Crypto-Crowdfunded Golf Venture Raises $ 11 Million

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ConstitutionDAO raised $ 47 million to buy a rare copy of the United States Constitution, with token buyers having the right to vote to do with it, well, something with it.

Now, a new DAO has raised $ 11 million to buy a golf course in the latest example of crypto crowdfunding startup entrepreneurs rather than looking for start-up investors, angel investors, or venture capitalists.

It is touted as the latest trend in crypto, with Bloomberg announcing on November 17 – two days after the plan to buy the landmark document at auction crashed and burned under the weight of a billionaire bidder’s wallet – that “crypto crowdfunding fits into the ConstitutionDAO Offer to Purchase.”

CoinDesk, the crypto industry’s largest media outlet, called it the next gold rush.

Crowdfunding start-ups are working. Tracking device maker Tile and VR headset maker Oculus VR started out this way, and tens of billions have been invested in platforms like Kickstarter and Indiegogo.

That said, the ways of investing in crypto can be a bit silly at times – which doesn’t mean they will fail, as Dogecoin’s $ 22.5 billion market cap, fueled by Elon Musk’s tweet, clearly shows. .

This is built on DAOs, or decentralized autonomous organizations. It is the intelligent governance mechanism based on the vote and fueled by a contract at the heart of decentralized finance projects, or DeFi.

See also: PYMNTS DeFi Series: DeFi and DAO Unboxing

This is not the first time that DAO-based crypto industry crowdfunding has been tried.

The DAO structure gained prominence in the crypto arena in April 2016 with the launch of The DAO, a decentralized crowd-funded venture capital fund that would support investor-selected projects. It was a huge success at launch, raising $ 150 million from over 11,000 governance token buyers in less than a month.

A “great experience”

On New Years Day and January 2, LinksDAO sold 9,090 NFT tokens on the OpenSea Marketplace which serve as membership cards in the golf course project.

To be clear, these NFTs do not bring any ownership rights to the course, or even club membership. What they bring is the right to vote on the purchase and design of the course – the goal is to make it a top class – as well as things like prices and rules, as well as the right to purchase a membership and various club benefits such as preferred tee times and discounts.

There is also a members-only Discord channel.

These voting rights will come when the $ LINKS governance tokens of the project are dumped to NFT buyers, the global members who paid 0.72 ether ($ 2,700) getting four times as much as the leisure members, who paid 0, 18 ether (about $ 675).

In an industry where fraud is rampant and where ‘carpet pullers’ – starting a project and running away with investor funds – is a growing problem, LinksDAO has one big advantage: The project is led by one person. well-known and respected in the crypto community, Mike Dudas, who founded The Block, a well-regarded cryptocurrency news and research site, as well as several other successful startups.

Read more: Crypto scams fueled by ‘carpet draws’ compatible with DeFi

The schedule calls for a club purchase in mid-2022, an opening in early 2023, and future club purchases thereafter.

If the business plan of the LinksDAO project is much more detailed than that of ConstitutionDAO (i.e. it has a business plan), it remains very light compared to a traditional start-up seeking venture capital .

This is something Dudas acknowledges, telling Golf magazine that this is a “great experience” that might never see a real golf course open.

He added that the $ 11 million will not even be used to buy a course, but to manage, plan and develop the project.

This process is not very advanced – certainly not far enough for angel investors or venture capitalists to shell out $ 11 million.

It is far? Dudas said he only started thinking about LinksDAO at the beginning of December – just weeks after ConstitutionDAO had a wave of success in capturing the attention of the crypto public.

Back to DAO

DAOs are ubiquitous in DeFi – it’s the only truly decentralized, non-human management method of governance that crypto has found – with virtually every project managed by DAOs or founders intending to turn them into DAOs. .

However, in the case of a lending platform or a decentralized exchange, the basic business plan is well tested.

Which points to another hole in DAO-based crypto crowdfunding: Decentralized investment projects don’t necessarily have professionals scrutinizing the business plan, or even the DAO code itself.

The DAO model relies on knowledgeable members of the community to examine things like coding and smart contract language – sometimes with ruinous results.

See also: Stablecoin Issuer Tether Freezes $ 1 Million in USDT

More particularly the DAO. Launched in April, May and June, community members warned of loopholes in the code. Then, on June 17, it was hacked. About a third of his ETH was stolen, with the thief running away with around $ 50 million.

It was such a disaster for the credibility of both the DAO and even the Ethereum blockchain project – just over a year ago at the time – that node runners voted to hard fork, reverting to a block. pre-theft, which effectively returned investor funds. It was so controversial that it caused a schism, with opponents carrying the original blockchain as Ethereum Classic.

As for The DAO, its token was quickly canceled by various exchanges and the project died with its tokens. Which in a way was a good thing: A year later, on July 25, 2017, the United States Securities and Exchange Commission (SEC) released the DAO report – a posthumous investigation that was the first time that she claimed that initial coin offering (ICO) token sales were in fact securities offerings – an issue that has stubbornly and hampered crypto investing to this day.

Read more: SEC Chairman Wants More Crypto Supervisory Authority

A slice of reality

So what does this bode for the future of LinksDAO?

It’s actually hard to say. In crypto, failure can be successful on exuberance alone. Again, see Dogecoin, a smart contract platform like Ethereum, but with hardly any projects built on it.

See what happened to ConstitutionDAO’s PEOPLE tokens after the auction was lost.

After a botched redemption process, many original investors hung on or sold their governance tokens. The result? PEOPLE now has a market capitalization of over $ 800 million.

Why? Well, there are really only two possible explanations: it is considered a token like Dogecoin, valuable as long as the joke lasts, or there is the core of an investment DAO somewhere in there – if the community of governance token holders is behind some proposal.

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