• Investing in DAO projects gives investors opportunities to take part in the decision-making process
• There are many DAO projects which center around different aspects of crypto such as exchanges, metaverses, and even DeFi banks
• DAO projects are developed to remove control from one central governing body and give it to investors

Before we discuss the best DAO projects, we need to understand what exactly is DAO and how it operates. DAO projects don't have centralized entities looking over them, and they are run by community members.

DAO projects give the governing rights to investors to make all kinds of decisions about the project. With the usage of smart contracts, community members can propose different ideas and steps the project can take, and then other community members vote on the proposals and decide if they should go through or not. Usually, the weight each person's vote carries will depend on the amount they have invested in the project. 

But there is another question. Why are DAO projects important and so interesting? Their main goal is to remove control from one entity. This removes human error and the ability to exploit investors' funds as centralized organizations see fit. 

“Competition is overrated. In practice it is quite destructive and should be avoided wherever possible. Much better than fighting for scraps in existing markets is to create and own new ones.” - Peter Thiel

As we mentioned before, there are many DAO projects that investors should be looking out for. Some can be decentralized exchange protocols, some can be lending platforms, and some are involved in NFT games that utilize DAO governance. Here we are going to talk about some of those projects and why they are potentially good investment opportunities.

Uniswap is an interesting project. It is a decentralized exchange that is built on the Ethereum network. This platform gives people opportunities to swap ERC-20 tokens in a fast and cheap manner. What makes Uniswap interesting is that, while using centralized exchanges you are limited to certain tokens which you can trade, but here there is a huge selection of altcoins which have trading pairs with almost every token on the exchange. Uniswap also removes the need for third-party service transactions and each transaction is done peer-to-peer.

Right now you might be wondering how we can invest in an exchange. Well, Uniswap has almost any trading pair for any ERC-20 token, and to keep this up they need liquidity. This liquidity comes from investors who lock their tokens on the exchange for a period of time to facilitate swaps and earn interest on them. Interest rates will differ depending on how much you put in and which token you supply, but in general, these interest rates are higher than those of centralized exchanges.

UNI is the native token of Uniswap and interest is given out in the form of UNIs. Currently, UNI is the 25th largest crypto on the market. It trades at $6.10 with a market capitalization of $2.7 billion. UNI was at its peak last November, just like most other cryptos. But with Bitcoin's price drop and the coming of the new crypto winter, UNI lost its $25 value and tumbled down into the single digits. Expectations are that it will bounce back to at least $15.

We can invest in UNI through different means. If we already hold other ERC-20 tokens in our wallet we can simply connect them to the Uniswap website and exchange them for UNI. We can also purchase UNI tokens on standard centralized exchanges such as Binance and Coinbase. 

"Uniswap Labs will focus on building services that will make Web3 more accessible to non-technical people" - Hayden Adams

Compound operates in a similar manner to Uniswap, but instead of it being a crypto exchange it is a lending platform. This is one of the biggest crypto lending projects on the market. Just like Uniswap where investors provide liquidity pools for different cryptos, here, investors provide liquidity pools which people can borrow cryptos from. Investors can lock their cryptos in Compound protocol and start earning interest on them straight away.

What makes Compound stand out from other projects is that you can earn interest in the form of tokens you locked in. When locking our funds in other similar projects, the interest rates are usually paid out in the form of their native tokens. For some, this is not an attractive proposal, and investors prefer to receive payouts in the form of the tokens that they deposited. Compound gives investors this opportunity and if you, for example, locked in USDT tokens for people to borrow, you can earn interest rates in the form of USDT.

But this ability to receive interest rates in the form of tokens you deposited does not mean that Compound does not have its native token. COMP is their native token which trades at $55 with a market capitalization of $373 million. Each COMP gives investors one voting right on each proposal made on the platform and is given out each day to people invested in the project. But, we need to mention that going all-in for COMP tokens might not be a good idea, as it is far from its all-time high of $850. There is a huge number of investors who believe that the current price of COMP does not represent the value it brings, and they believe it will go up again. So if you are interested in the COMP token, make sure to do research into the project and decide for yourself.

Maker is another DAO project with huge potential and ambitions. This is a project that introduces real-world assets to the crypto domain. Their main goal is to try and evolve their DAO Maker token into the largest DeFi central bank. Alongside MKR, their native token, they also have DAI, which is an algorithmic stablecoin with a market capitalization of $6.4 billion.

Their native token MKR currently trades for $930 with a market capitalization of $843 million. This makes MKR the 57th largest crypto token in the world. Holders of these tokens receive government rights and can vote on different aspects of the project. The most notorious voting processes that took place were when community members voted for Maker to use tokenized versions of revenue-based small loans, agricultural real estate, and freight-shipping invoices. 

But just like any cryptos, currently, MKR is far off its all-time high of $4,000. Most believe that it is unlikely that MKR will return to that valuation, but expectations are that it will reach back and be able to find the $2000 mark in the future. DAI, which is their stablecoin, is another danger that needs to be taken into consideration. Algorithmic stablecoins might seem interesting but the recent collapse of TerraLuna and its native stablecoin UST showed us how fragile these algorithmic stablecoins can be. If DAI falls MKR is destined to follow, just like Luna followed the UST crash.

These risks do not mean that this is a bad project to invest in. The main thing we have to look at is the team behind this project. So look over the project, learn how and why they operate exactly and if you like it, investing in this project can give out great returns if crypto markets pick up again.

Another great DAO project we can invest in is the Decentraland which was created by by Argentinians Ari Meilich and Esteban Ordano bac in 2020. This is the metaverse project where people can purchase land plots and use them as they see fit. What makes Decentraland interesting is that whenever someone purchases land they are given the ability to create a whole new experience. This is a platform on which you can build your own project. Investors can monetize their own projects by implementing virtual assets such as NFTs into their ecosystems. Decentraland is also being used as a hub for different events and a lot of metaverses and NFT online conferences have taken place here. 

Decentraland has its own governance token called MANA which currently trades for $0.8 and has a market capitalization of $1.5 billion. This makes MANA the 38th largest crypto on the market and one that investors should keep an eye on. What is interesting here is that investors who create their own universes on Decentraland have the ability to implement their own tokens into the project which operate separately from Decentraland and only have authority in their respective projects. MANA holders have control over the whole project and vote on decisions about the direction the project should go, what kind of content should be available on the platform, and other similar decisions. Just recently there was even an unsuccessful proposal to remove and ban the word Russian from the platform completely.

With metaverses becoming a hot topic and huge investments flowing into them, investing in Decentraland has some potential. We can either invest in MANA and take part in project development or use MANA to purchase land and build our own project within it and profit from that. Be careful though, the metaverse idea is still very much a novelty at this point and should be approached with much caution.

Another decentralized exchange on our list, SushiSwap is a project that has grown in popularity. SushiSwap is still behind Uniswap in regards to market share, but SushiSwap has shown promising growth and has attracted the attention of many different investors. This decentralized exchange is hosted on the Ethereum network and deals with ERC-20 tokens, but with bridging and other methods, it is possible to also trade with tokens that are not ERC-20 tokens. Here, just like Uniswap, traders are given a huge selection of trading pairs for each token and can practically swap any token for any other token. 

SUSHI is the native token of SushiSwap and holders receive governing rights. But here, decisions made by community members are not final, and executions are done by developers. Recently there has been an announcement that it will be fully moving to a DAO protocol. This has attracted interest from many different investors and speculations are that the SUSHI's price is set to go up once this protocol gets integrated into the project.

When it comes to investing in the project, outside of investing in SUSHI you can also provide liquidity pools and receive interest on it. Here you have to provide a liquidity pool for pairs, which means that you need to lock two cryptos that will be traded one for another. This should be done with a 1:1 ratio, which means that if you provide liquidity for $1000 worth of Ethereum you have to provide $1000 worth of liquidity for another token that will be traded with Ethereum. Interest rates you will earn on this will depend on the tokens you provided and how many of them you provided. These interest rates are given out in the form of SUSHI tokens.

SUSHI currently trades for $1.23 and has a market capitalization of $236 million. This project might not be as big as Uniswap, but there is still room for development which creates good investment opportunities.

• The best DAO project for lending money and receiving interest in the form of the same tokens is Compound
• For those interested in metaverse and NFTs, Decentraland is the DAO project they should be looking at
• The project which currently does not follow DAO protocol but has plans to transition to it soon is SushiSwap, and it gives good investment opportunities