DAO is one of the main factors of DeFi's evolution

DAO-based Decentralized Digital Asset Management Protocol for Web 3.0

Despite Defi's explosive growth, one cannot deny that there are still many challenges in current Defi investments, and like most capital ecosystems, investor reputation is the most powerful asset. Funding rounds are very competitive, and founders have a lot of power in choosing investors. Defi funding is highly dependent on market volatility, causing many potential angel investors to potentially be unable to enter the Defi space with small investments as Defi's valuation soar. This is not friendly to many smaller investment institutions and retail investors. Specific problems exist in the following areas.

a) High investment and participation threshold

Crypto funds with good brands and reputations are prioritized more than ordinary investors. At the same time, the founding team usually requires a high minimum investment amount, excluding potential small and retail investors.

b) Poor investment information

Senior investors have more project information and investment contacts than ordinary investors and have more details on financing and investment channels.

c) There is a digital asset and transaction risk.

Despite the explosive growth of Defi, traditional financial traders migrating to Defi are forced to use centralized custodians, which naturally creates counterparty and regulatory risks. Whereas DAOs, as an underlying design, seem to be able to be combined with various hotspots, Defi projects directly adopt the governance model of DAOs, allowing pass holders to participate in the ecosystem development and share the financial derivatives benefits. In such a project, pass holders are community members with decision-making power who can design and optimize protocols and applications through proposals. Defi products as payment and distribution methods within the organization make DAOs more decentralized and digital. Defi is undergoing an iteration, and the DAO governance model has become one of the criteria defining Defi 1.0 and Defi 2.0