Since the first “Quantum” token was created on the blockchain in 2014, NFTs have come a long way. The market has grown quickly, giving investors a great place to invest where cryptocurrencies, traditional assets, and digital ownership all meet. As of May 2022, more than a million crypto users had bought or sold NFTs, and the global NFT market is expected to grow from USD 3 billion in 2022 to USD 13.6 billion in 2027.

Non-fungible tokens are unique digital assets that are stored on the blockchain. This is the first time that owners of physical assets can extend their ownership into the digital world. This kind of ownership can include art, fashion, sports, and even physical objects. Since the introduction of the ERC721 token standard in 2018 and the groundbreaking sale of “Everydays: The First 5000 Days” by Beeple in 2021, which marked the entry of NFTs into mainstream culture, NFTs have given communities of developers the ability to invest, create, and self-custody their own creative financial assets. People also think that NFTs are the next step in managing digital rights. More buzz about digital ownership of these assets has also brought in art collectors, who are taking advantage of the difference between traditional art and digital art to start attracting a wide range of people, from gamers to celebrities to crypto enthusiasts.

The new brands and IP franchises are NFTs.

It’s important to know that NFTs are not just images that you can collect. The biggest NFT collections, like Bored Ape Yacht Club, Azuki, RTFKT, and Loaded Lions, have become mainstream brands and intellectual property franchises whose ownership is split between their creators and the owners of each NFT unit. Each one shows a different worldview, brand story, and set of images. Like Marvel characters or Transformer toys, they are on branded merchandise, show up in real and virtual events, and are likely to become video game franchises.

From the point of view of the people who own NFT units, shared ownership means that having an NFT in a cryptocurrency wallet doesn’t just give access to special events (also called token-gated experiences). It sets up the expectation that the holder will have a say in how the brand is run and will take part in making the franchise more valuable in the long run.

How does this system of leadership work? Enter DAOs (Decentralized Autonomous Organizations).

DAOs and NFTs are two types of investments.

DAOs replace traditional corporate hierarchies with structures owned by the community and run without a central leader. Even though they are still young, they are becoming more popular and will eventually help make Web3’s goal of giving the value of a network back to its users a reality.

DAOs are community-led, digital-native organizations that are powered by blockchain technology. Members vote on the direction and goals of their organization. The utility of a DAO is that it can help Web3 reach its goal of democratizing the creator economy by making connections between communities and specific projects that are more direct and clear. This is true for both crypto-curious people and natives. DAOs are replacing legacy institutions with governance models that are more flexible and adaptable than the rights given to shareholders of a large company. This is made possible by technology.

Also, people think that control and ownership are more democratic, like a cooperative organization. In a DAO, each owner has voting rights through a “governance” token, which has a code that is 100% transparent. This means that no one person controls the community, so decisions can be made more quickly and efficiently. NFT creators and community members can make decisions about the future of an NFT project and change its direction by voting in a secure way that other owners can see.

The people who use DAO-NFT

DAOs might be able to help new NFT creators build a sense of community and bring together a group of investors to take part in gated community events, raise money, and give smaller projects access to voting and access to the public. Users can meet, talk, and agree on a common goal for the DAO on different social networking sites. They can then use Ethereum contract development to send money to the DAO.

When investors decide to take part in a project, they may be able to get discounts on products and pay less for fees if they join early. In a world with fewer and fewer borders, DAOs can also bring together people from all over the world to work together and coordinate on a common goal. A DAO lets almost anyone build the future of Web3 as long as they have an internet connection and governance tokens. Participating in a DAO also gives people a sense of ownership similar to being a cofounder of a start-up. This is because they can direct the investments of the project’s treasury, which is controlled by a multi-signature crypto wallet. This can lead to more innovation and even financial rewards.

What will happen with NFTs and DAOs?

When it comes to NFTs and DAOs, they raise the philosophical question of what the next step is in the peer-to-peer economy and how the people who run Web3 can make it easier for the next generation to use. We will keep seeing new ways to use DAOs, including in music, art, buying high-value assets, and more.

Case studies of collaboration between DAOs and NFTs are starting to come out, and we are starting to see how DAOs, by using a co-op model of organizational structure, are giving people who participate in the creator economy in their own small way new ways to get involved. Because NFTs give people ownership and real-world benefits and DAOs offer new ways in, the fit between asset and community will continue to drive innovation.

As both traditional markets and cryptocurrencies face tough times ahead, more and more people are looking to Web3 to give them the power and tools they need to write their own financial histories.

Ken Timsit is the Managing Director of Cronos chain and Cronos Labs. This is the first Layer 1 blockchain network that works with EVM and was built on the Cosmos SDK.

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