Reasons why DAOs fail

According to DeepDAO, the total treasure managed in the last week increased by $387.4 million in the DAO sector. Also, in the same period, more than 20,000 adopters started to hold governance tokens. 

As you can see, DAOs are growing drastically in 2022. However, four reasons will possibly bring many of them down. In this article, you will see an analysis made by an ex-employee of Alliance DAO, which made a very interesting conclusion about this.

Not All DAOs Will Be Happy

In his Twitter account, an ex-employee of Alliance DAO made a thread about the current status of DAOs and brought to the table four possible reasons that can make many DAOs get out of the league. Here they are:

  1. Regulations in DAOs

One of the most important bottlenecks that decentralized organizations face nowadays is regulations. This sector is new and governments are just starting to adapt their laws. As a result, many DAOs are having a lot of trouble adapting their business, which affects negatively their monetization mechanisms.

In other words, no regulation, no money.

2. Product Offering in DAOs

Another critical part of making decentralized organizations that can grow consistently over time is to have a clear product strategy. People need to identify what is your DAO offering to them. Therefore, DAOs need to have a robust marketing and product design department and develop an effective product and content strategy. This way, DAOs can grow in the long term.

3. Developing a Strong Community Around Your DAO

We all know that developing a strong community is a critical milestone for any crypto organization. However, for DAOs this is what they were made for. Without users, they are simply useless.

However, according to this analysis, DAOs need to make sure that they are building a specialized community that will use their product/services over time. In other words, find a way to build their loyalty.

4. Having Exposure

People working within the crypto ecosystem know that the first step to building a community is to attract attention. However, this attraction dissipates in many cases when decentralized organizations don’t have a consistent communication plan.

As a result, it’s very important to gain more exposure in the ecosystem with a professional strategy.

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