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‘Our democracy will better evolve because of DAOs,’ says Animoca’s Yat Siu


The rise of Web3 has paved the way for new business models that could shape the next phase of the internet. For instance, nonfungible tokens (NFTs) will play a large part in the open metaverse as the underlying assets people interact with. Decentralized autonomous organizations (DAOs) are also coming to fruition to allow for 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 stats platform — shows that DAOs have experienced 130-times growth over the last 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 peak of roughly $16 billion in mid-September. Nonfungible tokens are also on the rise as a number of crypto-platforms and mainstream organizations continue to implement NFT use cases.

Given this increased interest, Cointelegraph spoke with Yat Siu, co-founder and chairman of Animoca Brands — a Hong Kong-based gaming and venture capital company — during NFT LA to better understand the impact that NFTs and DAOs will have on the future of the internet.

Cointelegraph Senior Reporter Rachel Wolfson sat down with Yat Siu at NFT LA. Photo Credit: Larry Wong

Cointelegraph: Thanks for joining me, Yat. Can you please explain what you spoke about during your fireside chat at NFT LA?

Yat Siu: Sure, I talked about the future of NFTs and briefly discussed why I think nonfungible tokens are going to usher in human creativity that is truly valued. Currently, the content we create is an asset, which actually becomes a platform in itself because it is the data we own. In regard to Web3, I think that the idea of the open metaverse has now become permanent — it’s powerful. It represents hope, along with the idea of equity in a democratic fashion. In order to explain this, I compared the open metaverse to how people typically view America. America represents freedom of expression, natural rights, self-sovereignty and more. I’m optimistic because the people building in Web3 are striving toward that similar goal.

CT: What role do NFTs and DAOs play in Web3?

YS: 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 organizations. They determine our rights in the Metaverse.

Nonfungible tokens also present greater opportunities than physical items do in the real world. For instance, if I own land in The Sandbox, I now have the ability to not only build on what Sandbox gave me as tools, but I can also have any third party come in and construct a new idea and innovation. This means that we can create a Cambrian creative explosion because we can build and compose freely on assets someone else has formed.

We’ve experienced small instances of this in Web2. Take YouTube, for example. Users can upload a video to that platform, but I remember Hollywood executives initially didn’t believe that anyone would want to watch someone else eating food or dancing — now, look at YouTube. YouTube demonstrated that we can combine the culture of user-generated content with our own experiences. However, ownership does not belong to the creator in this instance, 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 DAOs at the moment. How does Animoca decide which to invest in?

YS: From an investing perspective, we look at where value is driven within DAOs. For instance, if you look at ApeCoin (APE) or Sandbox (SAND), owning these tokens is a way to be part of a network effect and power those communities they represent. If you think The Sandbox is going to keep growing, 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, America is one of the most desirable immigration spots in the world. As such, the resources and systems within America are more valuable. If you have a stake in America, then you’d be doing well in the long term since 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 community strength and whether it’s a desirable place to be. It’s not just about how much money the DAO makes, but it’s also about whether it has longevity or if it serves the community well. People aren‘t going to be a part of Sandbox, ApeCoin or any other community if the members don‘t serve the community properly. DAOs that 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 instance, you can say Facebook is a closed metaverse while The Sandbox is open. Animoca generally calls every metaverse that isn‘t open a “fake metaverse.” We call closed metaverses fake because we don’t actually own anything. Everything on Facebook belongs to Facebook, for instance. They can delete users’ content and their legacy if they choose to. For us, that can‘t be a metaverse since we are unable to have an identity in these worlds. Therefore, the open metaverse is the only real way of ownership. NFTs are a fundamental part here since we actually own these assets.

CT: Can you elaborate on how DAOs act as governing bodies for NFTs?

YS: Decentralized autonomous organizations are living structures that exist on a blockchain network that allow us to take governance and control over decisions made in a democratic fashion. DAOs iterate on democratic systems at the pace of technology. Therefore, I think our democracy will evolve stronger and better because of DAOs.

For example, countries might look at 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 this isn’t the case in a technological framework. You now have a sandbox to experiment on — some DAOs will fail, some 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 can’t be explored physically because it’s too risky and expensive.

The ApeCoin DAO, for instance, 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 think it will evolve over time. This is a living example of a functioning DAO where people can express 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 idea of composing and constructing democratic systems together — even if people don‘t have the same level of understanding — is equitable in itself.

We are excited about Web3 because the future of work is all digital, and the resources of Web3 are data created by users. As such, we are the creators of our own equity, which provides everyone with a form of universal basic equity. Imagine if Facebook considered all of its users to be workers that provide the company with data. Well, this is what we are doing for free. We think data should be a natural right, like property, meaning users have ownership of the data they create. This will completely reshape how the digital world interacts with the physical world.