The BitDAO treasury is the largest for a DAO you’ve maybe never heard of.
BitDAO is a group designed to raise funds and support other DeFi projects. According to Open-Orgs, it currently has $851M, making it the third largest publically viewable treasury on Ethereum, following those of Uniswap and Ethereum Name Service, and just ahead of those of Lido and Gitcoin.
BitDAO would be at the No. 2 spot on the list, but Open-Orgs isn’t counting its BIT token. The treasury holds another $1B in BIT, the governance token for the DAO, which currently trades for around $1.06.
Why is this relatively little discussed DAO so big?
Coordinating Capital
“I think people in crypto have been excited about coordinating capital better than you can as an individual,” Jonathan Allen, of Mirana Ventures, a sister fund of ByBit, the exchange that managed spinning up the BitDAO concept, told The Defiant.
BitDAO has been building since early last year. It announced $230M in sales of BIT token in June, to Peter Thiel, his Founders Fund, Pantera, Dragonfly and others. Then it raised another $365M on SushiSwap’s MISO platform in August, selling BIT to over 9,000 people.
But the real revenue stream into BitDAO comes from its association with ByBit, the exchange. It’s been putting about 2.5 basis points from its volumes, the lion’s share of its profits, into the BitDAO treasury. In exchange, ByBit controls 60% the BIT supply, according to the litepaper.
So BitDAO has been seeing something like $2M worth of deposits into its treasury each day that BIT holders then have control over.
“This is pretty much an option on Bybit’s success,” Allen said.
BitDAO thinks very broadly.
Ecosystem Support
“If you want to distill it to the simplest mental model, it’s an investment DAO,” Allen said, but he cautioned that it’s not nearly so straightforward as that. “It’s really kind of this fundamental ecosystem support,” he said.
In other words, with this much money, BitDAO will be happy to fund things that may not have direct financial value to the DAO, but will make the overall ecosystem stronger and, therefore, ultimately drive value — even if it’s hard to quantify.
For example, BitDAO is doing a lot of token swaps. In DeFi, we have been seeing more and more DAOs swap tokens and make specific commitments to each other about when they would sell. This is often a way of cementing a relationship between two projects that already rely on each other, as we saw with Balancer and the Fei protocol.
With BitDAO, it’s less direct. As an investment DAO, it doesn’t really have operations. Instead, it can do swaps with other projects in order to give each other some say over the other’s operations. So, for example, if the other project sees BitDAO considering an investment it would find helpful, they have voice in the decision.
One of its first investments was a swap with FTX for its FTT token, with a 3-year lockup. As Allen described the BitDAO philosophy, he used the word “mutualism” a lot.
With so much money available, the other core idea in BitDAO is autonomous entities. Instead of trying to invest $2B directly, it makes very large commitments to autonomous entities that can make whatever investments they want in a specific area.
So, for example, it has committed $500M to Game7, a DAO committed to building out the gaming ecosystem in blockchains, but it’s giving the funds out in $100M chunks. BitDAO won’t decide on each grant Game7 makes with the funds, but it can decide not to make further contributions if the partnership isn’t working.
Fractal Growth
As more funds come into BitDAO, it can fund more of these autonomous entities. And autonomous entities might fund further ones, making for what Allen describes as “fractal growth.”
BitDAO has flown under the radar thus far in part because it seems like the rest of crypto hasn’t noticed how much ByBit is putting in or can’t really believe it.
“As the treasury starts to get larger, it will start to have more stability,” Allen said. “Once people start to understand the mechanics, I think it’s going to be more clear.”
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