TL;DR: non-financial DAOs are growing in popularity and are looking for alternative ways to finance their growth. Many have some of the hottest NFT collections stored in their Treasury cabinets. Could Altair help unlock this value to help these DAOs scale?
DAOs are the preferred method for crypto-native communities to organise. Social DAOs, artist DAOs, creator DAOs etc are growing in popularity because they enable people to come together around a common cause and organise on-chain, while each sharing in the economic upside that they generate. Many DAOs own their own NFTs in ‘cabinets’, held in their Treasury - sometimes bought through shared funds or sometimes minted by individual members or the DAO itself. As the DAO grows in popularity and importance, the NFTs it holds also grow in value because, well, NFTs are about scarcity + perceived value!
As the DAO movement matures, new ways of generating revenue both on-chain and off-chain are being explored. Many DAOs pull in a huge amount of revenue and this is only set to grow as their popularity booms. But the race is on - there is not space for an infinite number of DAOs, so members are aware that they need to invest rapidly in their growth to succeed (just as in any start-up). However, being crypto-native, DAO members are often sceptical of traditional growth funding methods like venture capital.
DAOs are looking to experiment with new funding methods and Altair could be the solution they’re looking for. What if their NFTs could be locked up in a vault as collateral, then using Altair they could borrow against their value? They can use the financing they receive to invest heavily in growing their on-chain and off-chain revenue sources, just as any start-up would when it raises funding. In turn, the NFTs they have locked in the vault are likely to go up in value as a result of the new money they have that they can use to invest in growing the importance of their DAO, which reduces the risk of the collateral being liquidated in a market crash. It could be a win-win situation. This is crypto-native venture debt, using DAO-owned NFTs as collateral.
There are risks to this for sure: NFT values are volatile, which could cause mass liquidation if the market falls. But this can be addressed by adopting Floor Perps which monitor the price floor of NFTs. And growth lending / venture debt is inherently risky - the DAO may fail to generate enough future revenue to service their loan.
Altair is a place to test financing experimental assets and I believe it could play a key role in helping the DAO movement figure out their best product/market fit for financing their future growth. And I for one am here for it