- Date
- 15 SEPTEMBER 2022
- Author
- GLORIA MARIA CAPPELLETTI
- Image by
- TRIBUTE BRAND
- Categories
- Fashion
How DAOs are changing the fashion system
Fashion is using a new medium right now, and that is digital, and we get excited by brands that are taking that journey. It is simply fashion moving into the next dimensionality using the most cutting-edge technological tools, with some being proprietary technology from Tribute Brand - like AR - for shaping, and blockchain to prove ownership. Tribute Brand, a pioneer of digital fashion known for its distinct conceptual work reshaping the future of fashion, has raised $4.5M in its seed funding round. The round has been led by Collab+Currency, a leading early-stage consumer VC in web3 and crypto, which previously invested in platforms like SuperRare and ArtBlocks. Other investors included an impressive list of VCs and DAOs, such as Alice Lloyd George (Rogue VC), Lattice Ventures. Among the investors, notable DAOs (Decentralised Autonomous Organisations) joined the round, RED DAO specializing in fashion, and Flamingo DAO, known as one of the biggest collectors in the NFT art space.
The DAO movement is still very much in its early days, with its own set of challenges regarding governance and trust. Decentralized autonomous organizations hold great potential for rebuilding the current hierarchies in the world of fashion, which are still largely dependent upon, and built upon, gatekeepers (in this case, the insiders in fashion, who do not want to see particular products become trendy). Realizing Decentralized Autonomous Organizations in the real world would require overcoming considerable obstacles, but there is a compelling reason for organizing companies differently, and the potential benefits are undeniable. Because of its unique structure, DAOs hold out the promise of making it possible to put the emphasis on the community, not simply profits, and could provide for more socially-conscious structures.
DAOs are also autonomous, operating outside centralized governing structures. With DAOs, each member is given control over an organizations resources and direction according to his or her contributions to the project. In DAOs, transparency is built right into the basis of the organization. DAOs rely on blockchains security and transparency to equally distribute power to all members.
DAOs, in contrast, are decentralized, meaning that they are not controlled by one individual or organization. The rules and governance for each DAO are encoded into smart contracts on a blockchain, and cannot change unless it is approved by members of The DAO. The details of each DAO, including its type, structure, rules, and governance, are dependent on the group and its goals.
To join a DAO, members usually must apply by purchasing some cryptocurrency, which grants them governance tokens, or DAO-specific currencies, for voting on decisions and investments. DAO members buy governance tokens, which are used to vote on proposals. By holding governance tokens, members are generally able to hold shares of the DAO, and to help shape the DAOs future.
DAOs are actually owned and managed by people who own enough of a native token for a DAO, which functions as a kind of cryptocurrency. DAOs are formed by groups of people wanting to create together as a community, merging and increasing the value of their individual tokens, as well as that of a shared DAO.
The best-known DAO for fashion is The Red DAO, which purchased one of the first NFTs from Dolce & Gabbana, Doge Crown, for almost $1.3 million worth of Ether cryptocurrency describing its goal as to foster and finance a digitally-fashionable future. For many within the industry, the DAOs were the first ones that caught their eye, being among the biggest buyers in the early wave of fashion NFTs.
Like NFTs and cryptocurrencies before it, the DAO proved to be divisive within both the technology and fashion communities. DAOs still have to overcome many obstacles before becoming a pervasive force within the fashion industry. Many experts said they would not be surprised to see DAOs take over from traditional LLC business models. As the fashion industry is more heavily involved with the Web3, or next phase of the Internet, The DAOs may shape the next phase of governance, and completely change the existing industry hierarchies, which are still largely dependent on gatekeepers.
In addition to traditional investments, DAOs may enable a new type of ownership model. The idea of democratically controlling a platform via community, like that enabled by The DAO, could result in areas of style being controlled by a single, similar community. Because DAOs are more democratic, changes could be proposed and implemented with relatively little friction.
While DAOs are mostly driven by funding allocation, leaders still get to observe how a process works and observe how effective it is. Megan Kaspar says Red DAO has chosen to be a long-term community focused on broader uses, but DAOs could be used for singular purposes, such as buying a baseball team, or investing in a resource expected to quickly liquidate. When talking about DAOs functions within fashion, Megan Kaspar said that she sees a bright future because of changes to the way that fashion is controlled and decisions are made. As one of the first fashion-focused blockchain entrepreneurs, the 23-year-old helped build a decentralized autonomous organization, or DAO, running on blockchain technology.
A decentralized autonomous organization is a cooperative of independent fashion designers that operates under a set of rules encoded in the blockchain. For brands that are closely connected with their community of customers, which is expected of almost all brands, DAOs enable customers to become members of a DAO, allowing them to become a part of the community involved in actively developing the brand. Social DAOs provide brands an opportunity to convert groups of loyal customers into contributing engaged brand advocates.
Currently, media and social DAOs are probably the ones that are of most interest to brands, as they tie directly to their marketing efforts. DAOs are sure to affect creator economies, but as the Web3 continues to develop, so too will they alter how brands conduct business.
Media, social, and service DAOs will play an outsized role in branding strategies, decentralizing and democratizing many decision-making processes within brands, placing control back into the hands of content consumers as well as producers.
