Jan 28, 2022
Tyler Golato

The Emergence of Biotech DAOs

Breaking Eroom’s Law

We are all familiar with Moore’s Law - the observation that the number of transistors in a dense integrated circuit doubles about every two years, which broadly describes the exponential growth we see in computational power over time. Eroom's law (Moore’s Law, in reverse) is the observation that drug discovery is becoming slower and more expensive over time, despite improvements in technology. While technologies such as high-throughput screening, combinatorial chemistry, and computational drug design should have arguably improved the rate of innovation, progress has been bottlenecked by other systemic and institutional-level issues such as increasing regulatory burden, a lack of open-source sharing of technologies, and misallocation of capital in incumbents that have prevented new drugs from reaching the market, and therefore, patients.

One potential explanation for this trend is the failure of coordination of capital and resources, coupled with monopolistic intellectual property models that pervade pharma and biotech at scale. These models disincentivize information sharing and collaboration, muddling data production and generating ambivalence on experimental outcomes. While new laboratory technologies alone have failed to improve efficiency in drug development, we believe that new advances in network, coordination, and incentive technologies at a structural level could reverse this trend by enabling new methods of optimizing collaboration, talent, and capital allocation.

Biotechnology and pharma have been historically centralized in the form of large companies and organizations that lack incentive to work in open and collaborative ways. Put differently, pharma has a “closed source” culture. The decentralization trend is dethroning centralized entities with power monopolies and shifting towards networks of collaborators co-existing in flat hierarchies.

Decentralized communities are powered by sharing pre-competitive resources within a community to achieve a common goal. They promote an open-source culture to their members and incentivize them to collaborate using token-based mechanisms.

Decentralized networks provide a trustless environment where data reconciliation is improved, points of weakness are reduced, and resource distribution is optimized at scale. In the context of biotech, this means creating new organizational structures that have a low barrier to entry (logging onto Discord, for example), are intrinsically collaborative and incentive aligned (WAGMI), and can coordinate capital and work from any participant (even the general public and patients). These features are emerging in the form of decentralized autonomous organizations (DAOs).

DAOs are relatively new smart contract-based entities that enable the coordination of capital, talent, and crowd intelligence at an unprecedented scale. Recently, a new decentralized science (DeSci) movement has been rapidly changing the way that coordination in science and biotech occurs by leveraging DAOs (see VitaDAO, PsyDAO, labDAO), with Molecule increasingly positioned as a core infrastructure provider in the space.

The DeSci movement is currently forming as a talent pool for entrepreneurial researchers and leading thinkers in biotech innovation that are frustrated by the status quo, whether it relates to funding, coordination, collaboration or other systemic issues that affect young founders and academics in biotechnology. The NIH, for example, allocates just 2% of its funding to scientists under 36, and 98% to those 36 and older. This trend, amongst others, has led to enough frustration that several new organizational types, such as FROs and DAOs, have emerged with an intention to revolutionize the biotech landscape. But what exactly is a DAO? Why is it important, and how might it change biotech?

The Biotech DAO Design Space

Let’s begin to understand biotech DAOs by walking through the steps of creating a DAO and how they function. An appropriate starting point for a biotech DAO is a clear vision and mission — what do these new, open organizational frameworks enable? Biotech DAOs can coordinate talent, enable decentralized fundraising and governance, or help create standardized methods of data collection and production, among other things. They can be philanthropic or for-profit. While biotech DAOs have a limitless design space their key innovation is their lack of gate-keeping and the use of technology to mediate decisions by large communities.

One element that all biotech DAOs have in common: they address a problem that has so far been unsolvable given the lack of incentive mechanisms for widespread collaboration in biotech.

To better understand this, we can take an example — VitaDAO, the first biotech DAO birthed by Molecule. VitaDAO is focused on funding early-stage preclinical drug development in the context of longevity. When designing VitaDAO, Molecule’s goal was to 3-fold:

  1. Create a Schelling point and community building exercise at the intersection of longevity and Web3, enabling researchers and the public to gather and participate in research and funding.
  2. Fund cutting edge, high impact research out of academia, and help to translate this research into effective medicines
  3. Create a sustainable organization as a function of its commercial efforts, with proceeds from these efforts providing a continuous funding mechanism for longevity science.

The third point, “a sustainable organization as a function of its commercial efforts” requires that the DAO derives monetary value from its funding efforts. To do this, VitaDAO leverages Molecule’s IP-NFT framework, which allows the DAO to own, license, and transact in intellectual property generated from the projects it supports. VitaDAO works to fund and later commercialize early-stage research out of academia. The DAO owns the resulting IP from the projects it funds. For the first time, value is captured by large, decentralized communities of researchers and patients.

NFTs can enable us to capture all sorts of asset types, including IP rights and data, and manage them natively in web3. Web3 allows these assets to exist in cyberspace, which means you can interact with them in some way no matter which country you’re in, transcending borders, time zones and jurisdictions. This is a big step in democratizing access to these assets. NFTs can be transferred to another wallet, tokenized, collateralized and borrowed against, sold on NFT marketplaces and they can be programmed so that the original creator automatically receives royalties every time the NFT is resold.

At Molecule, pioneering novel frameworks for IP-NFTs that attach both IP and data to NFTs turns IP into a new highly liquid, transactable asset class that bridges web3 into the real-world. Designs here are early, and these new vehicles will need to stand the test of time and the courts. Early data shows they work and comply.

BioDAO Frameworks

VitaDAO is the first design of what a biotech DAO might look like. One of the core goals at Molecule is to create productized biotech DAO frameworks that enable anyone to build their own biotech DAO, operationalize it, and begin leveraging the effects of a large, open community to achieve their goals. To this end, Molecule is seeking to work with motivated researchers, patient groups, entrepreneurs, community builders and visionaries that are interested in building at the intersection of biotech x web3.

We imagine these structures becoming instrumental in shaping patient and researcher communities. Imagine patient- and researcher-centric Bio DAOs focused on Alzheimer’s research, specific types of cancers, or diabetes with tight feedback loops and collaboration between patients and researchers during the entire end-to-end drug development process, from funding to licensing and beyond.

At Molecule, we see our core responsibilities here to help builders in a number of ways:

  1. Enable biotech DAO builders to leverage our IP-NFT legal licensing frameworks and DAO organizational frameworks. We will support their efforts of collaborating with and supporting academics via Molecule’s marketplace.
  2. Funding from the right sources. We will provide liquidity and support to projects in the form of grants and token swaps. WAGMI.
  3. Provide a talent pool that can move between DAOs, helping build and bootstrap across all components of a DAO: treasury, governance, operations, strategy, marketing, education, and search/evaluation. We have a network of researchers, entrepreneurs, builders, biotech VCs, and enthusiasts to help build the best organizations possible.
  4. Help establish sound global legal frameworks tailored to specific biotech and patient-centric DAO communities such as for-profit LAO like frameworks pioneered by Tribute Labs or non-profit Swiss Associations.

PsyDAO will be the second biotech DAO that Molecule launches and its ultimate goal is to democratize access to psychedelics. We aim to achieve this core goal through several related means. The first is by bringing together a large community of researchers, KOLs, enthusiasts, and spiritual leaders to collaborate and determine the future of psychedelic research. Collectively, this group will work on funding psychedelic research in exchange for ownership in intellectual property, which will be open-sourced and made available to all or commercialized. A key goal is working to make psychedelic IP unmonopolizable by front-running industry or purchasing IP to be made public, before it is patented. This design principle differs slightly from VitaDAO’s, for example.

Others in the ecosystem are also beginning to build biotech DAOs with entirely different functions, going beyond funding. One leading example here is LabDAO. LabDAO is building a community-owned and operated platform to run scientific laboratory services, exchange protocols, and share data. These organizations have a high potential for interoperation and collaboration.

You can imagine a scenario where organizations like VitaDAO source assets from Molecule’s Discovery Marketplace in the form of IP-NFTs. VitaDAO funds early preclinical de-risking experiments. Once positive data emerges, and new experiments need to be performed that might be beyond the scope of the laboratory receiving funding, LabDAO — a community of laboratories — steps in, coordinating downstream development work and experimentation via other academic labs and CROs. Decentralized drug development begins to take shape. Further, the IP-NFT allows different contributors (like LabDAO members) to receive exposure to ownership in IP, in exchange for work. These organizations begin to form a modular, decentralized drug development pipeline with each organization playing to its strengths, and receiving rewards for their contributions.

All of these parts taken together begin to form the basis of a collaborative, open, and inclusive ecosystem that has the potential to permeate and shift monopolistic behavior in biotech towards something that is more strongly aligned with patient and researcher’s interests. This is the beginning of a new frontier for biotech, and this is only Day 1.

Please join us in helping build a better future for biotech.

An open BIO ecosystem for humanity

We want to help anyone that shares our dream of an open pharmaceutical system. Currently, we are helping build biotech DAOs such as:

  • VitaDAO — focused on funding longevity research
  • PsyDAO — focused on funding psychedelic research
  • Drug repurposing DAOs such as Crowdfunded Cures
  • DAOs for Rare Disease communities

At Molecule we provide:

  • DAO and web3 frameworks
  • Hands-on community development strategies
  • Legal frameworks
  • Token economic designs
  • Liquidity
  • We intend to provide DAOs with funding and liquidity to enable them to compete with current VC and Pharma models.

Also be sure to check out LabDAO — one of the most exciting new players in the DeSci community.

This is day one. Build the future of biotech with us.

To learn more about Molecule: Check out our documentation, blogposts, talks, podcasts, careers, website & socials here.
For researchers: List your projects for funding on our Discovery platform here.
For web3 Builders: Join our Discord and reach out to our community manager.
Want to build your own Biotech DAO? Introduce yourself on our Discord or Email us.

Thanks to Paul Kohlhaas, Niklas Rindtorff, and Vincent Weisser for their critical feedback, edits, and assistance with this draft.