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What is a DAO and why did one just try to buy the US Constitution?

Little-known groups called DAOs caught the public eye after one crowdfunded $46 million to purchase an original copy of the US Constitution. ...
Constitution
  • A group of internet friends crowdfunded $46 million to try to purchase the US Constitution. 
  • They got together in what's called a DAO, a decentralized autonomous organization.
  • These new types of groups could have a major impact on the metaverse or, better yet, the globe. 

They almost did it. A cohort of 17,000 people crowdfunded $46 million over the course of several days to purchase an original copy of the US Constitution, but then they lost the bid. 

The group, known as ConstitutionDAO, started as more of a joke on Twitter after Sotheby's announced the sale of one of 13 remaining copies of the US Constitution, CNBC reported. Then it turned into a group of people meeting on a Discord server deciding they could have a serious shot at buying the document. In a plot twist, Ken Griffin, the founder of Citadel Securities at the center of retail-trader anger over the GameStop trading halt in January, was revealed as the winning bidder.

The group that formed is what's known as a DAO, a decentralized autonomous organization. It's a fancy term for something that can be summed up as a bunch of internet friends getting together for a common purpose.

That's the bare-bones definition. But if you've grasped that concept, let's go a little deeper.

Here's how Ali Yahya, a crypto general partner at the Andreessen Horowitz venture capital firm known as a16z, puts it: A DAO "enables online communities to form, pool resources, and coordinate towards common goals — all run trustlessly via code."

That code runs on blockchain technology and enforces the rules that govern the group. Members can be from all over the globe and even remain anonymous, Yahya said to Insider via email.

Plus, it's both cheaper and faster to set up than something like an LLC, he said, noting that a lot of the behind-the-scenes work is automated through the code. The group generally raises capital using an ethereum-based wallet, CNBC reported.

DAOs, a16z has said, are going to have an "enormous impact" on the next phase of the internet, aka web3 or the metaverse. And they aren't just limited to buying rare artifacts such as the Constitution. Like companies or venture capital firms, DAOs have different purposes, depending on their goals.

"Some act like trusts and manage collectively owned property. Some act like investment firms and pool resources to make investments. Some act like associations and oversee the operation of decentralized financial services. And some act like social clubs," Yahya said.

One called PleasrDAO purchased a one-of-a-kind Wu-Tang Clan album — once owned by Martin Shkreli — from the US government last month for $4 million. Before that, it purchased a non-fungible token of the legendary doge meme that sparked multiple crypto projects.

Another called Friends With Benefits operates as an exclusive social club that requires so-called FWB tokens to get in as well as an application and a vote from members, according to a16z.

Others are thinking beyond the bounds of the internet. Matthew Gould, CEO and founder of crypto-domain name company Unstoppable Domains, told Insider that ConstitutionDAO showed the "power of new tech to quickly organize thousands of people and tens of millions of dollars for a cause."

"Given the scope of problems we are facing globally, from climate change, pandemics and hunger, these new tools show promise for rallying support to important causes and making a true difference," he wrote. "If we can put together $47 million for a copy of the US Constitution, we can surely raise more for major issues. When RainforrestDAO?"

Read the original article on Business Insider

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