Blockchain-Backed Aid Groups Could Be the Future of Philanthropy

Blockchain-Backed Aid Groups Could Be the Future of Philanthropy

A month after Russian troops invaded Ukraine, an organization called Gitcoin raised over $800,000 for initiatives to support Ukraine with protective equipment, food and aid. It's one of many causes that Gitcoin and other so-called impact DAOs are funding through blockchain technology.  

Impact decentralized autonomous organizations, or impact DAOs, use crypto tools as a source for public good and an alternative way to support social causes. Consider it the blockchain version of a nonprofit. 

Ukrainian aid, the fight for reproductive rights and efforts to reverse the effects of climate change are all getting aid from impact DAOs to rally support. 

These organizations aim to correct what they see as the institutional underfunding of public initiatives and causes. A DAO (pronounced "dow") is a fancy way of saying that it is a self-governing body that makes decisions based on community votes rather than executive decisions. Anyone who buys tokens for a particular DAO is able to vote on what decisions the organization makes, like what social issue to donate funds to. 

Crypto enthusiasts have created DAOs for everything from building high-status friend groups to buying the Constitution. With impact DAOs, however, the mission is more philanthropic -- and ambitious. 

In theory, impact DAOs and similar cryptocurrency projects seek to correct the failings of traditional institutions by funding public goods that go undersupported in society. They have been created to support everything from reproductive rights organizations in Texas to aid for climate change. Impact DAOs run counter to the idea that everything related to cryptocurrency is about making a quick buck. 

In practice, it's a bit muddier. Impact DAOs and blockchain projects focused on aid represent a novel way of disrupting long-standing acceptance of how philanthropy and giving work. Still in their infancy, they face barriers to accessibility and a general distrust from the public due to the volatile crypto market. It's just one of the many ways the crypto world intends to overhaul the status quo. 

A new philanthropic model 

DAOs have been around since 2016, but in 2021, right when cryptocurrencies like bitcoin and ether were topping new all-time-high valuations, there was a shift. More Web3 and cryptocurrency enthusiasts began to imagine how virtual technologies could have a more tangible, positive impact on society, Scott Moore of Gitcoin explained. 

Moore and co-founder Kevin Owocki created Gitcoin in 2017 to fund software developers creating the foundation for Web3, which blockchain proponents dub the next generation of the internet. The nebulous idea broadly refers to a decentralized internet deeply integrated with crypto and NFTs. 

Even though Gitcoin began as an impact DAO for funding software, in the years since, it's funded causes associated with climate change, aid for people in Ukraine, and arts and culture. 

"We want to make the case that Web3 public goods are more than just infrastructure," Moore said. "They're things like the climate we live in, our health and wellness, and the diversity of our community. We can't just exist in this metaverse. We need to actually have impact in this world as well."

Because a community of members decides what issues an impact DAO will fund, Moore believes it's more egalitarian than an individual coming in with a donation or a new technology for an underserved community and directing how to use or spend resources. 

Since these donations take place on the blockchain, another benefit of the impact DAO model is increased transparency and community oversight, said Robbie Heeger, president and CEO of Endaoment, a crypto donation platform. The blockchain is a public ledger, meaning anyone can see who donated how much, and who voted for what. 

Hefty amounts of money have been raised by impact DAOs and traditional nonprofits on Endaoment, with around $3 million donated for Ukraine Humanitarian Aid, around $2 million for physics-related research and experimentation and around $500,000 for reproductive rights. 

"There's this conception that all of this stuff is out there and going to happen in the future. I really get the impression, from our vantage point, that not only are impact DAOs a real thing happening now, raising significant amounts of money, but they are also overhauling conventional philanthropic systems," Heeger said. 

20 more steps 

But developing relationships with trustworthy local organizations that won't take advantage of disenfranchised communities is a key part of philanthropy work that's important to establish and something that impact DAOs need to work on.

That's according to Devin Mathias, who as the senior director of development for the Center for Disaster Philanthropy, has spent his whole career in the nonprofit world consulting or working with philanthropic groups.

"I feel like part of what the general crypto world and environment wants is, at their core, to disrupt," Mathias said. "There's times that can be great and that can be effective. There's times it's going to only cause more problems and make things harder." 

Mathias is open to new ways to simplify philanthropy. But the charity process requires time and effort to weed out organizations that can't be trusted and develop relationships with ones that can. He worries impact DAOs may move too indelicately for the charity process. 

Mathias noted that, on paper, it may be attractive to donors that these DAOs are providing communities with potential answers to these infrastructural issues, but it could also further complicate existing problems.

"You just created 20 steps for [the community] to go from receiving a gift to actually helping them," Mathias said. "There's a lot of power in just giving cash to the right people, so they can go from zero to impact quickly." 

Beyond the DAO 

There are a few other hiccups funding public goods through impact DAOs will have to work through before gaining widespread acceptance. People can generally understand the big picture, but relaying the details of the technology is thornier, said Darrell Jones III of developmental Web3 infrastructure organization city3.

Jones is trying to create a thriving, hyperlocal community in Oakland, California, by developing Web3 tools, like a local cryptocurrency called Oak. city3 isn't a DAO, but Jones partnered with impact DAO Gitcoin to create a community funding process as a form of governance to determine which local nonprofits the community would want to fund. The project is still in development, but city3 has been working with Oakland residents to participate. 

The language and digital tools around cryptocurrency and Web3 are particularly inaccessible to folks outside of the ecosystem, Jones said. Another hurdle the crypto community will have to overcome is gaining the trust of the communities it wants to serve, not to mention the fact that most people don't have crypto wallets to store digital coins.

"The specifics are harder for folks to grasp. And then using the technology the way it is today is even more challenging," Jones said. Jones stressed that they are working on these issues, and city3 is still in the early developmental stages. 

Endaoment's chief operating officer, Zach Bronstein, also noted that it's not just about getting these new ideas into people's heads; it's also about changing the narrative around crypto itself from a get-rich-quick scam to an effective way to fund causes and communities. 

"The more that there exist things in cryptocurrency that feel juvenile or scammy, that makes it less likely that people will be willing to participate in this space," Bronstein said. "So the more mature that this space gets …  the easier time that we're going to have creating tools that benefit nonprofits in a real, tangible way."

The real world 

Some of the skepticism around this new technology is justifiable. With the collapse in value of several cryptocurrencies and a new, exclusionary technology being pitched as a salve for real-world issues, it's reasonable that many are casting a critical gaze at DAOs. 

Even when it fulfills its purpose of raising funds for different causes, the results can raise some eyebrows. 

When Gitcoin initiated rounds to raise money for Ukraine, there was a disparity in the number of contributions for donations that could immediately help Ukrainians in comparison to the kind of causes that excite crypto donors. For example, in Gitcoin's 13th funding round, there were opportunities to fund aid in Ukraine, climate and ethereum infrastructure. An accounting tool that protects privacy got a vast majority of contributions, with only a fraction going to more practical needs like protective equipment. The funding came just a month into the conflict. 

"There's been too little research and too little interest in serving people that may be skeptical of Web3," said Gary Sheng, co-founder of Dream DAO. 

A former Google software engineer, Sheng co-founded Dream DAO with a vision to empower young people from all over the world to use Web3 for good, but now he's "unplugging from responsibility" after leading Dream DAO through its first six months. Sheng said he wants to better understand how impact DAOs can be used for people outside of the Web3 world, where "normal people are and where our grandmas are." 

"If Web3 isn't greatly improving the lives of a lot of people who may really not like Web3," Sheng said, "it is not realizing its full potential."

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The Metaverse Is on the Way: Here's What You Need to Know

The Metaverse Is on the Way: Here's What You Need to Know

This story is part of Making the Metaverse, CNET's exploration of the next stage in the internet's evolution.

You've probably heard the hype: the metaverse is going to change the way you live. 

A vision for the next step in the internet's evolution, the metaverse refers to digital worlds in which people will gather to work, play and hang out. Some of those online spaces will be immersive 3D experiences and require fancy goggles to enjoy. Others will play out on a computer screen. The term's been in flux, and might still keep evolving and renaming itself.

Tech hype cycles come and go. The metaverse could fizzle before it's even realized. As of yet, however, interest continues to grow. Across gaming, NFTs and shopping, it's become a repeated buzzword.

Microsoft's planned acquisition of ActivisionBlizzard for $69 billion, was explained as part of an expansion into metaverse. Last year, Facebook rebranded itself as Meta, a nod to the social network's ambition to be a prime mover in the new world. Rec Room and world-building games, like Roblox and Minecraft, all get rolled into discussions of what the metaverse is or will be.

This story is part of CNET's exploration of the internet's next iteration.

Naomi Antonino

The term metaverse has circulated for decades. Virtual reality, augmented reality and 3D computing – the technological concepts behind it -- are older still. The current boom in interest is just the most recent peak in a years-long push to make these advances useful to everybody.

What's changed is a shift in understanding, a conviction the internet needs to be reimagined. How far-reaching those changes end up being is anyone's guess. After all, the road map for the metaverse is half-paved. It isn't clear it'll be completed as promised.

What's for sure is that if there's money to be made, big companies will be involved. In addition to Microsoft and Meta, Qualcomm, Nvidia, Valve, Epic, HTC and Apple are all dreaming up new ways of connecting online. So you'll be hearing more about the metaverse in the years ahead. 

What is the metaverse?

Unsatisfyingly, the metaverse is a squishy concept. An evolution of the internet, it's often described as online spaces where people can socialize, work and play as avatars. Those spaces are shared and always available; they don't disappear when you've finished using them, like a Zoom call. The description is so broad that many people say the metaverse already exists in the digital worlds of Roblox, Minecraft and Fortnite, which allow players to gather in 2D environments. Second Life, a nearly two-decade-old social-and-gaming platform, is the OG metaverse. (It's being revamped.)

Facebook boss Mark Zuckerberg, Microsoft CEO Satya Nadella and other proponents see a deeper, more immersive experience that marries a host of existing technologies, such as VR headsets, mobile devices, personal computers and cloud-connected servers. These futurists envision the development of a 3D virtual world, one that you might enter while wearing a headset or AR glasses. There's no agreement you'll need VR or AR to get to the metaverse but they pretty much go hand in hand. That suggests these headsets will be compatible with whatever's on offer. A new wave of VR and mixed reality headsets are expected this year from Meta, Sony, Apple and maybe others.

The metaverse will take cues from our IRL lives. 

James Martin/CNET

One common theme: The metaverse will be a virtual world that parallels our IRL lives. Digital neighborhoods, parks and clubs will spring up, possibly in a single virtual world or spread across many. Some people see a metaverse that overlaps with the physical world and includes AR overlays. Investors are already splashing out on plots of virtual land. Barbados has indicated it wants an embassy in the metaverse, underscoring the cachet the concept has generated. 

Naysayers are skeptical that the metaverse will be all that Zuck and others suggest. Many point to the cumbersome headsets that will be needed to access the most exciting chunks of the metaverse. (The inventor of the Playstation called them "simply annoying," while a senior Meta executive called his own company's headset "wretched.") They argue that Big Tech hasn't figured out how to curb hate speech, misinformation and bullying already on the web. Getting a handle on those problems in an even more freewheeling environment will be daunting, they say.

Will there be one metaverse? Or many metaverses?

That remains to be seen. No standards for the metaverse exist and lots of companies are clamoring to lay the groundwork others will follow. Facebook, Microsoft, Sony, Epic Games and a bunch of smaller companies are all working on projects with the hopes of grabbing first-mover advantage. It's unclear whether one company's VR headset will be compatible with another company's expansive multiplayer world or cloud-based graphics. Most companies promise a metaverse that allows other companies in. But that requires them to agree on how they work together.

Meta, which plans to spend billions on its metaverse projects, says interoperability is crucial. If you have an avatar on Facebook, you should be able to use it on a Microsoft platform. That suggests a single metaverse. Try moving a skin you bought in Fortnite to another platform and you'll quickly find those add-ons are stuck in the battle royale game. 

The vision of a single metaverse supporting services from lots of different companies is reminiscent of the utopian ideals of the early internet. When the early pioneers figured out how much money could be made online, however, all bets were off. It'll likely be the same with the metaverse. If Zuck and others are right, too much money will be on the line for companies to allow customers to pick up and move. 

Our best guess – and it's just a guess – is that the metaverse will start as a slate of competing platforms, each laying claim to being the metaverse. Think of an environment that looks like the early days of instant messaging, when services were fragmented. Over time, however, standards will emerge, and eventually the big players will use compatible technology, evolving into something that resembles email protocols. The internet broadly works that way now with battles between agreed-upon protocols and proprietary standards, content from a host of companies and competing software ecosystems.

What will it be like in the metaverse?

The idea behind the deluxe Metaverse – the one that requires a headset – is an immersive, 360-degree digital world. You'll have your own avatar, which you'll be able to design, and you'll own digital assets, the titles of which will likely be recorded on a blockchain. Some think you'll buy plots of digital land and build online houses, in which you can entertain your friends (or at least their avatars). 

That may sound fantastical or absurd, but bets on the value of digital land have already started. Tokens.com, a Canadian company, spent almost $2.5 million on virtual property in Decentraland, a 3D world platform that is a spiritual descendant of Geocities or Second Life. (Purchases in Decentraland are conducted with an ethereum blockchain token.) 

Others see a more fluid experience. Simpler versions of a metaverse experience, such as Roblox or Fortnite, are already available. Those games aren't as immersive as the metaverse Zuck talks about, but they offer a reasonable sense of what's being planned.

All the things we're already doing on the internet point to how the metaverse may grow. It will be a bit of gaming, some Zoom telepresence, splashes of VR and AR, and plenty of social media. Expect many attempts to pull it all together so that it's fun or useful. 

What kind of equipment do I need to enter the metaverse?

Facebook wants you to buy a headset like the Oculus Quest 2 in order to enter the metaverse. Not everyone thinks the specialized hardware will be necessary.

Scott Stein/CNET

That depends on where you want to go. Facebook wants you to buy one of its Oculus Quest 2 VR headsets. That will set you back $300, although the hardware is self-contained and doesn't require a PC or game console to use. There are also a number of other VR headset makers: Valve, HTC, HP and Sony, whose gear works with PCs or a PlayStation 4/5. Expect more headsets, some of which might start connecting with phones, by the end of the year.

A handful of other companies – Microsoft and Magic Leap, to name a couple –  make AR headsets, which layer digital information on top of the real world and tend to be a lot more expensive. Qualcomm and other companies are developing methods for AR glasses to work with phones, though most applications so far have remained experimental or business-focused. Snap's prototype AR glasses, or glasses like the Nreal Light, show how much work is still needed to make them a purchase you'd even consider.

You can also enter existing metaverses, such as Roblox and Minecraft, from your computer, tablet or phone. It isn't a 360-degree experience, but the popularity of these platforms speaks to their appeal.

Where did the metaverse come from?

Neal Stephenson coined the term in Snow Crash, a 1992 novel in which the main character, a pizza delivery driver, hangs out in an online virtual fantasy world. The idea got an update in 2011's Ready Player One, a novel in which people gather in the Oasis metaverse, which inspired the launch of Facebook's Oculus Rift.

Outside of fiction, Linden Lab created Second Life, a virtual world that launched in 2003 and attracted car companies, record labels and computer makers to open digital outposts. (CNET also had a presence in Second Life.) After a rush of hype, Second Life's popularity slowly waned, though it's still active. 

Games like Minecraft, Roblox and Fortnite have also been described as metaverses. Fortnite has hosted concerts, including performances by rapper Travis Scott and pop star Ariana Grande, that attracted attention to the already popular shoot 'em up. Fortnite's Soundwave Series is international and includes musicians from Egypt, Mali and Japan. All three games allow players to create worlds, a cornerstone of the metaverse concept.

Two years of a pandemic have prompted us to redefine "virtual." No one's perfected what the future will look like yet. But a rethinking of what it means to gather virtually and at scale is underway. And lots of people want to define it. 

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