Survival of DAO in crypto Winter

Survival of DAO in crypto Winter

The bearish trend in the market has dragged on and it’s time to talk about the weather, how to prepare for survival in the cold season. 

Concept of “crypto winter”

It is very difficult to say exactly who coined the term “Crypto Winter”, but the media already in 2018 began to use this concept to tell users about the protracted correction. Like the seasons, the cryptocurrency market is very cyclical and the protracted period of decline in buyer interest and correction began to be called a long time ago. At the moment, we are already observing the third crypto winter (the first in 2013-2015, lasting 427 days, and the second in 2017-2018 with a duration of 395 days). The fall in the total value of bitcoin from the local maximum reached in all three cases almost 85%!

Impact of crypto winter on DAOs

DAOs aren’t the only ones suffering from a protracted crypto winter. Losses are borne by all market participants. When the gloss of crypto projects falls, only the strongest projects that have an active community and a fundamental foundation remain on the market.

With a decrease in the cost of the native token of the project, staking programs become less profitable, which causes an avalanche effect of the sale. Such losses cause participants to abandon their positions and sell their coins. Participation in the community becomes less profitable and and because of this, the development of the project is hampered. Attracting new members becomes more difficult, and even more difficult is to convince them to become holders of DAO tokens. As you can see, the protracted crypto winter can have a very negative impact on the DAO community. 

Key lessons learned from the crypto winter period for DAOs:

The only thing that I would like to say is that you need to be more demanding on the expenditure from the DAO treasury, it is worth reducing non-current expenses and preparing a stock for solid construction during the crypto winter. There are many examples of non-rational use of the budget, which led to very sad consequences. 

Steps that can be taken by DAOs to prepare for future crypto winter or market downturns.

Reasonable reduction of marketing costs: 

With a high probability of the onset of crypto winter, successful projects reduce marketing activity and increase the costs associated with the implementation of the project, to maintain and redeem their native token, as well as to encourage active and old participants.

Strengthening the fundamental basis for the use of the native token: 

If the native DAO token gains popularity and its use increases, there is a possibility that a protracted correction it will react noticeably weaker.

Strengthening the community:

The DAO community community is its heart, the more active the internal work will be, the higher the chance that the DAO will be in demand on the market even during the crypto winter. 

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