DAOs helping scientists: Underfunding solved by decentralisation
No borders, no problems
Before blockchain technology came to the scene, scientists based at institutions in states with higher GDPs had more opportunities for sufficient funding and bigger research potential. This added up to the phenomenon of ‘brain drain’ where scientists from less-developed geographical areas migrate to wealthier areas.
The scientific community spends a lot of time competing for funds; a large portion of these funds ends up in the hands of well-known scientists, along with tech giants and big pharma companies.People who are responsible for achievements that benefit many parts of our society are caught in a hyper-competitive ecosystem which drains out energy and creativity.
On the other hand, decentralised autonomous organisations (DAOs) do not adhere to geographical borders, enabling them to be driven by scientists rather than the financial interests of corporations, countries and universities as main funding bodies of scientific research.
To understand how DAO members can promote the development of the science world, it is important that you are aware of DAO’s main elements. To learn more about DAOs, check out this article: 'What's a DAO?'.
DAOs are still in their early days, yet their potential to aid underfunded scientists and projects has been acknowledged. For example, the Nature Science Journal published an editorial in its Nature Biotechnology section suggesting that DAOs are a revolutionary new method for research scientists in underfunded scientific fields to create communities and raise funding that might not be otherwise available.
However, DAOs are not just a funding body, but a community of individuals with a common goal. In a DAO-based research scheme, project proposals, research scheme, fundraising and further feedback can all be handled by the same decentralised governing body.
Decentralised autonomous organisations have been successful in rapidly raising funds in the past. For example, when Ukraine needed funds for its defence, the community interaction was fast and fruitful. To find more about this, read this article:'Ukraine DAO: How a DAO is funding the Ukraine defence'.
What about Big Pharma?
In the traditional biotech space, projects are led by a handful of well-known names in the industry. Centralised big pharma companies monopolised the market which led to the stagnation of innovation. Big pharma companies often include a so-called closed source culture, lacking incentives to work in a transparent and inclusive environment.
DAOs present a shift towards a flat hierarchy and transparency. Instead of a closed source culture, DAOs bring to the table an open source ecosystem to their members using a token-based structure.
Additionally, DAOs want to fund projects that big pharma refuses by being more open to non-conventional research such as longevity, cryo-preservation and hair loss treatment. All of these are being funded by the DeSci community.
However, instead of looking away, big pharma companies decided to jump on the DeSci bandwagon. For example, VitaDAO closed a $4.1 million fundraising round with Pfizer and Shine Capital, along with capital from Web3 organisations and longevity enthusiasts.
How could it work out?
Simply – DAOs are permissionless, member-driven entities that utilise smart contracts and blockchain technology. It is about providing a decentralised governance structure where decisions are reached by voting.
DAOs are typically funded by individuals and organisations interested in the members’ common purpose. The more a decentralised autonomous organisation obtains public interest, the more funding it gets.
DeSci DAOs are mainly driven by a fusion of public attention and domain experts. Since biotech proposals are complex, domain experts play a significant role in vetting projects and investments. Once the vetting process is finished, community members are gathered to vote using tokens.
The general workflow could become faster and more efficient since project proposals are sent to the DAO, and each DAO member gets to vote whether a particular project should be funded.
Using expert guidance and perks such as transparency, accountability and decentralised governance, DAOs can provide a flat hierarchy and informed decision-making.
Thanks to blockchain technology, each transaction is recorded and transparent, along with public results. This amounts to the ethos of any scientific research and eliminates sources of bias, establishing DAOs as a crucial platform for the development of science.
Which issues can decentralised autonomous organisations (DAOs) resolve?
DAOs combined with scientific research have the potential to address a number of current problems faced by science such as funding, transparency and accessibility – all by leveraging advantages of blockchain technology. Let’s take a look.
A second chance for traditionally underfunded scientific fields
One of the most interesting aspects of DAOs’s funding scientific projects is the fact that they want to finance projects regarding rare diseases. Big pharma companies didn’t have a lot of incentives to take on such projects due to their small potential market. For example, rare diseases such as schwannona, a sort of nerve tumour, along with the genetic condition known as alkaptonuria affect a few hundreds or thousands of people across the US.
However, projects that are broadly underfunded are not only associated with rare diseases. For example, DAOs started to handle projects regarding the use of synthetic biology for climate change applications and women’s health issues.
Big pharma has mainly been interested in conducting basic disease research, adding up to broad gaps in researching rare conditions. DAOs provide stakeholders and affected people to raise funds for scientific research. This is beneficial in two ways; affected patients are enabled to participate in drug development, and gain a monetary stake when the project is finished.
IP-NFT in the hands of token holders
After research is done, results are provided transparently to members of the community. As the project continues, it can end up in IP rights; sort of as a patent owned by the DAO and governed by token holders.
For example, imagine a particular DAO developing a drug with real-world utilises. It could be owned by each member holding governance tokens. In other words, tokenization fractures an asset into parts owned by individuals. This makes high-value investing accessible to the wider public.
In case the DAO decides that the IP could be commercialised further, it could generate more revenue and be fed back into the DAO for the purpose of funding other scientific project.
MoleculeDAO has created a new legal primitive for intellectual property (IP) ownership called IP-NFT.
Crossing the Valley of Death
DAOs have the potential to overcome the ‘valley of death’ phenomenon associated with the world of biopharma. In simple terms, when a drug is discovered or research becomes more akin to product development, the source of funding should change. It is known as a critical point where innovation fails and many potential products are left to die.
The valley of death phase is typically associated with universities; DAOs can provide stronger alternatives for project funding at universities. By providing an active and involved public, many products with real-world utility could overcome the valley of death.
Are there any setbacks?
Regulatory risks come with the territory- the world of DAO fundraising is still a grey area. Given a blurry regulatory status, potential investors are cautious when dealing with the crypto world. Fearing a sudden regulatory crackdown, investors and scientists still need to obtain trust in the decentralised world.
The legal status of DAOs has been changing for the better. Even though it is a type of organisation that hasn’t been seen before, a number of states decided to give them a place within their traditional legislation. You can read more about it in our ‘DAOs: In Search of Legal Personality & Limited Liability’ article.
On the other hand, due to the lack of regulatory assurances, sketchy projects accompanied by scammers appear from time to time in the crypto ecosystem. At the root of the crypto movement lies transparency, but a big part of the community is still not ready to trust the trustless world of blockchain totally.
On the bright side, most science-related DAOs are trying to overcome these issues. For example, the Molecule DAO implemented a system where a research proposal is first examined by a panel of experts. Once it has been approved by this panel, the project is presented to DAO members. Such a mechanism is set in place to avoid misleading members and preventing perpetrators from playing the system.