Moyed
Growing up, I saw many people around me pursue careers as academic researchers. Through their words and from what I observed, I became indirectly aware of how challenging the life of a researcher can be. Particularly in Korea, where talent is the most crucial resource, there is a personal disappointment that the country does not provide sufficient support for researchers and the field of science and technology. Nonetheless, today I would like to take a closer look at Desci, a movement that aims to make the academia great again through blockchain and crypto.
Personally, I have some doubts about whether the name "Desci" is appropriate. Since decentralization alone cannot solve all the various problems in the academia, I wonder if the name really needs to include "decentralized." However, since there are no clear alternatives at this point, I will continue to use the name Desci for now.
Decentralized Science (Desci) is a vision to solve various issues faced by the academia and academic researchers through blockchain and crypto. Projects that share the Desci vision can be further categorized based on the problems they aim to address. Personally, I prefer to divide them into funding, research resources, clinical trials, and publishing.
The issues related to funding, which can be considered the starting point of research, are largely as follows:
Increased Competition Due to Limited Funding Supply: As the approval rate for NIH grants has decreased from 30% in 2000 to the current 17%, the rising costs of scientific research and the limited supply of funding have intensified the competition for research funding, leaving many projects underfunded.
Complex and Time-Consuming Funding Applications: Researchers, who already find it hard to focus solely on their research, reportedly spend about 50% of their time writing research proposals.
Bias in Research Topics: Funding agencies tend to favor research topics that are likely to yield short-term results and have lower risks, which naturally discourages researchers from pursuing long-term, high-risk projects. I believe this phenomenon has significantly contributed to the recent decline in disruptiveness in the acaedmia.
Desci projects aimed at solving these problems seek to add a new funding option to the existing public funding from governments and private funding from VCs by introducing crypto investors worldwide as potential funders. This would alleviate the competition for research funding and allow researchers to work on topics that previously struggled to secure funding.
If I had to pick one project that represents Desci, it would be Molecule. Molecule's most significant achievement is the tokenization of research outcomes into IP that can be traded. Research DAOs, which I will introduce later, support research, own the IP, and monetize it through Molecule's IP-NFT mechanism.
In July 2024, Molecule launched Catalyst, a research funding platform using crypto, allowing researchers to secure funding more easily and enabling investors to invest in early-stage research more conveniently. In September 2024, the first project launched on Catalyst, Project Transfidelity, successfully reached its target amount of 76.461 ETH, marking a strong start. The project, led by Dimitry Shcherbakov from the University of Zurich, aims to develop a new compound that enhances protein translation accuracy to address neurodegenerative diseases.
While Molecule is a platform for funding, projects that actually invest in early-stage research through crypto are Research DAOs. Research DAOs not only invest in specific research topics but also aim to build the largest online communities related to those research topics.
Research resources are essential elements in the research process, such as patient medical data or biological samples. The challenges researchers face related to research resources include:
Lack of Transparency: The entire process of collecting research resources, delivering them to researchers, and using them lacks transparency. This discourages people from sharing their data, lowers the reliability and increase the uncertainty of research results.
Profit-Sharing Issues: Patients who provide biological samples or medical data often do not receive any compensation even when their data is used for research or commercial purposes. The absence of tools that easily enable profit-sharing with data providers is a significant contributing factor to this phenomenon.
Cumbersome Process: The process of collecting and utilizing research resources is cumbersome. The most critical step is obtaining consent from those providing the data, which can be time-consuming and require complex legal procedures due to the lack of a standard framework. Additionally, there is a need for overall improvements in the process, allowing people to easily upload their data and researchers to easily find and use it.
A project worth examining in this area is AminoChain. Participating in a16z's accelerator program, AminoChain envisions itself as the Amazon of biological samples, connecting biobanks worldwide so that researchers can obtain biological samples as easily as online shopping.
Biobanks are institutions that collect, store, and manage biological samples such as blood, DNA, and cells, and are indispensable to biomedical and medical researchers. The global biobank market was estimated at around $2.7 billion in 2022 and is expected to continue growing as genetic research and personalized medicine advance.
According to AminoChain, the consent rate for providing biological samples is around 25% in most institutions, leading to only 10-15% of donated samples being used for research. In the U.S. alone, 200M samples are stored in biobanks but remain unused.
AminoChain is building a biobank network by involving biobanks worldwide as Amino Nodes and enabling patients to participate directly in this ecosystem. This allows patients to transparently check sample license agreements, manage their data, and easily receive compensation when their samples are used. Additionally, it provides researchers with an intuitive UX that makes it easy to find and purchase the biological samples they need.
In addition to AminoChain, projects like Hippocrat, which deals with patient medical data, and Puffpaw, which focuses on data related to smoking behavior, can also be considered part of this area.
In the biomedical field, clinical trials are significant obstacles in terms of time and cost, with many researchers pointing to regulatory burdens as the cause. According to this survey, regulatory delays significantly impact drug approval processes, with regulatory reviews alone causing delays of 1-2 years. Another survey found that the cost of regulatory compliance increased by 41% in the past two years, attributed to increasingly stringent reporting requirements and more complex processes.
Although not directly related to blockchain, I believe a bio-focused Economic Acceleration Zone could address the issues related to clinical trials. An Economic Acceleration Zone is a designated area where a country provides various incentives and regulatory advantages to promote specific economic activities. Examples include the Shenzhen Special Economic Zone and the Dubai International Financial Centre. In a bio-focused Economic Acceleration Zone, clinical trial regulations could be streamlined, and customized regulations applied based on the research characteristics, reducing the financial burden and administrative complexity, thereby accelerating research progress.
A project worth examining in this context is Prospera. Prospera is creating such an Economic Acceleration Zone on Roatán Island under Honduras' ZEDE law. Prospera has already tested the potential of a bio-focused Economic Acceleration Zone through a pop-up city project called Vitalia. In early 2024, in collaboration with VitaDAO, Prospera hosted a two-month pop-up city called Vitalia, inviting experts, researchers, and entrepreneurs in innovative biotech fields, such as longevity, to participate in related conferences and workshops conducted. Although Vitalia was a short-term experiment, I believe it serves as an important case study demonstrating how bio-focused Economic Acceleration Zones like Prospera can accelerate innovation. Similar pop-up city projects include Edge Esmeralda and the upcoming Network School.
In 2022, a new government took office in Honduras and repealed the existing ZEDE law. Consequently, Prospera, which had been operating and developing under this law, naturally opposed this move and ultimately filed a lawsuit against the Honduran government for approximately $10.8B. Therefore, it remains to be seen whether Prospera can continue to operate normally and actively in the region.
The issues related to publishing research, which can be considered the final step in the research process, are as follows:
Costs of Academic Journals: Researchers have to pay around $500~$5,000 to publish a paper in Elsevier. Universities' spending on access to academic journals increased by 521% between 1986 and 2014, while CPI rose by 118% during the same period. Currently, the costs of both publishing and accessing papers are excessively high. For reference, Elsevier recorded a profit margin of 38% in 2020, higher than that of any big tech company.
Lack of Compensation for Peer Review: Peer review is the only QC mechanism in publishing, but it's currently slow, and since there is no compensation, it's challenging to maintain quality. However, whether monetary compensation alone is an appropriate incentive is debatable.
Questions About the Scope of Research Disclosure: Even though many early natural science studies are funded by government taxes, people still have to pay again to access the results through academic journals.
Lack of Research Reproducibility: Research reproducibility refers to whether individual researchers can replicate the results of a published study using the same methods described in the paper. Research reproducibility significantly impacts the credibility of research. According to a survey conducted by Nature in 2016, 70% of researchers failed to reproduce other researchers' experiments, and more than 50% of researchers even failed to reproduce their past experiments.
A representative project aiming to solve the problems of paper publishing is ResearchHub, a project led by Coinbase CEO Brian Armstrong.
ResearchHub aims to increase collaboration among researchers and reduce the costs and time required for publishing papers through token incentives and a user-friendly UX similar to Reddit. ResearchHub offers various features, but the most significant difference from traditional journals is the provision of monetary rewards for peer review. The overall process is as follows:
Preprints from BioRxiv are scraped and imported into ResearchHub.
A bounty is automatically assigned to papers that receive five or more upvotes.
Researchers freely conduct peer reviews, and editors at ResearchHub check these reviews and leave comments for feedback if necessary.
The ResearchHub Foundation rewards researchers who successfully complete peer reviews.
According to ResearchHub, approximately 600 peer reviews have been conducted so far, with an average of about 16 days from bounty assignment to peer review completion. Another feature of ResearchHub is that users can directly request peer reviews of their research or set bounties for required research and offer tokens as rewards.
Compared to traditional journals, ResearchHub differentiates itself by being a dynamic journal where papers that receive more upvotes are displayed at the top in real-time, unlike the static nature of traditional journals. However, a downside is that due to copyright issues, uploading full-text PDFs requires the paper to be under a CC BY or CC0 license, limiting the range of accessible papers on ResearchHub.
Recently, ResearchHub has been attempting to reform the current reputation system for researchers, which overly relies on citation-based metrics. They are introducing a point system called REP that quantifies researchers' reputations by incorporating not only citations but also various research activities such as upvotes and peer reviews. For more details on this, please check this article.
The most significant difference that sets the academia apart from other industries is that reputation, or fame, is more important than money. Because of this characteristic, it is not easy for Desci projects, which propose new alternatives to the current methods familiar to researchers, to squeeze in.
Nevertheless, I believe that Research DAOs are the most likely to succeed as the first player in Desci, for the following reasons:
Low (or No) Switching Costs: Researchers do not lose anything by receiving funding through a Research DAO instead of traditional funding channels, as they are ultimately securing the same funds for research. On the other hand, in the case of publishing, if a researcher has to choose between Nature and ResearchHub, the high switching cost involves forgoing the great honor of publishing in Nature.
Clear Value Proposition: Even if researchers know nothing about crypto and blockchain, Research DAOs still provide value as an additional funding option.
Focus on Niches: When a new service enters the market, focusing on a specific niche and fulfilling the needs of that customer group is important. Research DAOs currently excel in identifying their own niche research topics and forming communities of investors, researchers, and patients who resonate with these topics.
While we have already touched on Research DAOs, let's delve into more detail.
Objectives
Research DAOs have three main objectives: building a community, supporting academic research, and securing sustainability.
Community Building: They aim to build an active online community based on the internet, including researchers, patients, and the general public interested in specific niche areas.
Supporting Academic Research: They seek to discover and actively fund impactful academic research related to the specific research topics they focus on.
Securing Sustainability: To ensure that the Research DAO can operate without additional capital injections, they aim to commercialize the intellectual property (IP) of the research they have invested in and use the profits to support additional projects.
Overall Funding Process
The process of obtaining research funding through a Research DAO generally follows these steps:
Initially, when a Research DAO is established, it raises funds through its native token sale to the public and some institutional investors. Participants in this initial sale purchase the Research DAO's native tokens at a fixed price, and the funds raised form the Research DAO's treasury.
Researchers seeking funding from a Research DAO must submit a proposal for their intended research. While the specific procedures may vary among Research DAOs, proposals are typically reviewed by various members of the Research DAO in multiple stages.
Once the proposal passes the internal review, all members of the Research DAO vote on the final decision to provide research funding.
After the final decision, researchers convert their project into an IP-NFT with the help of Molecule, and the Research DAO purchases the IP-NFT, providing funds to the researchers in return.
Recently, instead of minting IP as NFTs, a method of minting them as fungible tokens called IP Tokens (IPTs) has been used, allowing various entities to freely purchase parts of the IP as they wish.
Performance
So, how are the current Research DAOs performing?
As of September 1, 2024, there are currently 8 Research DAOs, with the second cohort in preparation. The most representative Research DAO, VitaDAO, focuses on longevity research and has received investment from Pfizer Ventures. VitaDAO currently holds over $6 million in liquid funds, has distributed over $4.5 million, and has supported more than 20 longevity research projects in collaboration with institutions such as the University of Copenhagen and Newcastle University. Recently, two companies that VitaDAO has equity invested in, Rubedo Life Science and Oisin Biotech, secured Series A investments of $40 million and $15 million, respectively. For more details about other Research DAOs, please check this article.
Finally, I would like to share the questions I had about Research DAOs during my research and the answers I found.
How is the funding actually delivered to the researchers?
In the case of VitaDAO, legal contracts are signed between "Molecule AG" and the researchers for funding through IP-NFTs, and the actual funds seem to be provided in fiat currency. For equity investments in startups, a Canadian non-profit foundation called the Vitality Healthspan Foundation was established, which acts as the legal wrapper for VitaDAO. Of course, this may vary for other Research DAOs.
Are Research DAOs for-profit or non-profit?
In the case of VitaDAO, it falls somewhere between for-profit and non-profit. Although it engages in profit-driven activities through IP commercialization, this is entirely for the purpose of continuing to support longevity-related research. For reference, all profits generated from IP commercialization go entirely to VitaDAO's treasury, so $VITA holders do not directly benefit financially. Of course, this may differ for other Research DAOs.
Is it possible to have research topics other than biotech in a Research DAO?
What research topics would be suitable for a Research DAO? Here are the criteria I consider:
It should be niche but still have a real impact, even if only on a small group of people.
It should be relatively underfunded from the traditional government-led public funding system for various reasons.
It should be R&D extensive & high-risk.
For sustainability, the research outcome should be commercializable through licensing or patents.
Considering these criteria, biotech indeed seems the most suitable, but fields like materials science could also be possible.
What’s the difference between a Research DAO and crowdfunding?
For investors, the key difference seems to be that Research DAOs allow participation in funding more simply using crypto. For researchers, the biggest difference from crowdfunding is that Research DAOs not only provide financial support, but also enable research to advance through collaboration and feedback from the Research DAO community, which may include other researchers or patients.
Can Research DAOs replace existing funding channels?
I believe it’s impossible. The most significant reason is the difference in scale, as the amount of funds that Research DAOs can currently utilize is not comparable to government-led public funding. Therefore, I think Research DAOs should aim to establish themselves as an additional funding channel for researchers. However, I believe there are some exceptions, such as in the case of HairDAO, where the Research DAO funding channel could play a more leading role in topics with very limited government-led funding, such as androgenetic alopecia.
In this article, we explored various Desci projects and took a closer look at Research DAOs, which I personally believe are the most promising first player in Desci. However, what’s more important than the discussions above is the actual thoughts of the researchers currently in the scientific community. Understanding what aspects of Desci and Research DAOs are problematic or attractive to them and improving on those points is of utmost importance. Therefore, through the internship project I will be participating in during the second semester, I plan to focus on examining the realistic possibilities of Research DAOs. I will share my findings once they are completed.
