Ethereum has become an absolutely game-changing technology by using blockchain technology. It's, birthed the world of new possibilities that are positioned to disrupt countless industries that we know today.
We're already, seeing this with decentralized finance or d5, and also nfts, and in this video i want to talk about. Eth is uniquely positioned to completely disrupt startup, investing, as we know it. This can completely change the game for venture capital, open up the door for anybody to invest in new projects and get the kind of financial returns that were typically only available for a select few.
I'm gonna talk about that. As a blockchain developer, who works with ethereum protocol on a daily basis and also an east holder myself, so before we get into that, you know if you're new around here, hey i'm gregory and on this channel i turn You into a blockchain master, so if that's, something that you're interested in then smash that like button down below and subscribe to this channel, and if you want to become a blockchain master step by step start to finish.
Then, head on over to dappydiversity.com forward slash boot camp to get started today, all right, so let's. Get into this. Let's. Talk about ethereum is you know completely disrupting startup investing venture capital.
So basically, there are a few problems with like startup investing right now and also the venture capital space. You either need to have a lot of money or you need to have the connections in order to do it, and sometimes honestly, you really just need both and there's also.
You know this other big problem of startup equity being really hard to exit, so you own part of a startup. Sometimes it can be really challenging to sell that, even if you have a lot of money tied up into it and blockchain technology cryptocurrencies, particularly on top of the ethereum platform, can completely turn all this upside down on its head change the game it'S just right for disruption, so how well let's, get the 30 000 foot explanation first and then i'll.
Give you the actual, in-depth explanation in a second so, first and foremost with blockchain, we're starting to see new projects launch as protocols, and these protocols are being governed by things called decentralized, autonomous organizations or dows.
So these are brand new projects that will have a lot of hype around them, but also a lot of utility as well and instead of buying you know, shares in a company. You can buy tokens that help govern these protocols and these tokens will, you know, allow you to have voting power for these protocols.
A lot like you'd. Have you know, shares in a company and the crazy thing about cryptocurrency and defy? Is that you have complete access to buying these tokens? You don't have to have a certain amount of money in order to get into the game you don't have to know the right people to let you into their buddy system in order to buy this stuff.
A lot of these tokens can be purchased on decentralized exchanges or dexes without you having to kyc, and nobody has to really like whitelist you in order to do this. There's, no middleman. It's completely decentralized in this way, and that's, a huge value proposition for average people, because now you're able to get in on projects early and experience the types of returns that were typically only possible to Vcs and people with lots and lots of money to invest with the right connections.
All you need is a blockchain wallet, the willingness to learn and make good decisions, and this will give you the informational advantage that you need to do this type of investing and, of course, also probably a little bit of you know, luck all right.
So let's, break this down step by step, so you can see how this actually works. So let's start off with you know the new sort of company, so protocols are replacing companies in this case. So what do i mean by that? Well, basically, we're, having new decentralized finance projects or d5 projects that are powered by smart contracts that live on top of a blockchain.
Okay, like ethereum, for example, that's, where a vast majority of the d5 activity is happening. So one example is compound finance. Okay, so you can go to the compound finance app. You can see uh how it works.
It basically works like a bank in the sense, if you deposit, cryptocurrency on one side, you can earn passive income reward in term in terms of interest here and then you can take out loans. On the other side, there's, lots of other defy apps out there, but that's just one example.
Okay, so compound, like i said it's, a protocol, it's, powered by smart contracts. It lives on top of a blockchain, so compound uh introduced their own governance token. Last year, the comp token, okay, you can see this on any uh cryptocurrency.
You know price website, whatever you want to call it like coingecko.com, coinmarketcap.com and the comp token. What it does is it actually allows you to govern the protocol, so we have proposals about what should happen with a compound protocol.
How should money be spent lots of governor's? Proposals are added and the people who hold the tokens can actually vote on these proposals. You can actually see that here on the compound finance website.
If you click on the vote tab and if you want to see all the proposals, you know you can uh check out here and then you can walk through and see how the entire you know, governance proposals, work and that's.
Just one example of you know how the compound token can be used uh in governance. So what is this in this case? Well, it's, a decentralized autonomous organization. It's a dow. The compound protocol is a set of smart contracts that actually run and facilitate the savings and lending activity.
But then you have this dow, this decentralized autonomous organization that's, allowed to pass proposals that actually govern the protocol itself and the people, who are token holders have a say in what changes happen.
So this is actually value to the cryptocurrency itself and its incentive for you to hold comp tokens. You can vote on governance proposals for the compound protocol itself, so this is really important to understand because some people say oh yeah, but you can't.
Compare cryptocurrencies to like startups or traditional venture capital, because the cryptocurrency doesn't represent anything doesn't represent shares in a company all that kind of stuff. But in this case the compound governance token actually represents voting power for the compound protocol.
Now i realize that's, not actually one-to-one ownership, equity of the startup itself. It's, not a perfect analogy, but it does represent some real world value and determining what happens to the protocol.
So there's, an incentive to hold the token we see there's. Other crypto protocols like uh, urine finance, for example, or the wi-fi token okay. This is another defy app that has a governance token, that's.
What wi-fi is you see? The price has absolutely jumped in the past several days here, and so this is a really common pattern. Where you're, seeing new protocols launched, they have governance tokens, and this, you know, represents control for the actual protocol itself and one really common thing that you're.
Seeing is new product protocols launch and then actually transitioning to where a dow owns it over time. So you might see uh, you know centralized control at the beginning. Just to set the application up.
You know get the token out there make sure that everything's running smoothly. It's, some it's kind of maybe good in the sense that initially, you're. Doing that, of course, that's going to have a lot of trust involved, you have to trust that the team's, going to act honestly and not rug.
Pull people's funds, all that kind of stuff. So it's, definitely riskier in the beginning, but sometimes that centralized control helps get the project started and then you can actually transition the project over to a dao.
You burn the user control admin keys. We've. Seen this happen a number of times for d5 projects and now another crazy thing about dowels. Is we're starting to see them as recognized legal entities? So we saw this earlier in a wyoming, so state lawmaker explains wyoming newly passed, dow llc law.
So wyoming has become the first state to clarify the legal status of decentralized autonomous organizations or dowels. So basically, what they're saying here is wyoming governor signed a new bill allowing wyoming to recognize dows as limited liability corporations or llcs.
So this is huge and i think it's, the beginning of something big to come down the road i don't. You know totally see all the implications of this right off the bat it ' Ll probably take time to know about it.
You know if you're a lawyer. If you have insight into the situation, i'd love to hear your thoughts on the comment section below, but one really cool outcome. I can see this is like dallas being able to own property to have rights under the law that normal businesses do.
That files llcs - and i think when we had this direction, we opened up a world of possibilities, for you know what can happen with blockchain technology, and so, if you want more clarification on exactly what a dow is and what are the possibilities of dowels, you can See this here on the ethereum.
org website, so we talked a lot about. You know how dallas can replace traditional startup, investing and change the game for venture capital, but there's, a lot more. You can do with it for sure. So you can see here uh, you know like: why do we need dao? So starting an organization with someone that involves funding and money requires a lot of trust in people you're working with, so this is trust minimized.
This is decentralization that's; the ethos that we're talking about here. The dow is governed by code. It's governed by smart contracts. So you, you know, code is law in this situation. Whatever the code says, that's, what you're able to do so.
You can see a comparison here, uh a dow organization structure versus a traditional organization, whether it's, you know, uh, it can even be a non-profit doesn't have to be a startup, it could be anything or that could that you Know spends money, so a dallas organization usually flat and fully democratized, so that's.
The decentralized ethos versus a traditional organization, usually hierarchical, okay, so dow uh voting required by members for any changes to be implemented. Organizations, depending on the structure, changes can be demanded from a sole party or voting may be offered all right.
So for dow votes are tallied and outcome implemented automatically so that it's, trust minimized. Also, dao services are handled automatically and all activity is transparent and fully public. So again this can be for charities.
It could be for a freelancer network ventures and grants. Like we talked about a minute ago. You need a token to be a member of adele, just like we talked about with token voting for a protocol. There's.
Other models like share based membership, which is a little more complex and permission. You can see that with mult now here, and so this is a great resource if you want to just browse and see more examples and see what's totally possible with decentralized autonomous organizations or doubts.
But the use case that i'm for sure most excited about is protocols replacing traditional companies. We're, seeing that with legal status, recognized here in wyoming and how you know we can in a more decentralized way, remove the gatekeepers and make it easier for individuals like you or i, who may not have all the money in the world to Be able to actually buy into these at a really early phase.
You know something that's normally only possible for vcs, with lots of money and amazing connections or both you know we can do this and hold. You know part of the voting power and get the kind of returns that were not really possible for many people before something like this, so that's.
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