Morgan Chittum

<div id="highlights-block_6230ea7cf8372" class="highlights">
 <ul>
 <li>“It looks like [the vast majority of] FAANG engineers and Web3 founders [want] to build in DAO tooling,” Alliance’s Qiao Wang told Blockworks</li>
 <li>Ink Finance, specifically, facilitates mergers and acquisitions for DAOs</li>
 </ul>
 
</div>



As the number of DAOs has exploded this year to 4,832 — just the first 216 in assets under management (AUM) are responsible for $9.1 billion in Web3 assets — so has their pursuit of funding and exposure.



The uptick has been good news for one Web3 accelerator: Alliance. A record number of DAOs (decentralized autonomous organizations) and related startups will pitch to investors during <a href="https://twitter.com/alliancedao/status/1500896793453862913?s=20&amp;t=Nymm5mnpl2Ojuwcc1L7ZeA" target="_blank" rel="noreferrer noopener">Alliance’s Demo Day</a> on Wednesday, Qiao Wang, a contributor, told Blockworks.



Last April, total DAO AUM was just $932 million, according to data dashboard <a href="http://deepdao.io/organizations">DeepDAO.io</a>. Specifically, 10.3% of those presenting at the Demo Day will be related to the nascent space.



“On the DAO side of things, we’re seeing an overwhelming number of [them],” Wang said. “It looks like [the vast majority of] FAANG engineers or Web3 founders [want] to build in DAO tooling.”



The startup accelerator accepted less than 5% of applicants this year. The “main goal” for roughly half the startups is to raise money, according to Wang.



Prospective applicants are considered based on the “caliber of the founders,” and “if they’re building something truly unique,” Wang said, adding that the criteria are not “absolute requirements” for acceptance.



“I don&#8217;t just look at credentials [of founders],” Wang said. ”It&#8217;s also based on an interview with myself and other partners of Alliance. [The] second thing is whether or not they&#8217;re building something novel.”



<hr class="wp-block-separator"/>



<h4 class="wp-block-heading">Alliance Presenters</h4>



<ul class="wp-block-list"><li><a href="https://azuro.org" target="_blank" rel="noreferrer noopener">Azuro</a> is a blockchain-betting protocol governed by a DAO. The startup bills itself as a way to replace traditional bookmakers with independent data providers, front-end operators and liquidity providers.</li><li><a href="https://www.raincards.xyz/" target="_blank" rel="noreferrer noopener">Rain</a> is advertised as the “credit card for DAOs,” aiming to make cryptocurrency spendable without a centralized exchange.&nbsp;</li><li><a href="http://inkfinance.xyz" target="_blank" rel="noreferrer noopener">Ink Finance</a> facilitates mergers and acquisitions for DAOs in need of financing — comparable to a Web3 investment bank.&nbsp;</li></ul>



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Yury Lifshits, chief executive of DAO infrastructure company Superdao, told Blockworks the startup will be presenting Wednesday to “encourage people to use [their] services.” Superdao <a href="https://cms.blockworks.co/dao-startup-raises-10-5-million/" target="_blank" rel="noreferrer noopener">raised $10.5 million</a> in January, raising its valuation to $160 million.&nbsp;



The number of DAOs in Alliance’s cohort, Lifshits said, will continue to grow, because the number of DAOs in Web3 will do the same. 



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We estimate that up to one million DAOs will be created by the end of this calendar year,” he said.</blockquote>



Investing in new structures like DAOs with less lengthy track records always has some risk, general partner at VC firm Initialized Capital Brett Gibson told Blockworks. 



“DAOs are new…but there are a lot of different types of DAOs, DAO governance structures and relationships to the legal system,” Gibson said. “So if you believe in the ability of token economics to align incentives and believe the DAO is well structured and governed, a lot of risk is mitigated.”



One DAO in particular was plastered over mainstream headlines last year when a group of crypto investors raised $49 million in a bid to buy a copy of the US Constitution at Sotheby’s auction house.&nbsp;



The group — dubbed ConstitutionDAO — later <a href="https://cms.blockworks.co/the-constitutiondao-raises-49m-to-buy-a-copy-of-the-us-constitution/" target="_blank" rel="noreferrer noopener">lost the bid</a> to hedge fund billionaire <a href="https://www.wsj.com/articles/citadel-ceo-ken-griffin-outbid-a-group-of-crypto-investors-for-copy-of-u-s-constitution-11637352087" target="_blank" rel="noreferrer noopener">Kenneth Griffin</a> and dissolved.



DAOs, however, have had their own pitfalls as well — despite the surge in popularity.



“There have been DAOs that I’ve been a part of that have accidentally sent millions of dollars’ worth of tokens to the wrong address and then they were just lost forever,” Will Papper, co-founder of Web3 investing DAO Syndicate, told <a href="https://techcrunch.com/2022/01/24/hundreds-of-y-combinator-alumni-join-crypto-collective-to-back-web3-startups/" target="_blank" rel="noreferrer noopener">TechCrunch.</a> “We have a lot of protections in place to help users, but there’s always a tradeoff between the protection we give them and the flexibility.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



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The Y Combinator of Web3 Attracts Record Number of DAO Startups

Jacquelyn Melinek

<div id="highlights-block_61df58d1065f7" class="highlights">
 <ul>
 <li>“The next logical step will be turning [DeFi Alliance] into a DAO and giving up ownership of the accelerator program to the community,” Imran Khan, pilot at DeFi Alliance told Blockworks </li>
 <li>“Our goal is to be the nation state or DAO for builders that can scale Web3 to billions of users,” Khan said</li>
 </ul>
 
</div>



DeFi Alliance has raised $50 million from contributors of its newly formed Alliance DAO to help founders grow in the space, Imran Khan, pilot at DeFi Alliance and venture partner at Volt Capital told Blockworks in an interview.&nbsp;



DeFi Alliance, in which Blockworks Co-founder Jason Yanowitz is an investor, is a Web3 startup accelerator that has helped more than 90 startups. Some of the top DeFi projects by market capitalization like 0x, Alpha Finance, dYdX, Kyber, Olympus DAO, Paraswap, Ribbon Finance, Sushiswap, Synthetix, and Zerion participated in past programs. 



“The next logical step will be turning [DeFi Alliance] into a DAO and giving up ownership of the accelerator program to the community,” <a href="https://cms.blockworks.co/what-investors-have-to-say-about-defis-largest-hack-to-date/" target="_blank" rel="noreferrer noopener">Khan</a> said. “DeFi Alliance’s name will be deprecated over time and replaced with Alliance or Alliance DAO,” he noted.&nbsp;



The decentralized autonomous organization (DAO) will run as the first “digital startup nation” and initially consist of roughly 300 contributors who were a part of the raise. The funds will be used to expand the team and software, Khan said.&nbsp;



The list of contributors includes notable members of the crypto community like <a href="https://cms.blockworks.co/twitch-co-founder-justin-kan-talks-gaming-nfts-and-the-institutional-investment-case-for-crypto/" target="_blank" rel="noreferrer noopener">Twitch</a> Co-founder Kevin Lin, Gemini Co-founders and President/CEO Cameron and Tyler Winklevoss, Terra Founder Do Kwon, OpenSea Co-founder and CEO Devin Finzer, Aave Founder Stani Kulechov, Circle Co-founder and CEO Jeremy Allaire and BlockFi Founder Zac Prince, to name a few.&nbsp;



While most accelerator programs are run by a centralized team, as DeFi Alliance was previously, having the DAO and community running it will change the landscape and ecosystem, Khan said.&nbsp;



“Ultimately, you go faster when you have a community that can help connect the dots,” Khan commented. “By bringing stakeholders together, you can help founders coming into the program. With the community, you can get an answer quickly,” through elements like crowdsourcing or token incentives, he added.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Our goal is to be the nation state or DAO for builders that can scale Web3 to billions of users,” Khan said. “Whether you have an idea, validating an idea or want to build in any sector in crypto. We want to be a platform for builders to succeed,” he added.&nbsp;</blockquote>



In 2022, the DAO will run three batches of its accelerator program and may re-evaluate in 2023 to lower it to two batches, Jocelyn Robancho, head of operations at DeFi Alliance said to Blockworks.&nbsp;



The program has a 2 to 5% acceptance rate and is targeting to bring on 25 startups for each cycle, but would increase to 30 to 35 startups if necessary, she said. Upon graduating from the program, founders can become contributors to the startup nation.&nbsp;



Within the next few months, Alliance will share a white paper and other materials to explain how it will govern, operate and what services it will provide.&nbsp;



“We’re taking a structured approach compared to a traditional DAO raise,” Khan noted. The DeFi Alliance team invited domain experts from certain crypto sectors to help provide support for Web3 startups in the program from areas like gaming and NFTs to DeFi and traditional finance.&nbsp;



Over time, the number of contributors will grow organically and on an as-needed basis, Khan said. 



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DeFi Alliance Raises $50M, Shifts to DAO Structure

In the latest episode of &#8220;<a href="https://youtu.be/K88HLCIJnKM">Empire</a>,&#8221; Blockworks&#8217; founders, Jason Yanowitz and Mike Ippolito, are joined by Qiao Wang and Imran Khan of Alliance DAO. 



Not only are Qiao and Imran announcing the launch of Alliance DAO (in which Yanowitz is an investor) and a $50 million fundraise, they&#8217;re also diving into their thoughts on how the &#8220;Summer of DeFi&#8221; set up the current state of crypto. They also cover metaverse and gaming projects they&#8217;re interested in.



Plus, listen in to hear their thoughts on:



<ul class="wp-block-list"><li>Web2 vs. Web3</li><li>The convergence of DeFi and TradFi</li><li>Tokenomics</li><li>and so much more</li></ul>



Check out what they had to say in the video below. 👇



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="Alliance DAO on raising $50M and this year’s biggest DeFi trends | Qiao Wang &amp; Imran Khan" width="1024" height="576" src="https://www.youtube.com/embed/K88HLCIJnKM?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>
</div></figure>



<h3 class="wp-block-heading">About the show</h3>



&#8220;Empire&#8221; is a twice-a-week show. On Thursdays, Jason interviews crypto industry movers and shakers to talk about their struggles, bold moves and tough decisions. Friday&#8217;s weekly round-up episodes feature <meta charset="utf-8">co-host, Santiago Roel Santos and cover the top news from the past week.



For any NPR or Guy Raz fans out there, you can think of &#8220;Empire&#8221; as a &#8220;How I Built This&#8221; for the bitcoin and crypto industry.



Subscribe to &#8220;Empire&#8221; today on <a href="https://podcasts.apple.com/us/podcast/empire/id1554930038" target="_blank" rel="noreferrer noopener">Apple</a> or <a href="https://open.spotify.com/show/4UTePv1CR3APdKOiosR3Iq" target="_blank" rel="noreferrer noopener">Spotify</a>. Watch episodes on <a href="https://www.youtube.com/playlist?list=PLvER9nHSRN3wPkrDGTT5_8VC4Hjcq0f9U" target="_blank" rel="noreferrer noopener">YouTube</a>.



<hr class="wp-block-separator"/>



Get the day’s top crypto news and insights delivered to your inbox every evening.&nbsp;<a target="_blank" href="https://cms.blockworks.co/newsletter/?source=end" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.



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