So far, NFTs have dominated the cryptocurrency conversation in fashion. But other innovations are beginning to attract attention due to the implications they represent for the industry. In particular, DAOs present a new way of functioning for the industry.
DAOs, or decentralized autonomous organizations, are digital communities with democratized governance that derive from the crypto-community. And they could have revolutionary applications for fashion. As the industry engages more and more in the Web3, or the next stage of the Internet, DAOs could form the next stage of governance and revise the current industry hierarchy that still relies heavily on gatekeepers. They are formed by a group of people who want to co-create in a community, converge and increase the value of their individual tokens and the value of the community DAO. In short, they come together to invest, although the potential of DAOs extends to other areas where mutual decision-making would be beneficial. DAOs are also autonomous and operate outside a centralized governance structure. They are governed by smart contracts developed by all of their members.
As companies like Instagram and Meta are more dependent on content creators using their platform for continuous content production, the influence and power of the industry are changing. The idea of democratized control of a platform by a community, as allowed by a DAO, could lead to areas of fashion being governed by one of these communities. However, the idea is still addressing some opposition.
Megan Kaspar is a member of Red DAO, a decentralized standalone organization that focuses on digital fashion shopping. Last year, the group became the best known DAO after purchasing many of the items from Dolce & Gabbana NFT to launch. According to its ledger, Red DAO currently holds approximately $ 15 million worth of Ether in its account. “Red DAO was created by a group of like-minded individuals and companies who envisioned an opportunity in digital fashion and beauty,” said Kaspar. “The bylaws, governance and structure they were decided when we legally formed the entity and then programmed it into the Ethereum blockchain. Other members share an interest in collecting digital fashion and include Danielle Loftus, founder of the digital fashion platform This Outfit Does Not Exist, and Katya Kovalenko, a data designer.
Although Kaspar said Red DAO has chosen to be a long-term community focused on broad uses, DAOs can also be used for single purposes, such as buying a baseball team or investing in an asset that should be liquidated quickly. But the idea of merging cryptocurrency to create lasting collections of digital items is only one of the purposes they could serve. For now, many DAOs are still in a nascent stage when it comes to infrastructure, and the market is poised for more tools to build them. Kaspar is aware that people still have reserves on cryptocurrencies, but she said she did see opportunities in the digitized market.
Tribute Labs, a simpler DAO creation framework, helped with the formation of Red DAO. He has also worked with the digital streetwear brand RTFKT, which recently joined Nike, on Neon DAO, focusing on the metaverse and digital fashion acquisitions. Tribute Labs currently controls about $ 20 million worth of Ether.
These applications are just the beginning of what DAOs can do for creators and organizations, where the balance of power is affected. Community voting in a DAO, for example, is set to unit the evolution of the character of the first digital influencer, Lil Miquela, who is now part of the startup NFT Dapper Collectives.
Marieke Flament, CEO of the NEAR Foundation, a Swiss non-profit organization focused on blockchain, noted the opportunity in the community approach of DAOs. “In large DAOs, the functions may be different. Individually, we all tend to take on roles, so it could be that, in one DAO, you want to lead more and propose things, and in another, you just want to vote and have voting rights. The beauty is that you could almost choose the role to play, depending on the DAO you are involved with. It redistributes the way we can make decisions, rather than [following a] traditional business structure, where you have to go through managers and departmental levels “.
Speaking about the role of DAOs in fashion, Kaspar said he sees a bright future thanks to changes in the way the industry will be controlled and decisions will be made. “DAOs are a new form of business structure that uses the capabilities of blockchain technology, such as immutability, transparency and decentralization,” he said. “They are business 2.0 structures, from the economy, which are completely transparent to the statutes that cannot be changed without transparency among the stakeholders”.
Enabling transparency within fashion supply chains has been another big topic of discussion among insiders over the past year. DAOs allow full transparency between your accounts and between your stakeholders, allowing information to flow freely within the space. Fashion as an industry is still cautious about the crypto space, yet many of its problems stem from a lack of transparency and choking on the control of resources and opportunities. Without changes in fashion operations and governance, the industry will not be able to move as fast as it should to take advantage of the pace of Web3.