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Collective ownership and funds

Collective ownership and funds
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© RMIT 2023

DAOs are often used for collective ownership because they provide a transparent and secure way for a group of people to make decisions and manage resources.

Using a DAO, members of an organization can propose and vote on decisions and the smart contracts will automatically execute the agreed-upon actions. This allows for decentralized decision-making and can help to ensure that all members of the organization have an equal say in how the organization is run. Members of the organization can earn and hold tokens, which can be used to vote on decisions or can be traded on exchanges.

DAOs and collective ownership

DAOs are useful for collective ownership because they allow for the creation of token-based economies. While DAOs allow collective ownership and stewardship an organisation by extension they also allow collective ownership of things. This is especially interesting and useful when we consider collective ownership of things that are by their nature indivisible. This concept of ‘fractional ownership’ through a DAO can apply to a range of things such as real property (ie houses and land), intellectual property (music, film, video, etc), collectibles whether physical or digital (from rare first edition manuscripts all the way to NFTs, physical artworks, and financial instruments like government bonds and corporate bonds – financial instruments and other high-value assets that have previously only been the domain of institutional investors and traders and high-net worth individuals).

DAOs and tokenised ownership

Tokenised ownership involves representing ownership rights over an asset through use of a digital token on a blockchain. This allows for the creation of a tokens that have ‘partial’ or ‘fractional’ collective ownership of an asset, where multiple parties can hold a stake in the asset through the possession of these tokens. In this model, the ownership rights over the asset are typically divided across a large number of tokens, each of which represents a fractional ownership stake in the asset. In the wider blockchain world these tokens could be bought and sold on a digital marketplace, allowing multiple parties to buy and sell ownership stakes in the asset. In the case of a DAO, the DAO can own tokens in an asset, OR the DAO itself can own the asset and the members (tokenholders) in the DAO own tokens that effectively give them partial or fractional ownership rights over the asset/s owned by the DAO and allow them to participate in decisions about what happens to those assets.

Tokenization has the potential to revolutionize the way that ownership of assets is represented and managed, making it easier for individuals and organizations to buy and sell ownership stakes in a wide range of assets, including real estate, fine art, and even intellectual property. It also allows for the creation of a more efficient and transparent system for tracking and managing ownership of these assets. Whether via a DAO or not, tokenisation of otherwise indivisible things, things that may be of very high value and not normally within reach of ‘everyday’ folks, can open up access to smaller investors and enthusiasts in ways that haven’t previously been simple, or even feasible.

Real-life examples

Here are some examples of decentralized autonomous organizations (DAOs) that are focused on the collective ownership of real assets:

Slock.it

Slock.it DAO was founded in 2015 and is focused on creating a decentralized sharing economy for physical assets. It has developed a platform that allows users to rent out their underutilized assets, such as cars, bikes, and tools, using smart contracts on the Ethereum blockchain.

District0x

District0x DAO was created in 2017 and is focused on building decentralized marketplaces for various types of assets, including real estate, art, and collectibles. It uses smart contracts to facilitate peer-to-peer transactions and enable users to buy and sell assets directly without intermediaries.

ArtChain Global

ArtChain Global DAO was launched in 2018 and is focused on the creation and management of digital art collectives. It allows artists to form collectives and collectively own and manage their artworks, using smart contracts to track ownership and facilitate the sale of artworks.

RealT

RealT DAO was founded in 2018 and is focused on creating a decentralized platform for the buying and selling of fractional ownership in real estate. It allows users to buy and sell shares in real estate assets using smart contracts, enabling them to collectively own and manage properties.

These are just a few examples, there are many, many more and new examples emerging all the time. Overall, DAOs can be a powerful tool for enabling collective ownership and decision making over organisations, but they have huge potential to enable collective ownership in a transparent, secure and more readily accessible way.

© RMIT 2023
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Introduction to DAOs: Decentralised Autonomous Organisations

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