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 materializing to enable community governance within virtual environments.
The growth of Web3 has basically allowed NFTs and DAOs to thrive. For example, recent data from DeepDAO – a DAO statistics platform – shows that DAOs have grown 130x over the past year, reaching a market capitalization of $24.8 billion. In December 2021, DeepDAO found that the total assets under management (AUM) for DAO treasuries listed on the platform increased from around $380 million in January to a high of around $16 billion at the end of the year. mid-September. Non-fungible tokens are also on the rise as a number of crypto platforms and mainstream 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 that NFTs and DAOs will have on the future of the Internet.
Cointelegraph: Thanks for joining me, Yat. Can you please explain what you talked about during your fireside chat at NFT LA?
Yat Siu: Of course, I talked about the future of NFTs and briefly explained 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 in fact becomes a platform in itself because it is the data that we have. As for Web3, I think the idea of the open metaverse has now become permanent — it’s powerful. It represents hope, as well as the idea of fairness in a democratic way. In order to explain this, I compared the open metaverse to how people generally view America. America stands for freedom of speech, natural rights, self-sovereignty and more. I’m optimistic because people building in Web3 strive to achieve this similar goal.
CT: What role do NFTs and DAOs play in Web3?
YS: NFTs are essential because they represent the assets and items of the metaverse, or things that we own. We govern this through decentralized autonomous organizations. They determine our rights in the metaverse.
Non-fungible tokens also present greater opportunities than physical objects in the real world. For example, if I own land in The Sandbox, I now have the ability to not only build on what Sandbox has given me as tools, but I can also bring in any third party and build a new idea and an innovation. This means that we can create a Cambrian creative explosion because we can freely build and compose on assets that someone else has trained.
We’ve seen small instances of this in Web2. Take YouTube, for example. Users can upload video to this platform, but I remember Hollywood executives initially didn’t believe anyone would want to watch someone else eat food or dance – now watch YouTube. YouTube has demonstrated that we can combine the culture of user-generated content with our own experiences. However, the ownership does not belong to the creator in this case, it belongs to YouTube. Web3 brings that back to the end user, and NFTs are key assets in that equation.
CT: There’s an influx of DAOs right now. How does Animoca decide which one to invest in?
YS: From an investment perspective, we look at where value is generated within DAOs. For example, if you look at ApeCoin (APE) or Sandbox (SAND), owning these tokens is a way to become part of a network effect and power the communities they represent. If you think The Sandbox will continue to grow, it makes sense to have this token since these people most likely care about the future of this community. You also see this in countries. For example, America is one of the most sought-after places for immigration in the world. As such, the resources and systems in America are more valuable. If you have a stake in America then you will do well in the long run since it is 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 location. It’s not just about how much money the DAO makes, but whether it has longevity or serves the community well. People will not be part of Sandbox, ApeCoin or any other community if the members do not serve the community properly. DAOs who treat the community well have more loyalty and strength, and that’s what we believe in when investing in DAOs.
CT: What is the difference between centralized and decentralized metaverse environments?
YS: 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 open. Animoca generally calls each metaverse that is not open a “fake metaverse”. We call fake closed metaverses because we don’t own anything. Everything on Facebook belongs to Facebook, for example. They can delete user content and their legacy if they want. For us, it cannot be a metaverse since we are unable to have an identity in these worlds. Therefore, the open metaverse is the only true means of ownership. NFTs are fundamental here since we actually own these assets.
CT: Can you explain how the DAOs act as the governing bodies of the NFTs?
YS: Decentralized Autonomous Organizations are living structures that exist on a blockchain network that allow us to take governance and control over democratically made decisions. DAOs iterate on democratic systems at the pace of technology. Therefore, I believe that our democracy will evolve stronger and better through DAOs.
For example, countries might view DAOs as a consensus mechanism that works well for a virtual society serving millions of users. Iterating on democracy in the physical world can be risky, but not in a technological setting. You now have a sandbox to experiment on – some DAOs will fail, others will succeed, and different governance models will develop. This is how we can innovate on what could become the most optimal form of a democratic process that cannot be explored physically because it is too risky and costly.
The ApeCoin DAO, for example, is fascinating because it’s a very vocal community that doesn’t have the same level of understanding when it comes to certain terms, but we believe it will evolve over time. This is a living example of a working DAO where people can voice their thoughts on things they agree and disagree with.
CT: What excites you most about the future of DAOs and Web3?
YS: The framework and the idea of composing and building democratic systems together – even if people do not have the same level of understanding – is fair in itself.
We are excited about Web3 because the future of work is all-digital and Web3 resources are user-created data. As such, we are creators of our own capital, which provides everyone with a basic form of universal capital. Imagine if Facebook viewed all of its users as workers who provide data to the company. Well, that’s what we do for free. We believe data should be a natural right, like ownership, which means users own the data they create. It will completely reshape the way the digital world interacts with the physical world.