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We’ll all be joining crypto DAOs soon enough

October 29, 2021, 1:18 AM UTC

This summer when I embarked on writing a Fortune cover story about “decentralized finance,” or DeFi, I had a hidden agenda.

I really wanted to write about DAOs, or decentralized autonomous organizations, a concept I—and lots of folks beside me—have come to regard as the next evolution of human economic organization, one native to the Internet. DAOs are online clubs of crypto aficionados who set out to accomplish certain goals like developing software, investing, or community-building (and often all three) with a much more fluid and flexible structure than a traditional company.

DeFi just so happens to offer some of the best, earliest examples of DAOs in action; I’ve long called the alt-finance movement just the “tip of the spear” in conversations with Fortune editors. Groups of loosely affiliated individuals, acting like something akin to boards of directors and coordinating over chat apps like Discord, steer the direction of projects such as the interest-generating protocol Compound, savings jackpot PoolTogether, and decentralized exchange Uniswap. If these DeFi projects strive to unbank banks, DAOs unincorporate corporations.

(Full disclosure: I believe so strongly in this future that next month I’m taking a job with Andreessen Horowitz as the head of content and editorial for the crypto fund, a16z Crypto, which is a major investor in just about all of the crypto-sphere. This will be my penultimate Ledger column as part of Fortune’s staff.)

A few months ago, I spoke to Aaron Wright, a professor at Cardozo Law School and leading DAO-ist philosopher, about the nature of such decentralized clubs. He described them as “a more digitally native corporation that’s more efficient.” He continued: “They’re flatter, less hierarchical. They’re not claiming that folks owe fiduciary duties to one another. It’s just a group of people getting together to do something online—more like a swarm, as opposed to a top-down, World War II-era board, shareholder, manager” structure.

There is no settled legal framework for DAOs; they’re new after all, and the inventors of corporate law didn’t anticipate how the Internet might affect industrial organization. Wyoming passed a law earlier this year that creates a classification for DAOs as a kind of limited liability corporation, or LLC. Meanwhile, Miles Jennings, the general counsel at Andreessen Horowitz’s crypto fund, recently proposed an alternative ideaRegistering DAOs as “unincorporated nonprofit associations” in states where the option is available. Both proposals intend to fit DAOs into an existing legal framework.

The aim is to harness the powerful collective, global force and open-source innovation promised by these successors to the corporation, while bringing them into compliance on tax-paying, bank account management, legal liability, and other operational woes. As regulations catch up, expect to see more DAOs cropping up and experimenting with all sorts of objectives in the coming years.

Robert Hackett


Credits 🚀 

The crypto market has a new top-tier dog: Shiba Inu coin… If you're a joke-crypto purist, don’t worry, though. Dogecoin was up more than 22% over the prior week as of Thursday afternoon. Other Shiba-Inu-themed cryptos like Floki Inu jumped too… Staff at the Office of Comptroller of the Currency may be open to letting banks legally trade crypto for their clients… A Squid Game-themed crypto is up nearly 2,400% over the last day...Shares in Digital World Acquisition, a.k.a. the SPAC planning to merge with former President Donald Trump’s new media company, have remained persistently high since surging last week… Michael Saylor’s MicroStrategy added nearly 9,000 Bitcoins to its holdings in the third quarter… Brazil-based neobank Nubank wants to go public… In El Salvador, President Nayib Bukele said the country had added another 420 Bitcoins to its reserves… Sam Bankman-Fried-founded Alameda Research has invested $75 million into crypto brokerage Voyager DigitalCathie Wood’s Ark Invest has been gobbling up shares of Robinhood’s stock this week… You can now add Matt Damon to the ranks of celebrities and sports stars getting behind crypto following a new investment the actor made in (and an accompanying ad campaign he’s staring in)… Beeple plans to auction off a real-life sculpture (as well as a corresponding NFT) in his latest sale with Christie’s… Crypto traders are buying up small tungsten cubes.

Debits 🐻 

Buying up crypto? Expect to maybe get a worse night’s sleepRobinhood saw its cryptocurrency transaction revenues crater 78% sequentially in the third quarter… Shares of the California-based retail brokerage have dropped nearly 17% over the past week… Rostin Behnam, acting chair at the Commodity Futures Trading Commission who has been tapped by the White House to take on the position full time, wants more authority over the crypto market from Congress.. While cryptos named after his dog soared, Tesla CEO Elon Musk revealed this week his only crypto holdings are Bitcoin, Ether, and Doge… The Securities and Exchange Commission is investigating Sen. Richard Burr of North Carolina and his brother in law for insider trading… Coinbase went down Wednesday around the same time that SHIB was surging… The Department of Justice is looking into Visa’s relationship with the likes of Square, PayPal, and Stripe… Speaking of PayPal, the fintech is not pursuing a deal with Pinterest any more.


Why do we trade things? Is it because we think Tesla is going to the moon? That Shiba Inu coin is destined for greatness? That Facebook is too fraught with scandal for its shares to go much higher? Or, is it because of the brokerage industry has made trading too easy, enticing, and exciting for us to put our phones away when the markets are open (a challenge that’s impossible in the never-closed crypto world)? Those are the questions that regulators are now looking to answer, thereby forcing brokerages to try and find a balance between keeping the interest of younger investors and conveying an accurate sense of seriousness about what investors are doing, as the Financial Times reports. 

From the article: 

Robinhood’s simple interface remains a draw for investors. According to a survey by Mizuho Securities about whether investors would leave the Robinhood platform if it stopped being free, 90 per cent of investors said no, or were undecided. More than 40 per cent cited ease of use as their top priority using the brokerage, rather than low cost. Only 7 per cent said brand trust was a priority. 

Some rival brokerages say Robinhood’s app design has put pressure on them to build similar products in an arms race for young customers.

But they caution that oversimplifying the app experience means users are encouraged to focus on the short term, without always recognising the risks of their trading decisions. 

“Sometimes people complain that our app is too complicated because it is when you compare us to a Robinhood set-up,” said Thomas Peterffy, founder and chair of Interactive Brokers. “We are focused on a more sophisticated investor. … Some interfaces are getting too dumb, and they attract people who [shouldn’t be trading].”


$6.5 million

Sam Bankman-Fried's FTX has been wading further and further into the sports world, including in the World Series. But the crypto exchange already has its eyes set on the NFL playoffs, having recently snatched up a Super Bowl ad. And while FTX has not disclosed how much it paid, NBC is selling ads to the game for as high as $6.5 million this year, Bloomberg reports


Intercontinental Exchange’s Jeff Sprecher paid $1,000 for a defunct trading platform and turned it into a $75 billion enterprise. This is his strategy for placing big bets by Shawn Tully

All the reasons why Robinhood might be holding off on a Shiba Inu coin listing by Grady McGregor

Meet the other dog-themed crypto challenging Dogecoin for dominance by Declan Harty

Shiba Inu crypto has already topped the market cap of these companies by Chris Morris

Coinbase looks across the pond for inspiration by Lucinda Shen

Every single Bitcoin transaction—even buying a latte—consumes over $100 in electricity, says a new report by Shawn Tully 

Robinhood hints retail-trading slowdown may last until year’s end by Declan Harty

‘Such a different asset class’: How crypto can fit into your overall portfolio by Jessica Mathews

Crypto project Worldcoin wants to give you coins in exchange for an eye scan by Marco Quiroz-Gutierrez

How to be ‘digital first, but not digital only’ by Sheryl Estrada

The latest meme stock in the Trump SPAC wave: Phunware by Jessica Mathews

(Some of these stories require a subscription to access. Thank you for supporting our journalism.)


This social media company is so meta. First it was Facemash. Then TheFacebook. Then Facebook. And now, Meta. In a widely anticipated move, Facebook changed the name of its parent entity to Meta to better reflect the vision of CEO Mark Zuckerberg has for the metaverse—a term that refers to the alternate digital reality that techies believe is ripe for exploration in Web 3.0. But the word Meta, for as much as it is a sign of the future, has a rich history in its evolution from prefix to the name of a social media giant that includes old keyboards at MIT, neuroscience, and more, as Ben Zimmer wrote in the Boston Globe way back in 2012. 

This issue of Fortune’s The Ledger was assembled by Declan Harty, who you can follow here.

This is the web version of The Ledger, Fortune’s weekly newsletter covering financial technology and cryptocurrency. Sign up here to receive future editions.