DAOs want to reshape fashion. Here’s what brands need to know – Vogue Business

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Emma-Jane MacKinnon-Lee is here to warn traditional fashion brands that their days are numbered. The 23-year-old, who sports bright pink hair, is considered a cryptocurrency veteran after five years working in the space. As one of the first blockchain entrepreneurs focused on fashion, she helped create a decentralised autonomous organisation, or DAO, running on blockchain technology.
In the world of blockchain, the innovations come fast and furious. After the NFT (non fungible token), the new acronym on blockchain fast forward is DAO. But the two are different. Whereas NFTs are digital assets, DAOs are essentially ways to govern organisations by issuing or selling cryptocurrency tokens that track individual ownership. The simplest type of DAO is one launched to collect and invest in creative work such as art or fashion. There’s a minimum buy-in (often in Ether cryptocurrency), then members receive special DAO tokens, which can be used to vote on which NFTs to collect. Any member of a DAO can make a proposal.

The most well-known fashion DAO is Red DAO, which recently purchased one of Dolce & Gabbana’s inaugural NFTs, the Doge Crown, for nearly $1.3 million of Ether cryptocurrency. Red DAO currently has about $15 million of Ether in its treasury.
“With crypto, we see people beginning to pool their capital together and work from a shared account. It magnifies what they can do together,” says Aaron Wright, whose company Tribute Labs helped in the Red DAO launch and provides support. “Red DAO supports digital fashion designers and collects items that we think will go up in value.”
MacKinnon-Lee believes it’s the future. The DAO she helped launch is a co-op of independent fashion designers operating on a ruleset encoded on a blockchain. She thinks DAOs like this have the potential to disrupt today’s Pradas and Guccis. “Brands that don’t develop DAO-like aspects will atrophy away,” she claims. “It will be a challenge re-organising an entire organisation. But the brands that do will have longevity.”
Proponents say that DAOs can shift more power into the hands of creators, whether fashion designers or Instagram influencers. The argument is that Web 2.0 companies (referring to social networks such as Facebook, Twitter or Youtube) in effect steal from their creators. By contrast, DAOs make creators part owners of their groups, benefiting more from their work.
Brud, the company behind virtual influencer and model Lil Miquela, is in the process of becoming a DAO. 
Tribute Labs, which has supported Red DAO, also worked with digital sneaker brand RTFKT to create a metaverse-focused DAO called Neon DAO, which currently controls about $20 million of Ether. Neon DAO’s mission is to purchase Metaverse items, such as virtual land or avatar fashion pieces — including RTFKT’s fancy virtual sneakers.
Beyond pooling funds to purchase creative works, DAOs are now being formed to govern the actual process of creation. Brud, the company behind Lil Miquela, a digitally-rendered model with over 3 million Instagram followers, has been in the process of turning itself into a DAO since earlier this year. In October 2021, Brud was acquired by Dapper Labs, the company behind NFT project NBA Top Shot, and rebranded as Dapper Collectives.
Dapper Collectives will continue to focus on the Lil Miquela character, with the goal of making her more community owned, says Kara Weber, COO of Dapper Collectives. In addition, they will create DAO tools on top of Dapper Labs’ Flow blockchain. Weber imagines Lil Miquela’s community using tokens to vote on her character arc, such as deciding which photos to post to social media.
Other DAOs seek to do what traditional fashion brands do: create fashion to sell. The DAO MacKinnon-Lee is part of, titled the Global Designer Network, is a group of nearly 100 indie fashion designers that was created by digital fashion design lab Digitalax. MacKinnon-Lee hosts eight to 10 hours of weekly calls with its members, where they teach each other how to create fashion pieces for the metaverse and share other skills in 3D design and gaming.
DAO Global Designer Network.
However, there are plenty of voices who are sceptical about the concept of upending traditional corporate structure in favour of a democratically-driven process encoded on a blockchain.
For starters, critics say they resemble multi-level marketing schemes because in many DAOs, tokens are tradable, meaning its members are all hyper-focused on making the tokens worth more.
DAOs also have an unclear regulatory status. While many DAOs say that they are operating in compliance with securities laws, in 2017 America’s SEC (Securities and Exchange Commission) concluded that one of the first DAOs — called simply The DAO — was selling unregistered securities.
Lauren Kunze, CEO of Iconiq, a company that makes an artificially intelligent digital model named Kuki, is sceptical that a DAO would be able to do the creative work necessary to produce works of fashion or character narratives.
“The idea of a DAO that purchases the Dolce & Gabbana NFT makes sense, but the idea of a DAO that rivals Dolce & Gabbana does not make sense to me,” she says. “Creative vision is usually a single visionary leading a team of people that execute. There are a lot of use cases where DAOs make sense, but it’s not fairy dust we should be sprinkling on top of everything.”
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