Syndicate Turns Ethereum Wallets Into Investing DAOs for ‘Just the Cost of Gas’

Decentralized autonomous organizations come in many flavors, but one thing remains the same: DAOs need to raise and manage funds, whether that’s to buy an NBA franchise, the Blockbuster brand, or the Dune Bible.

Syndicate—a decentralized investing protocol and social network for creating DAOs that launched in August 2021 with funding from Coinbase Ventures, Ashton Kutcher’s Sound Ventures, and Snoop Dogg Ventures, among others—thinks it has a fundraising method that’s as easy as connecting a MetaMask wallet.

It announced yesterday the public beta of its Web3 Investment Clubs. Syndicate says any Ethereum wallet can be transformed into an investing DAO using the product for “just the cost of gas,” Syndicate says, referring to the transaction fees for using the Ethereum protocol.

Traditionally, an investment club is a small group of individuals who pool money and resources to invest in assets or buy property. These groups typically meet periodically to discuss new ventures and review how existing investments have worked out.

That meshes nicely with DAOs, in which groups of people from anywhere can pool their crypto and use their own governance token to determine how funds will be spent. Several DAOs have taken on the mantle of becoming Web3’s version of venture capital, among them Neptune DAO and BitDAO.

Syndicate’s Web3 Investment Clubs run natively on Ethereum using an ERC-20 infrastructure, allowing clubs to take advantage of Web3. For instance, they can leverage Snapshot for on-chain governance, automate token distributions, deliver token airdrops to new users, and recognize contributors. Syndicate says there are plans for adding other blockchains in the future.

Thus far, the project has been able to diversify participation. “More than 50% of the DAOs launching investment clubs on Syndicate are either women-led or all women DAOs, including Awesome People, GCR, Eve, The Council DAO, We3 DAO, Women in VC DAO, and more,” Syndicate co-founder Ian Lee told Decrypt via email.

How to start an investment club

To start an investment club, founders will need to connect a wallet, for example, Metamask, to the Syndicate network. Deposits are collected in that wallet, and any existing assets in the wallet will be visible to all club members. After the investment club founder chooses a name, the platform will assign a club token symbol.

Next, the founder will enter how much USDC, currently the only cryptocurrency the platform supports, they wish to raise. The amount entered will, in turn, be paid out to members in the club’s token on a 1:1 basis. The founder will then select how long deposits will be accepted, giving time for others to join the club.

The founder will then determine how many members can join the investment club; 99 is the max. “For investment clubs to maintain their status in the US, they most follow a number of requirements including having less than 99 members,” Lee explained. After accepting the terms of service, the founder can launch the investment club.

Syndicate says Web3 Investment Clubs can use their assets to invest in tokens and NFTs—as well as off-chain startups and assets. By pooling their investments, members’ money can potentially go further. Lee says club tokens are not designed to be used as an instrument for investment—they’re non-transferable and used only for voting and governance purposes.

Partnering with Syndicate is Doola, which will enable DAOs that use the protocol to create legal entities, open bank accounts, and issue K-1 tax filings. Syndicate says it has also partnered with Latham & Watkins LLP, which will provide free standardized DAO legal documents for Syndicate investment clubs, which can be sent, signed, and collected via the Syndicate web tool.