Is the DAO unable to fund big projects?
Let's assume you are a holder of the DAO tokens. The basically represent
ownership of some of the ETH stored in the DAO's "vault" and allow you
to profit from startups that raised money from the DAO. So you are
exposed to ETH with very little chance to liquidate your DAO to ETH
(they are not really locked away but it seems to be not very easy to get
back all of them). Anyway, you have exposure to ETH and I bet that most
people that "invested" into the DAO are still long on ETH.
Now, a new startup seeks funding through the DAO. That startup initially
has real costs from labor, infrastructure, or whatever that they need to
pay in fiat. Since the DAO can only pay their "partners" in ETH (because
that's all they have), the partner will need to sell ETH to get fait.
Now, ask yourself this question: Why would I want to give a startup ETH
so that they can sell them, depress the ETH price and build a company
WHILE I am still long on ETH?
While the idea may work well for small projects (i.e. a couple k$), I
don't see how this could ever work for something that asks for a couple
M$.
What are the more than $100M worth of funding worth if they can't use
them? That money is stuck I personally don't see how any rational (i.e.
greedy) individual would ever approve the funding of a company/idea that
needs to pay their stuff in fiat?! Can you?
I suspect that if the DAO was truly decentralized, this would be a problem. But eth follows a model by Consensys wherein the devs are paid not by the DAO but by the VCs with large sums of funding accumulated in eth (that they likely have large amounts of).
In this case, it would seem to me that the DAO funding structure will be more of a marketing gimmick (that will not be abandoned at any cost---especially when DACs (DAOs) exist that suffer similar problems but have no centralized company paying for core development).
All that matters in the end for eth is whether or not there will be enough money pouring into eth to counter the sell off. Winklevoss new fund for eth might help in that arena.
I personally agree with you Xeroc...but then again I have watched Ethereum from the days when it was simply a yellow paper get thrown across all media worldwide---before the yellowpaper even made it into a white paper. That to me says that ethereum has big players in on it (not grass roots like it would like people to believe) who can afford to all work together and lose a bit of money up front to ensure the projects they believe will be best for their bottom line (and future power base) to succeed. It would be worth the hit for such people because if they become the defacto place for smart contracts in the future, the small amount of spending required to keep the system afloat today would be nothing compared to the profits (and power).
It depends on what the investors expect.
The BTS community didn't see funding big projects to benefit from them later as part of their business. But BTS had another type of investors. A lot of BTS long term holders (coming from PTS+AGS) have been attracted by promises of getting shares of new coins, without any impact on their BTS holdings at all. When workers came up, they didn't think a bit about the long-term impact on BTS market, but only tomorrows price of their holdings.
DAO investors know that startups will be paid in ETH and need to cover their costs, so I think they won't act anything like what happened with BTS. If they do, they didn't understand what they invested in.
that is a good point. one has to wonder then if they will struggle in the same arena. being "decentralized" has tradeoffs. Let's hope for their sake that they have listened to all our hangouts and have learned our lessons :)
I agree with xeroc and I think there is a way that bitshares holders can gain now from this buzz. If bitshares holders want to have some diversification in case the DAO increase in value vs. bts they can sell bts and buy the OPEN.DAO or TRANS.DAO but on the same time they can lock collateral and short bitassets. This way if the DAO increase they sell it and have the bts to cover their position. If not then they profit from the short selling of the bitasset. The end effect will be the creation of more bitassets and more bitshares liquidity from the DAO buzz (assuming people are hedging 100% these positions and follow carefully their strategy).
Very good point :)