Messari: Daos.fun, an on-chain hedge fund on Solana

Author: Justin Baba, Head of Research at Messari; Translated by:

Daos.fun went live at the end of September, introducing a decentralized hedge fund model on Solana. Daos.fun has recently attracted widespread attention due to the popularity of the ai16z fund, which is funded by Andreessen Horowitz co-founder Marc Andreessen.

• This unique structure allows carefully selected fund managers to raise SOL from investors and issue tradable tokenized shares (DAO tokens).

• Through a dual-purpose design, fund managers control capital allocation, while DAO tokens provide a floor price, fusing the appeal of speculative memecoins with on-chain assets.

The Daos.fun ecosystem operates as follows:

• Initial Fundraising: Each DAO sets a fundraising goal. If the goal is not met, SOL is returned to contributors, minus a 10% fee. Once the goal is met, the DAO token is listed on a bonding curve powered by a virtual AMM.

• Active Management: Managers are free to deploy SOL funds within Solana. At a predetermined end date, token holders can redeem the underlying assets or trade their shares.

• Profit Distribution and Holding: At the closing of the fund, profits are distributed and the manager collects a preset percentage of returns as a "carry-on" fee.

In DaosDotFun, two main strategies have emerged:

1. Buy discounted DAO tokens: Investors seek tokens that trade at a discount to their intrinsic asset value, expecting appreciation as prices converge with the market average.

2. Exit early for quick gains: Participating in financing rounds and selling tokens after issuance can generate immediate returns, especially in larger financings as demand for tokens initially surges.

Daos.fun pioneered a decentralized hedge fund model that combines the appeal of memecoin with tangible assets. The protocol sets a structural “floor price” for each DAO token, thereby balancing speculative potential with potential value, attracting a diverse group of investors. This dual-engine approach positions Daos.fun as a unique asset class in the on-chain financial ecosystem.