The Challenge of Protocol DAOs — And A Better Way Forward
Generally speaking, every innovation comes in the form of a double edged sword. More precisely, throughout history, every major achievement brought significant opportunity to humanity but also posed a great risk: nuclear energy and AI being just 2 examples. Both can tremendously help us but can also become really problematic if exploited with ill intentions.
This polarity can also be found in the blockchain realm of digital investment. On-chain venture clubs and DeFi protocols are showing the world how investment can reach a never before seen potential. While there are plenty of reasons to be optimistic about, there are also big challenges on the way. Security, regulatory uncertainty or technical limitations are just a few issues of the many an independent DAO can face.
In recent years, some of the most reputable decentralized investment clubs fell victim to the above mentioned problems — signaling that protocol DAOs don’t come without flaws. Fortunately, innovation is always the answer and with recent advancements, Unique Venture Clubs is offering a platform where digital investment has found a home.
The recently established dApp is offering a superior medium where you can join or create an on-chain venture club and benefit from fail-proof security, ground-breaking technology and the best tools modern investors can leverage to their advantage. Going forward, the digital investment space needs an open discussion about the obstacles on the road ahead and the best solutions and partners for staying safe and profitable.
Protocol DAOs Don’t Come Without Flaws
As soon as the digital investment space gained traction, the first problems broke the silence. In recent years, several DAOs and DeFi platforms faced the consequences of acting independently.
In the brim of the 2020’s pandemic, with the occasion of the big sell off that took place on 12 March, another organization called MakerDAO faced what was called “Black Thursday”. The price of ETH fell 43%, leaving 4.5 million DAI (the DAO’s native token) unbacked by any collateral. Before they could realize it, the DeFi community lost millions, leaving users in peril. The happening can be traced to a series of chain events. ETH crashed and the Ethereum network was suddenly overwhelmed. Gas prices increased considerably and caused the price oracles to fail. In consequence, the price instantly decreased, causing collateral debt positions to be liquidated immediately. This allowed for some liquidators to walk away with $8 million worth of ETH essentially for free, leaving others with 100% loss of capital.
More recently, the Terra Protocol crashed in May 2022, leaving behind a shade of doubt. Terra’s native token LUNA used to be burned as UST stablecoin was minted. To retain the 1:1 USD peg, it also worked the other way around: as more UST was burned, LUNA was minted.
What was believed to be a perfectly stable protocol started crashing on 7 May because of an organized manipulation that put pressure on the algorithm by swapping extremely large sums of UST for other stablecoins on the “Curve Pool”.
In the following moments, Terra failed to maintain a stable system and an unfortunate downward spiral followed. UST went down to less than $0.15 and LUNA became effectively worthless due to extreme quantities issued to the market.
The above mentioned examples are just two unfortunate events that showcase some of the flaws and drawbacks of investing independently with protocol DAOs. While there are several other similar cases that took place recently, let’s focus on what is causing these issues and how modern investors can venture in the digital on-chain investment space by having their back secured and looked after.
Digital Investment Needs A Native Space
Digital investment needs a secure and performant space where the above mentioned problems are avoided altogether. Moreover, venture clubs can greatly benefit from the right partner that offers premium tools and a platform that channels growth.
During the last twelve months, Unique Venture Clubs has grown into a performant platform where investment clubs can act to their best ability. Investors who are coming together to buy and manage assets can now do so in a secure environment, by leveraging the best tools to their advantage. Safety issues are mitigated by the performant Solana blockchain hosting the Unique Venture Cubs dApp. Solana is also the fastest decentralized ledger network and the fastest growing crypto ecosystem, making it the ideal distributed ledger for investors.
The blockchain layer also has some of the most optimum standards for NFTs and governance models. Running a club and managing finances are now streamlined operations that yield the best results to its users.
The Way Forward for On-Chain Investment
Let’s see how protocol DAOs function and serve their members. First, they need some of the best programmers to write the code for the application. Even so, the independent venturers are not protected against cybercrime. Second, members who invest need the legal framework to shield them from liability regardless of how things may go wrong.
Another equally important aspect is for members to have adequate governance and voting rights. In some cases, the concentration of power in the hands of a few can pose problems and hinder the collective’s investment path.
Modern investors need a safe platform where they can focus on performance and not worry about security issues and lack of tools. With all innovations they are pushing forward, Unique Venture Clubs offers the best investment environment for The New Internet.
It’s the internet of smart money, where users can act with confidence in a transparent medium. Members can join or create venture clubs and focus on trading crypto and NFTs, while their club is hosted in a superior investment platform that requires no code to operate. With role-based governance and several voting configurations, Unique Venture Clubs can serve any investment purpose for people all over the world.
A better space for investing in crypto and NFTs is pushing smart investors forward. Without security, innovative tools and a performant framework, digital investment cannot achieve its ultimate potential. A big part of the success is in choosing the right partners. While now it is easier than ever for people all over the world to gather and collaborate, it’s important they do so within a performant platform like Unique Venture Clubs, that can boost and safeguard their digital venture effort.