and being a citizen is also valuable. That's what a DAO really is.
From an investment perspective, one way to look at DAOs is by the strength of the community and whether it's a desirable place to be. It's not just about how much money the DAO makes, but also if it has longevity or if it serves the community well. People will not be a part of Sandbox, ApeCoin or any other community if the members do not serve the community properly. DAOs that treat the community well have more loyalty and strength, and that's what we believe in when we invest in DAOs.
CT: What is the difference between centralized and decentralized metaverse environments?
YES: People sometimes make a distinction between closed and open metaverses. For example, you can say that Facebook is a closed metaverse while The Sandbox is an open one. Animoca generally calls each metaverse that is not open a "false metaverse". We call closed metaverses false because we don't actually own anything. Everything on Facebook belongs to Facebook, for example. They can remove user content and their legacy if they wish. For us, that can't be a metaverse since we can't have an identity in these worlds. Therefore, the open metaverse is the only real form of ownership. NFTs are a critical part here as we actually own these assets.
CT: Can you elaborate on how DAOs act as governing bodies for NFTs?
YES: Decentralized autonomous organizations are living structures that exist on a blockchain network that allow us to govern and control decisions made in a democratic manner. DAOs iterate on democratic systems at the pace of technology. Therefore, I believe that our democracy will evolve stronger and better thanks to DAOs.
For example, countries might view DAOs as a well-functioning consensus mechanism for a virtual society serving millions of users. Iterating on democracy in the physical world can be risky, but this is not the case in a technological setting. You now have a sandbox to experiment with: some DAOs will fail, others will succeed, and different governance models will develop. This is how we can innovate in what could become the most optimal form of a democratic process that cannot be physically explored because it is too risky and expensive.
The ApeCoin DAO, for example, is fascinating because it is a very noisy community which doesn't have the same level of understanding when it comes to certain terms, but we think it will evolve over time. This is a living example of a working DAO where people can express their thoughts about things they agree and disagree with.
CT: What are you most excited about the future of DAO and Web3?
YES: The framework and the idea of composing and building democratic systems together, even if people do not have the same level of understanding, is equitable in itself.
We are excited about Web3 because the future of work is completely digital and the resources of Web3 are user-created data. As such, we are the creators of our own fairness, which provides a form of universal basic fairness to all. Imagine if Facebook considered all of its users to be workers providing data to the company. Well, this is what we're doing for free. We believe that data should be a natural right, like property, which means that users have ownership of the data they create. This will completely reshape the way the digital world interacts with the physical world.
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