DAOs or decentralized autonomous organizations are ventures that make organizations ownerless and member-driven. Built on blockchains, DAOs reduce the human effort to maximize a project's output. By leveraging the benefits of DAOs to create efficient business models, ventures have the potential to generate better returns on investments. This article explores why investing in a DAO is an option to consider.

DAOs and their business possibilities

DAOs stand on blockchains and have smart contracts written on them. Smart contracts help automate transactions in a DAO. Smart contracts are programs with a series of if/then statements grouped together to perform various functions automatically, eliminating human input as much as possible.

Since DAO businesses with smart contracts take care of all essential and non-essential processes, any business can potentially benefit from the DAO model.

For instance, an online shopping platform can store inventory details on the blockchain, and smart contracts can keep the details up to date. These contracts can also automatically generate invoices for buyers placing orders online. These self-executing pre-programmed contracts take care of all operational business tasks, reducing process inefficiencies.

In the DAO-based business model, smart contracts combine essential and non-essential tasks using a complex web of if/then statements. The objective is to bring human input as close to zero as possible, ensuring the DAO functions efficiently and essential changes are made independently depending on timely needs.

The DAO business model

DAOs are a desirable investment option, owing to their ability to offset the weaknesses of traditional organizations and protect the business -- without employees, intermediaries, and any central authority.

How can DAO investments bring more revenue?

What makes DAOs a great investment option? To answer this question, let's look at the aspects of DAOs that potentially generate higher returns on investments. Here are the three primary ways DAOs can be profitable:

Tradeable Tokens

DAOs issue native tokens when first built, with which they can execute democratic voting while also using them to share profits and supply liquidity.

The revenue from selling DAO tokens entitles owners to a profit share. Secondly, investors can trade these tokens like shares of stock and profit when the sales price is higher than the purchase price.

Higher profit share

Another significant benefit of DAOs is the higher share of any upside that is allocated to investors. Equity, venture capital, and hedge fund managers keep at least 20% of the profits in traditional models. However, in a DAO, the gain is entirely yours.

Less friction in the investment process

Unlike traditional investments, DAOs benefit from low intermediate charges. The minimal transaction fee and reduced paperwork make the process smooth. Furthermore, the transactions happen fast, regardless of the location of investors and operators. Using transparent protocol statistics, investors can also track their investments in real-time.

How to invest in DAO?

Now that we know how DAOs can generate operational profits and potentially yield token sale upside, let's look at the various ways in you can invest in DAOs:

Invest in tokens

Buying the tokens of a DAO is a sound investment approach since you are granted voting rights on the decisions of the DAO, and more importantly, ensuring that your investment yields profits when you sell the DAO crypto token if the price rises. Furthermore, if the DAO project succeeds and generates revenue, you can earn profit shares.

Do the essential research to determine which DAO crypto token investments might generate maximum returns.

Invest in NFT-based DAOs

Collector DAOs pool funds from members and invest in collectibles such as NFTs. If the NFTs manage to earn a profit, investors keep a share. Such investments have double benefits. For example, WhaleShark DAO is a collector DAO that invests in NFTs. It issues Whale Tokens that investors can buy as investment shares. If the NFTs generate profits, the investors share them. The Whale token also acts as a virtual asset, meaning if the value of the Whale token rises in the global market, investors can get upside from the token price rise.

In today’s environment, DAOs that focus on NFTs are easy investment opportunities to understand and evaluate.

Conclusion

Thanks to the community-first approach, DAO-based businesses will always be focused on the business itself and not on the founder or central authority. With DAO crypto tokens offering a natural way to invest along with the frictionless functioning of DAOs, this is an investment vehicle well worth looking into.