Being a young teen in the 2000’s meant a familiarity with the collectible card phase. Whether it was Pokemon cards or football player ones, if you didn’t own a trading card album, you most probably had at least heard about them or had seen them before.
It was most exciting when you were able to gather with friends or other collectors, pooling together your money to be able to buy the most lucrative pack, or trade cards for one you so wanted. Working together with your friends, you would collectively decide which card was best in your arsenal, and trade or buy accordingly.
Now, more than a decade has passed since this fad, and long gone are the days of Pokemon or FIFA cards (at least as a general trend, there still are diehard fans!). However, something new has replaced this group buying collectible trend, along with making it web3 and decentralized – Collector DAOs. Let’s understand how to fractionalize NFTs collectibles.
What is a Collector DAO and how do they work?
A collector DAO is self-explanatory – a DAO that collects things. NFT collectibles have taken the world by storm, and sometimes range from thousands of dollars to hundreds of thousands of dollars – not everyone has the money for that! Collector DAO’s aim is to help solve this problem, allowing members to pool money together, to be able to buy NFT together and ‘co-own’ the pieces through fractionalization. Normally these Collector DAO’s purchase NFT’s based on a set goal or vision. For example, one of the most famous and well-known examples of a collector DAO is PleasrDAO, who’s goals focus on ‘culturally significant pieces with a charitable twist’, donating much of sales and profits to different causes.
Ownership of the NFT’s among the members is distributed through tokens, and members are able to vote on the governance of the DAO through an internal meeting system. This ownership is normally through fractionalization, where an NFT collectible supposingly “non-fungible” is able to be liquified. With this collective ownership, every member of the Collector DAO gets to have a say in the direction of the DAO, including donation of profits or buying more NFT together.
How did Collector DAO’s start?
DAO’s started to gain popularity in the media in early of 2021, similar to the hype and release of NFT’s. It was at this time that the exorbitant prices of NFT’s became a turn-off to many, with the barrier-to-entry being too high for most. This is when the idea of collective ownership became more well-known. Instead of buying the piece individually, groups of individuals could pool together funds and collectively own the piece. Smart contracts could link ERC-20 tokens to ERC-721 ones, and members could own a piece of the NFT through fractionalization. These “Smart contracts also secure and store the data behind fractional ownership and anyone can see that the NFT has fractionalized ownership.” in a more technical perspective. PleasrDAO utilize collective ownership and govern their DAO in a similar way, which you can read more about in our article: PleasrDAO Paving the Way.
Fractionalization doesn’t just help with the purchase itself, but can help bring more liquidity to such NFT’s. There are multiple websites to help fractionalize NFT’s, like uni.cly or NFTFY where users can use tokens to buy and sell their fractions. Imagine trying to sell an art piece that is worth millions of dollars. To find one person or one gallery to buy your piece, negotiate prices, figure out the transaction process, delivery is a hassle, and the illiquidity can make buying such a piece an enormous risk. Now imagine cutting up that artwork into tiny little pieces, and auctioning them off piece by piece – it’s still the same piece, but now less risky to purchase.
Collector DAO’s enable this process of fractionalization in a simple and effective way. Collector DAO’s usually purchase more than one NFTs, thus the fractionalization is then not limited to a single NFT but a portfolio of NFTs. This helps web3 collectors and enthusiasts to diversify their risk through collective ownership.
What Collector DAOs are out there?
With the insurgence of NFT’s, collector DAO’s have become aplenty, some open to public joining and some private.
The Collector DAO’s out there range in purpose and mission, along with inclusivity and selectivity. Some, like PleasrDAO and others, are not open to public members, but instead are limited. Most, like ArtsDAO, NoiseDAO, among others, are open to the general public and follow a certain theme to buy NFT together.
For a semi-comprehensive list on what NFT Investment Funds and Collector DAO’s there are, you can visit here . You may be able to find a Collector DAO out there that speaks to you!
The Future of Collector DAOs
Despite the cold of the current crypto winter, NFT collectibles and digital art are still prominent and continue to be more innovative, and with that, more expensive. However, this is just the start of digital assets as the world expands into the Metaverse and beyond. Possible future implications for Collector DAOs could mean collective ownership of plots of land within the Metaverse by having fractionalization on the land NFT to grant partial ownerships. Other than just the Metaverse, how far could fractionalize NFT goes is depending on the utilization of NFTs. If the world speeds up the digitalization of actual real estates, bonds, jewelry certificates, and more with NFT, the demand for fractionalized NFT will go alongside.
If not digitalize, Collector DAOs though don’t have to just apply to digital assets however. While the specifics may be silly, the sentiment could certainly apply. Collector DAOs could purchase real world arts, and possibly be the owners of physical art galleries, where pieces are chosen through the DAOs voting process. Whilst the legal and operations may be a tricky beat to tackle, finding an agreed upon location to house the piece, its selling price, along with other general decisions can be decided upon within the DAO. An example of something similar is the Constitution DAO where the members were able to raise enough funds to buy a version of the United States Constitution, a collective ownership of the constitution. Though able to collect ample money, they weren’t able to obtain the version despite the fact. This example shows the collective power of a group with a set vision, especially with the governance of a DAO. A lot of unknowns are awaiting to be explored.
The applications of the DAO world are truly limitless, and buy NFT together with Collector DAOs are no exception. Whether you want to collect a little image of a smoking monkey, or a Rene Magritte piece, you can do it all with a Collector DAO.
How to start your Collector DAO? Buy NFT together with friends.
It might be frightening after reading all the descriptions about fractionalizing NFTs above. But starting a Collector DAO and buying NFT together with your friends through collective ownership is actually not that hard. Just… start it on ADAM Vault!
ADAM Vault is a decentralized treasury platform for DAOs, a simple and comprehensive no-code tool. Collector DAO creators could focus on their governance and NFT collectible portfolio. ADAM Vault supports multiple governance settings from DAO token and deposit entry requirement to both 1-account-1-vote or 1-token-1-vote for proposals. Factionalizing NFT has never been easier on ADAM Vault – just put the NFT inside the treasury you created for the collector DAO, NFT will be automatically factionalized. The backend system of ADAM Vault includes an accounting module that rebalances the holding ratio for you. Buying NFT together with your friends is just this easy! To learn more, go to our website.