In this episode, dao5 founder Tekin Salimi discusses his journey from traditional crypto venture capital to building dao5 (a decentralized autonomous organization). He reviews the challenges and opportunities in the crypto industry, shares insights on DAOs, venture capital, and the intersection of blockchain and artificial intelligence, and explores the evolution of the crypto ecosystem following market changes in 2024.
Tekin Salimi recounted his experiences from Polychain Capital to founding dao5 in 2022, highlighting the unique investment fund model he adopted at dao5 and emphasizing the importance of adaptability. His approach at dao5 differs from traditional venture capital, particularly prioritizing people and community building within a decentralized framework. Tekin delved into the altcoin market, token distribution, and the trend of venture capital shifting towards decentralization. He also highlighted dao5's future governance model, where decision-making will gradually decentralize, but initially there will be a strong leadership core. The discussion also touched upon current memecoin challenges, institutional adoption, and how the DAO model addresses liquidity, incentives, and governance issues in the crypto industry. Finally, he shared his thoughts on the long-term potential of integrating decentralized AI with crypto.
The opinions expressed by the guest do not represent those of Wu Blockchain. This article does not constitute any investment advice. Readers are advised to strictly abide by the laws and regulations of their locality.
The audio transcription was done by GPT and may contain errors. Please listen to the full podcast on platforms such as Little Universe and YouTube.
Small Universe: https://www.xiaoyuzhoufm.com/episodes/6977677fef1cf272a795d907
YouTube: https://youtu.be/Amj3vBK825A
Introduction and background of dao5
Ehan: Today we have with us Tekin Salimi, the founder of dao5. Tekin, welcome! Could you please introduce yourself and dao5?
Tekin: Thank you for the invitation. I am Tekin Salimi, founder of dao5. I entered the crypto space in 2017, joining Polychain Capital, where I served as a partner in the early stages of crypto venture capital, spending most of my time on investments.
In 2022, I founded dao5, building upon some of the venture capital strategies we developed at Polychain, focusing on technology-driven teams and innovative projects, particularly in the intersection of crypto and artificial intelligence, including modular and application-specific infrastructure. In early 2025, amidst market uncertainty, we shifted our investment focus more towards large-cap assets such as Bitcoin and Solana. Today, dao5 employs a diversified strategy: venture capital remains our core focus, while also engaging in areas such as liquidity investing, government bond investing, lending, and incubation.
Overall, our core philosophy is that adaptability is more important than conviction for long-term survival in the crypto industry. The value proposition of crypto is constantly evolving—from Bitcoin as digital cash, to digital gold, and then to decentralized internet infrastructure represented by Ethereum. Today, crypto is increasingly becoming the infrastructure for the global expansion of the US dollar, especially through stablecoins. Our approach is to remain flexible and adaptable, and to allocate capital effectively, based on changes in the market and long-term trends.
The core difference between dao5 and traditional venture capital
Ehan: What is the biggest philosophical difference between dao5 and traditional venture capital funds?
Tekin: That's a good question. When I founded dao5 in 2022, the environment was very different from when I joined Polychain Capital in 2017. Back then, Polychain itself was an innovative model—there were very few truly crypto-native venture capital funds, and many funds had begun to abandon traditional equity structures and instead focus on generating returns for new development teams through tokens.
When I founded dao5, I wanted to design a company with a clear future-oriented vision and core principles. While there aren't many fully functional DAOs today, there has been a wealth of experimentation since the original DAOs on Ethereum in 2016. Although most of these experiments haven't yet achieved sustainability, we've already seen early signs of success. I firmly believe that within the next decade, DAOs will become one of the most important entities in the global business world. Investing in DAOs, in particular, could potentially allow you to manage assets comparable to the world's largest asset allocators, or even control tens or even trillions of dollars in assets through decentralized or fully on-chain structures.
This is precisely what we are striving to build. Today, dao5 still operates as a relatively traditional venture capital fund. But as we manage more investment vehicles and build operational businesses—such as running validators and other on-chain activities—we plan to integrate these businesses under a DAO framework and gradually distribute ownership and control to our broader stakeholder group.
dao5's people-oriented governance model
Ehan: Does dao5 focus more on ownership, community building, or on-chain coordination?
Tekin: That's a great question. We haven't fully settled on the exact balance between these three elements, but I can explain our core concept and how it differs from most DAOs. At its most basic level, a DAO is an on-chain entity where token holders participate in governance. This definition encompasses many different models. In 2021, we saw investment club-style DAOs like Flamingo DAO and PleasrDAO. On the other hand, there are also DeFi protocols with very specific functions, such as lending protocols, that incorporate token-based governance.
Most DAOs have a clear mission from the outset: what the DAO does, how it generates revenue, and why people should join. Participants are drawn in by this predefined mission. We intentionally subverted this model. Even in the name dao5, we put "DAO" first, not last, to convey this shift.
Our core focus is first and foremost on assembling the best talent. In many ways, even our investment fund is a long-term process aimed at identifying outstanding founders, researchers, and advisors and building multi-cycle relationships with them. Once this team is established, the next goal is to tokenize the business and capital pool, and then use governance to determine the direction of dao5. We believe that people aren't drawn in by a fixed mission, but rather by those who define and evolve that mission over time.
Investment Direction and Strategy
Ehan: dao5 recently completed a $222 million fund. Which vertical sectors or themes do you primarily focus on?
Tekin: We believe the altcoin market—both in terms of the number of tokens and their total market capitalization—will continue to expand over a long period. When I talk about altcoins, I'm not entirely referring to those general-purpose L1 or L2 tokens that captured most of the value in the earlier cycles. Rather, I think tokens are gradually evolving into a distinct financial asset class, positioned between mid-to-late-stage private companies and publicly traded stocks.
We see tremendous opportunities in cash flow-generating businesses—whether they are software companies or more physically-based companies that are unwilling or unable to go public due to a lack of scale. At the same time, they still desire some of the advantages of being publicly traded. Binance and BNB are prime examples of this model in the crypto space: BNB has helped build a user base whose economic interests are tightly tied to the platform's customers, and provides a proxy for the valuation of the underlying business without the high costs and complex regulatory burdens of an IPO.
We view this model as a future asset class similar to private equity. In the future, we will see more and more tokens like Hyperliquid and Pump.fun, generating real and continuous cash flows from their core products. These cash flows can be used to buy back tokens or distributed directly to token holders. Over time, analysts can apply traditional financial tools, such as discounted cash flow models, to evaluate these tokens just as they evaluate publicly traded stocks.
We are still in the early stages of this trend. BNB has existed since 2017, but projects like Hyperliquid, Pump.fun, and Geodnet are relatively new. We believe this focus on real-world, fundamental financial value will drive the next wave of innovation in the crypto industry.
Institutional adoption and crypto-indigenous innovation
Ehan: How do you see the line between institutional adoption and crypto-native innovation?
Tekin: That's a great question. I've seen a clear divergence in the industry, a trend that's become increasingly apparent since the meme cycle of 2024. Today, the crypto space has essentially split into two parallel universes. Memes are almost entirely retail-driven, primarily driven by Gen Z and Millennials in the US, with some global participants. These memes are rooted in internet culture and a kind of grassroots on-chain financial nihilism, and are not an institutionalized phenomenon at all.
Meanwhile, many infrastructure altcoins and other non-meme coins have seen a continued decline in market performance over the past year. In contrast, Bitcoin—and to some extent Solana—has demonstrated greater resilience. This is mainly because assets capable of achieving truly breakthrough growth typically attract institutional demand.
For aspiring alternative coins to achieve breakthrough success, the real challenge lies in bridging the gap between VC- or retail-driven assets and those capable of attracting institutional investment. The specific path to doing so is currently unclear. A recent example is Solana. Initially backed by FTX in 2021, it ultimately achieved breakthrough growth and found new use cases, particularly in the launch and speculation of meme coins.
Currently, the retail and institutional crypto markets feel like two completely different worlds. However, over time, the biggest winners in the retail market will likely attract institutional attention.
Shift towards enterprise and compliance priority projects
Ehan: Have you noticed a shift in founders' focus towards projects that prioritize enterprise and compliance?
Tekin: Yes, I have indeed seen some shifts. There are now some founders who are starting to focus on enterprise-oriented projects, and their backgrounds are different from those of typical crypto founders in the 2017 or 2021 cycle. These founders are generally older, more experienced—they've weathered several market cycles, and are less aligned with Gen Z characteristics. In contrast, founders focusing on retail-driven projects typically have completely different backgrounds.
Two distinct groups of founders have emerged: one focusing on institutional or enterprise-level projects, and the other entirely on retail-driven speculation. Both present unique opportunities and potential. Whether it's institutional/enterprise projects or retail-driven crypto projects, both hold immense potential.
The performance of dao5's first fund
Ehan: In your first fund, which projects generated the highest returns, and which were the most challenging to lose?
Tekin: I don't want to go into specific project names, but one of our biggest success stories is Bittensor. We were one of the earliest investors in the entire ecosystem, buying tokens through Discord before it was even listed on an exchange, with only one other large VC also involved in the network's early investment. We made early acquisitions from miners and other early stakeholders. This was a huge success, especially as fair issuance made our position liquid. After seeing its success in 2023 and 2024, we ramped up our investment, acquiring and operating one of the largest validators on the network. We are also considering incubating a subnet and investing a significant amount of time in that ecosystem.
Other high-performing projects include Berachain, EigenLayer, Lombard, Sahara AI, and Allora. These projects successfully launched and gained real liquidity in the previous cycle.
Of course, like any fund, we also have some failed projects. In crypto venture capital, common reasons for losses are that the team fails to find a product-market fit, or internal problems arise, such as infighting among founders, causing the project to collapse even before a token generation event (TGE) is held.
Overall, our investment in them wasn't large—our positions were small—but it served as a reminder that even seasoned investors can lose their heads in a bubble-like frenzy. This is a valuable lesson in maintaining discipline and adhering to fundamental principles in investing, especially during periods when market value is lacking. Maintaining a slow and steady investment pace is crucial.
Bittensor and dao5 act as incubators
Ehan: Speaking of Bittensor, what is the vision behind dao5 as an incubator for the Bittensor ecosystem?
Tekin: Bittensor is one of the few truly grassroots, native community-driven crypto AI protocols we've seen. When I observe the crypto community, especially projects that are about to launch or have just launched, you often see the same type of people—primarily "farmers"—who are interested in airdrops or participate in ICOs on token sale platforms. Typically, they buy, sell, and then move on to the next token generation event (TGE), a process that often unfolds in a professional manner.
What's missing in many crypto communities are those who truly believe in the protocols and hold on even when prices drop. We felt this lack acutely from 2017 to 2021. Every protocol experiences pullbacks, and every token goes through market cycles driven by macroeconomic factors.
In contrast, Bittensor's user base and community are quite different. Many users hold no other crypto assets besides Bitcoin. This allows the community to focus more on its long-term vision. We will continue to support Bittensor and hope to play a role in its long-term growth. For example, the early data from subnets like Shoots is already very impressive—it is processing one-third the number of AI tokens that Google will process in 2025. These groundbreaking figures demonstrate Bittensor's enormous potential.
As AI applications become mainstream, we believe a shift will occur where users are unaware that the infrastructure supporting these applications is based on Bittensor subnets, rather than traditional cloud services. At that point, I believe Bittensor will achieve true product-market fit, and I firmly believe that moment is closer than many people imagine.
Blockchain and AI: Future Synergies
Ehan: What are your thoughts on the long-term convergence of blockchain technology and AI?
Tekin: I think many of the ideas currently under development are heading in the right direction, but the implementation still needs further refinement, and the models are not yet fully accurate. For example, concepts like the GPU market for training and inference models, or open-source large language models (LLMs) where weights, parameters, and biases are governed by stakeholders to reflect community value, are very innovative. These are not feasible in the Web2 environment, and I believe these categories are worth exploring. However, achieving perfection requires time and repeated iterations.
Furthermore, as AI continues to grow as an industry, the demand for computing power and global investment in computing resource allocation will increase. This growing market will make the decentralized GPU market more viable.
Overall, I think we're on the right track with these ideas, but the timing isn't quite right yet. These concepts need some time to fully mature.
Changes in expected returns on venture capital
Ehan: In this cycle, many VCs are feeling overwhelmed compared to the exceptionally high returns of the last bull market. How do you view the changes in return patterns and LP expectations?
Tekin: That's absolutely true, and I think it's a natural phenomenon in the maturation process of any asset class. The crypto industry is no longer in its early stages. Even looking at Web2 venture capital funds, I'm sure the industry's average and median DPI, or TVPI, has dropped significantly over the past five years compared to the previous five to ten years. I recognize that, but I also think it's healthy. This means the market is maturing, becoming smarter, and we're entering a more competitive phase in the crypto industry.
This is an interesting shift because in previous cycles, it felt like the founders of four protocols with similar features and competing for the same users would come together for a meeting, all behaving like best friends. Behind this dynamic was a mindset—that as long as more users joined, the entire industry would win. The prevailing view was "when the east wind blows, all ships sail." But that's no longer the case. By 2025, we've reached a new inflection point; new liquidity and new users have plateaued. Now, funds and founders will have to compete for existing market share. This shift will differentiate winners from losers, which I believe is very healthy for the industry.
The Dilemma of VCs in the Meme Coin Market
Ehan: In a meme-dominated market, what are the biggest real-world challenges for VCs in terms of incentive design, liquidity, or token distribution?
Tekin: As a fund manager, memes are definitely a double-edged sword. We learned this the hard way in 2024—if you don't participate in this speculative bubble, and everyone seems to be making money, LPs will naturally question why you missed out. But if you do participate, and these memes ultimately fail, get rubbed, or get hacked—which happens to 99% of memes—it's very difficult to defend your losses afterwards. The discussion quickly turns into: Why did you invest in this in the first place? This is a huge test of your emotions.
The fundamental problem with memes is that institutional investors, or so-called "professional players," such as venture capitalists (VCs), actually have no advantage. For almost all participants, it's a casino game, and the only ones with an advantage are the insiders who build and issue this "casino." Therefore, I don't believe VCs have much of a future in the meme asset class itself. Perhaps we can invest in the platforms or infrastructure that support these social phenomena, but if we treat memes as an investment category, VCs have no marginal advantage.
Ehan: Has Memecoin changed the founders' views on the pace of fundraising and the timing of token launch?
Tekin: To some extent, yes. Memes still absorb a significant amount of liquidity and speculative demand in the crypto market. Clearly, founders or VCs prefer retail investors to speculate on assets they have exposure to, or those with stronger fundamentals built by long-term founders, rather than memes. But the reality is that the crypto market is essentially a single global liquidity pool, and everyone is competing for the same amount of money. In a highly accelerated cycle like 2024 with memes, this competition forces founders to launch projects earlier and faster to compete for limited liquidity.
Transitioning to a DAO: Governance and Structure
Ehan: dao5 is transitioning into a DAO while raising funds. How are you planning your governance and decision-making mechanisms during this transition?
Tekin: The transformation into a DAO will still take several years. We initially planned to complete the transformation by 2025, but we believe that current market sentiment and infrastructure are not yet fully prepared for this shift. Our core strategy is to maintain maximum flexibility because, as I mentioned before, adaptability is crucial for survival.
I've seen some DAO experiments from 2021 that started with all the right people—top stakeholders, fund managers, and founders. However, these projects ultimately collapsed or gradually lost relevance. One challenge is that finding the right people isn't the hardest part. The real challenge is ensuring the right alignment of identity and incentives to keep everyone engaged and contributing in the long run. The most common failure pattern is the "tragedy of the commons."
For example, if I gave each of the 100 top figures in the crypto space one token, they wouldn't care about the operation of the DAO. They wouldn't contribute or participate in discussions because they're already wealthy. If one person does all the work, the other 99 token holders will simply sit back and reap the benefits, riding on that person's coattails.
This might sound controversial, but I don't believe a DAO should be entirely democratic or egalitarian. I believe the distribution of power will always follow a "power law." In the early stages, I and the other core stakeholders at dao5 will have the majority of control. However, to create an effective system, you need to gradually open up to new participants. This idea is like hiring employees for an early-stage company: your first 10 employees are crucial; you need to ensure they are both highly capable and culturally aligned with the company. Initial alignment is critical because these 10 people will influence the next 10. If early alignment goes wrong, this inconsistency will amplify as the organization scales.
We applied this gradual approach to the transition of our DAO, adhering to Dunbar's number principle, which states that social groups begin to lose cohesion after reaching a certain size—typically around 150 people. While 150 people may not be our exact figure, we applied this mindset to the transition process of our DAO, gradually absorbing new members.
Ensure a balance between minority and majority shareholders
Ehan: How do you plan the token distribution among LPs, builders, and the broader community in this process?
Tekin: We haven't finalized that yet. All LPs, founders, advisors, trading scouts, and even new members we haven't yet connected with will have the opportunity to participate. However, it's a gradual process, and it will take time to find the right approach. I'm not planning to replicate the chaotic token distribution we saw at Temple DAO or some of the Olympus DAO forks in 2021. Those projects involved lengthy, complex airdrops or token distribution processes. I had team members participate in those early forums, and they had to submit some kind of feeding images and post them on Discord—almost like an "initiation test." But I do think that this complexity can create a certain mystique when building a community.
Ehan: With the decentralization of Dao5, how do you ensure that small contributors are not overshadowed by large LPs or large users?
Tekin: This is a controversial topic, and similar discussions have arisen in several key DAO governance votes over the past few cycles. As I've mentioned before, I don't believe DAOs should be purely democratic, nor do I believe democracy is necessarily the best governance model. For example, I live in the UAE, which is not a democracy but a well-functioning, tolerant monarchy. I do believe that balancing the interests of minority shareholders is very important, but ultimately, the power dynamics will always exist in the incentives and decision-making processes between different DAOs.
There are many ways to address this issue, such as using a two-stage voting system to limit the influence of large shareholders who want more governance power. Personally, as a founder, I sometimes tend to adjust my voting to independently consider the interests of minority shareholders. There are many ways to solve this problem, but none is perfect, and there is a limit to how important it is to address this issue.
Building value-aligned community engagement
Ehan: What strategies do you use to attract contributors and create value-aligned community engagement?
Tekin: Since 2022, my approach has been somewhat unusual. Running these investment funds is certainly about making money and building a capital base, but the real focus is on picking the right people. My favorite part of venture capital is reaching out to young founders early on and building long-term, multi-cycle relationships with them. In building these relationships, I'm essentially selecting people for a non-chain entity. That's how I understand the process.
My strategy is simple: continue operating the dao5 fund and meet as many interesting people as possible. I hope to learn from them, and I also hope they can learn something from me. As these relationships stand the test of time, I believe we will be able to build not just a fleeting DAO, but a sustainable one that maintains its core principles across multiple cycles.
Managing Trust and Legal Risks Related to Anonymous Founders
Ehan: dao5 supports anonymous founders. So how do you handle trust, responsibility, and legal risks in this situation?
Tekin: That's a difficult question to answer, and it was definitely a learning experience for us. Our fund's very first deal was leading the seed round for Berachain. The three founders I met were all anonymous. I didn't ask them to reveal their identities, and they didn't. But you have to do your own background checks and assess their character from multiple angles. Even if they remain anonymous, building trust is still very important.
It's crucial to meet with founders face-to-face and get a feel for their character. Founders who choose to remain anonymous can be a huge red flag—there may be worrying reasons behind such a decision. However, as long as you can understand their reasons for doing so—whether it's for the benefit of the agreement, widespread strategic communication, or the legal risks posed by the Department of Justice and the Securities and Exchange Commission under the Biden administration, as was the case when I invested in Vera Chain in 2022—we feel reassured to continue working with anonymous founders as long as you clearly understand their motivations. It's possible to invest with confidence once you can build conviction in their motivations.
The Future of Crypto Venture Capital in a Decentralized World
Ehan: Do you think most crypto VCs will eventually transform into DAOs, or is dao5 a special case?
Tekin: Frankly, I think most crypto VCs will eventually disappear. We're in a testing and refinement phase right now, and those funds that continue to operate under the old rules and can't adapt to change will struggle to generate returns. Without experienced LPs, or LPs who don't understand the crypto industry, investing in traditional funds, they won't be able to raise future capital. I believe the two types of funds that will survive in the future are: one is mid-sized funds that can still operate entirely on their own capital, even if they no longer raise large sums or can only raise smaller sums; the other is funds that can build trust with LPs and perform exceptionally well, thereby attracting long-term, loyal investors.
However, I do believe that, in the long run, funds must fully leverage the DAO mechanism. You can have a DAO fund, not necessarily governed entirely on-chain, but even just auditing the fund is currently a very rudimentary and painful process. Any fund manager or logistics team will tell you how complex and time-consuming this process is. Once we can securely store and verify all transaction and investment information on-chain using smart contracts and computer science, efficiency will be greatly improved. We already have this technology—it's just that its adoption and regulation are still in their early stages. Some characteristics of DAOs, such as becoming on-chain entities, will undoubtedly make the operation of investment funds more efficient.
Differences between Western and Eastern crypto ecosystems
Ehan: What cultural or structural differences have you observed between Western and Eastern crypto venture capital?
Tekin: That's a great question. I think Eastern VCs tend to focus more on business acumen and financial literacy. On the other hand, Western crypto VCs often focus more on infrastructure idealism and computer science. They also pay more attention to signaling, like popularity on Twitter. Both approaches have their advantages. There are also some excellent funds that have successfully bridged the gap between the two, investing in both Eastern and Western projects. We tried this approach in our first fund as well.
Ultimately, different venture capital fund managers are playing different games, and their criteria for success vary. At its core, it depends on each investor's guiding philosophy. For some funds, success hinges entirely on returns—a numbers game focused on metrics like AUM and DPI. For others, success is more about external perception—being seen as top-tier or attracting attention on platforms like Twitter. Both models are effective, but the key lies in your value system.
Overcoming liquidity, network, and regulatory gaps
Ehan: Which of these factors—distribution, liquidity, network, or regulatory attitude—has the biggest difference?
Tekin: In the past, there was indeed a huge gap in regulatory attitudes, especially the hostile attitude of the United States towards crypto. For several years, non-US funds had a natural advantage—they didn't face as many subpoenas or SEC investigations. This significantly slowed down their Western competitors and added substantial back-office and compliance costs.
Regarding liquidity, I think the differences are largely minor. These markets are essentially a single global liquidity pool, so there's no reason to believe that Eastern VCs have more liquidity than Western VCs. However, I believe most Eastern VCs are more focused on liquidity, partly because they are generally more experienced in financial matters. But there are indeed some differences in liquidity and regulatory attitudes.
Ehan: Is there anything else you'd like to share with our audience?
Tekin: I want to emphasize a core point: we've entered a new phase for the crypto industry, and it's an exciting one. Since 2024, many market participants have experienced significant losses or pullbacks, and this cycle has been quite unique—especially given the Trump administration and the less-than-expected progress of crypto regulatory adoption. But in the long run, this is very healthy for the market. The future of altcoins is absolutely there, and we're seeing interesting innovations from cash flow generation systems like Pump and Hype. If we shift our focus from speculative investing to creating real value, I believe the industry will become much healthier, and there will be plenty of opportunities. So, don't lose hope.
