DAOs Growth Trends 2023: Evolution and Future

Step into the dynamic world of DAOs and journey through the remarkable growth trends of 2023. 

In this article, we explore the evolution of decentralized organizations and delve into the key trends shaping the landscape of DAOs in the past and current years. We uncover the transformative power of DAOs, analyze the emerging trends driving their growth, and shed light on the innovative projects and initiatives pushing decentralized collaboration’s boundaries. 

Note: The crypto ecosystem is constantly developing, and most of these trending numbers are subject to change, but we will keep them up-to-date. 

A brief history of DAOs and DAO concepts

• 1960 – 1970: First mentions of the decentralization concept in academic journals, laying the foundation for future developments.
• 1997: Werner Dilger writes a journal article on “Internet of Things” (IoT), coining the term “DAO” to describe a decentralized network of interconnected devices.
• 2006: Daniel Suarez’s science fiction novel “Daemon” explores the concept of DAOs in a prehistoric context, influencing future developments.
• 2009: The Bitcoin network, created by Satoshi Nakamoto, is considered the first example of a DAO. Nakamoto released the Bitcoin white paper and mined the Genesis Block on Jan. 3, 2009.
• 2013: Father and son Stan and Daniel Larimer invented the concept of a “Decentralized Autonomous Company” (DAC).
• 2013: Vitalik Buterin mentions the DAO concept in his writings, further contributing to its development.
• 2015: Dash pioneers decentralized governance using blockchain technology by launching its two-tier master-node network.
• 2016: DAOs started gaining popularity when “The DAO,” a blockchain-based investment fund, raised over $150 million in crowdfunding. However, it faces a controversial hack that leads to its dissolution.
• 2018-2022: An explosion of infrastructure and tooling applications emerge, ushering in the current era of DAOs.
• 2022 and beyond: DAOs continue to evolve and significantly shape the future of web3 and decentralized organizations.

Despite the challenges, DAOs have the potential to revolutionize traditional organizational structures, providing new ways for communities to collaborate, innovate, and participate in decision-making.

» Learn more: A complete history of DAOs

The current state of DAOs

Let’s take a closer look at the current state of DAOs! With explosive growth and increasing popularity, DAOs are making waves in blockchain and cryptocurrencies. 

Here are some key highlights:

A growing number of active DAOs

The number of active DAOs has been skyrocketing, with more and more organizations adopting the DAO model for their operations.

How many DAOs are there in 2023?

• As of April 2023, the total number of DAOs reached 12,872 organizations, covering various sectors and industries (source). 
• According to insights from SnapshotLabs and this Twitter thread, the number of active DAOs (with 1 and more proposals) has crossed 6,000 as of June 2022. 
• From 10 active DAOs in 2019 to more than 12k organizations in 2023 (note that not all show decent activity). These numbers show how fast DAOs are growing, considering only 76 were active in mid-year 2020.  

DAOs are no longer limited to cryptocurrency-related projects but have expanded into diverse areas such as art, gaming, finance, governance, and more.

Impressive DAOs market capitalization

Some DAOs have achieved significant market valuations, proving the potential of DAOs to disrupt traditional organizational structures.

How big is the DAO market size in 2023?

• The combined market capitalization of all DAO projects as of April 2023 is more than $22 billion, despite the bear market (source). 
• During the last crypto bull run in 2021-2022, the market cap of DAOs almost reached the $60 billion level.  
• DAO cryptocurrencies and tokens trading volumes surpassed $2.5 billion in April 2023 (source).

These numbers could be even higher, considering that not all Decentralized Autonomous Organizations (DAOs) possess tokens actively traded on exchanges or have enough liquidity to provide accurate price data. 

Sometimes, a DAO may have a vibrant community without requiring a frequently traded token. For instance, Nouns DAO is governed by Nouns (NOUN), unique Non-Fungible Tokens (NFTs, industry with their separate statistics) rather than conventional tokens, further illustrating the diversity within the DAO ecosystem.

Active community engagement

Community engagement and participation in DAOs have increased, with more individuals and organizations joining DAOs and actively participating in decision-making processes.

How many people will be in DAOs in 2023?

• Across various DAO projects are 6.8 million governance token holders and 2 million active voters/proposal makers (source). 
• Top 5 DAOs by participation and active members: PancakeSwap, Aave, Balancer, OlympusDAO, and Uniswap. (source)    

This active participation in DAOs fosters a sense of ownership and community involvement, a key driving force behind their growth and success.

DAOs treasury assets growth 

DAO treasury assets refer to the financial resources, holdings, or reserves owned and controlled by a DAO. These community-owned organizations may accumulate and manage various types of assets in their treasury, which can include but are not limited to cryptocurrencies (such as Bitcoin, Ethereum, or other digital assets), fiat currencies, other tokens or NFTs, and even physical assets like real estate or intellectual property.

How much money do DAOs have in 2023?

• The total treasury assets of all DAOs are estimated to be $28.1 billion in USD, with $24.3 billion liquid and $3.8 billion vesting assets, as of April 2023 (source), which is a staggering amount. 
• More than 50% of DAOs use USDC tokens as holdings and investments. The top 5 most popular investment tokens 2022 were – USDC, DAI, WETH, USDT, and WBTC (source). 

Top 10 DAOs by total treasury assets

• Uniswap – $2,644,933,256 Total treasury 
• BitDAO – $2,643,550,918 Total treasury 
• Stargate Finance – $273,126,581 Total treasury 
• Aragon – $113,827,437 Total treasury 
• Gitcoin – $103,419,038 Total treasury 
• Compound – $102,368,678 Total treasury 
• Synthetix – $82,986,672 Total treasury 
• Lido – $44,782,133 Total treasury 
• API3 – $41,702,321 Total treasury 
• Yearn – $40,264,820 Total treasury 

_{Source as of April 2023}

Rise of DAO application

DAOs can be used in various ways, and their applications span across different categories. Some of the most common categories of DAO projects include:

Research is done based on 550 DAOs, and one DAO can belong to multiple categories (source). 

• Almost half, 45% of DAOs are concentrated on DeFi, considering that Investments 5% also fall under the decentralized finances category.  
• NFTs and gaming projects often use the DAO concept as means of community engagement and take up to 22% share. 
• Infrastructure projects, with 8%, and DAO tools, with 6%, also comprise DAOs share.
• Etherium is the most popular blockchain and technology used for DAOs, with Binance second and Solana third. 
• Top 3 social media tools DAOs use to communicate: Twitter, Telegram, and Discord 

DAO funding trends  

Venture capital plays a pivotal role in the exponential growth of DAOs. In recent years, starting from 2021, venture capital has increasingly become a significant driving force behind funding DAO projects, often aligning with more significant macroeconomic and crypto market trends. 

The VC dimension of a DAO can be viewed from two angles: VC investments in DAOs and DAOs acting as venture capitalists themselves, paving the way for innovative funding models in the decentralized space.

How much funding DAOs get?

• In Q1 of 2022, roughly $160 million of VC investments was poured into DAOs hitting the pick. 
• DAOs accounted for 9% in Q1 2022 and  6% in Q2 2022 of all VC investments in the same period.

_{Data source}

Top 3 notable DAOs funding rounds in 2020-2022  

• OrangeDAO raised $15 million in March and $80 million in August 2022. 
• Alliance DAO raised $50 million in January 2022. 
• Utopia Labs raised $23 million in a Series A in May 2022. 

Another driving factor of DAOs growth is allocating treasury assets to internal DAO labor.

• Throughout 2022, $102 million was allocated from the DAOs’ treasuries to internal DAO labor. 
• Of most investments, 58% went to Product & Development expenses and 22% to the Growth category, aiming to grow protocol usage. 

Research is done based on DAO budget payments across 10 DAOs and 5 categories: Product & Development, Growth, Operational, Marketing, and Community (source). 

Examples of notable DAOs

Let’s explore some DAOs that significantly impacted their respective industries, showcasing the power of DAOs as a new form of organizational structure.

Here are a few examples of well-known DAOs:

• Uniswap is a decentralized exchange (DEX) built on the Ethereum blockchain that allows users to trade various cryptocurrencies without intermediaries.
• PleasrDAO is a decentralized autonomous organization (DAO) focusing on acquiring and managing digital art and cultural assets.
• Gitcoin is a DAO that aims to promote and support open-source software development by facilitating funding and collaboration among developers. 
• BitDAO is a decentralized autonomous organization focusing on funding and supporting projects related to blockchain technology and the decentralized finance (DeFi) ecosystem.
• Orange DAO is a community-driven organization that aims to support and promote the adoption of orange in various aspects of culture, technology, and art.
• Friends with Benefits is a DAO that aims to foster collaboration and support among individuals in the creative industry, including artists, musicians, and content creators.
• Alien Worlds is a decentralized metaverse and gaming platform that allows players to explore virtual worlds, mine resources, and participate in governance through a DAO. 
• DreamDAO is a decentralized autonomous organization that focuses on supporting and funding projects related to virtual and augmented reality (VR/AR) technologies. 
• AssangeDAO is a decentralized autonomous organization that aims to support and promote the work of Julian Assange, an Australian journalist, and founder of WikiLeaks.
• Avocado DAO is a community-driven organization that promotes sustainable living, healthy eating, and environmentally-friendly practices. 

DAO trends and outlook of DAOs

The future and the adaption path are unknown for DAOs! But it’s certain DAOs have the power to democratize decision-making and transform industries worldwide.

Many crypto enthusiasts are excited about the potential surprises that DAOs may bring in the coming years. Developers are expected to introduce new features and functionalities that will push the boundaries of innovation, shaping the future of DAO operations, legal structures, financial models, strategies, or products. 

Top 5 DAO trends with use cases 

According to the Messari report, which shows prediction and trend analysis for all crypto sectors in 2023, the following areas are the most interesting for DAOs development (page 147). 

To help you better understand how DAOs can disrupt different industries and business models, I’ll give you the actual use cases for each sector. 

• Social DAOs: LinksDAO will let you play golf with Mike Dudas (among other things). In January, they raised $10.4 million from 9,000+ members to form a DAO golf course. ​​    
• Special purpose acquisition companies (SPAC) DAOs: ConstitutionDAO raised $47 million to bid on the rights to acquire an official copy of the U.S. Constitution document in a Sotheby’s auction.
• Collectors DAOs (Investment Clubs): PleasrDAO came forward as the buyer of only one existing copy of the Wu-Tang Clan’s album “Once Upon a Time in Shaolin,” paying $4 million. 
• Investment DAOs: It’s believed that DAOs will disrupt the traditional VC funding models. For example, Syndicate, a community-based investment system, has raised a $20 million Series A funding round led by Andreessen Horowitz (a16z).
• Impact DAOs: Gitcoin pioneering quadratic funding concept with nearly $70 million in public goods has been funded in over 15 rounds organized, operated, and protected.

These are just a few use cases of today’s many notable DAOs. DAOs continuously evolve and explore new ways of organizing and making decentralized and autonomous decisions.

Conclusion

DAOs have come a long way from their inception. They are experiencing rapid growth in the number of active DAOs, market capitalization, community engagement, and evolving governance models. Despite facing challenges and limitations, DAOs are poised for a promising future, with the potential to reshape the way organizations operate and interact. 

So, keep an eye on the exciting developments in the world of DAOs, as there’s much more to come!