Liquid markets for bio IP

Last week Vita Dao fractionalized one of the IP assets in its portfolio and put up 10% for sale to investors.

For those that don’t know, Vita DAO is a DAO focused on furthering R&D in the field of longevity. It is part of a growing ecosystem of bio DAOs.

One of the core activities of Vita DAO is acquiring IP from research labs working on longevity research. Last year it funded the research of the Korolchuk Lab at Newcastle University, led by Viktor Korolchuk. Vita DAO did so by purchasing the Korolchuk Lab’s IP-NFT on Molecule, a marketplace for bio IP. Molecule’s aim is to make bio IP more liquid and easily transferable, which it does by attaching IP onto an NFT (hence the name IP-NFT) that makes the purchase of IP as easy as buying an NFT on Opensea. The Korolchuk IP-NFT is just one of several IP-NFT’s in Vita DAO’s growing portfolio of longevity IP.

Vita DAO chose to fractionalise and sell a portion of the Korolchuk IP in order to generate additional funds for future R&D. The sale was carried out by selling VITA-FAST tokens, which represent ownership in the IP. Prospective buyers were required to hold VITA tokens, the native token of Vita DAO, as a prerequisite to participate in the offering. A more comprehensive explanation of the sale can be found here.

The partial sale of a specific asset within the Vita DAO portfolio is akin to a venture capital fund selling a piece of one of its portfolio companies. While ownership of Vita DAO through VITA tokens gives holders exposure to a portfolio of bio IP, VITA-FAST tokens give holders direct exposure to a single asset within the portfolio.

It’s important to note that VITA-FAST tokens don’t allow holders to directly participate in the economic upside of the IP. Similarly to VITA tokens, VITA-FAST tokens are governance tokens that give holders the ability to influence decision making regarding the IP such as who can license it in the future. More on this can be found in the "Token Rights and Legal Considerations" section here.

In one of my previous pieces on bio DAOs, I wrote:

“I think we'll see more innovation in token design because most tokens today are just used for voting. Profits generated from investments flow back into the treasury and cannot be distributed out of fear that tokens could be deemed a security. As a result, the value of a token only rises according to the perceived value of governing a growing treasury. My guess is that if these tokens did give holders the rights to investment proceeds, Bio DAOs would be able to accumulate much more capital. It’s a tough line to walk though as securities are much tougher for investors to purchase and would exclude a portion of people from participating.”

While this refers to the tokens of bio DAO, it also applies to tokens of individual IP. We’re still very much in the early stages of experimenting with the right token design for the bio space and my guess is that while governance tokens will continue to persist, we’ll see the emergence of security tokens that will grant holders direct economic upside to the IP.

Coming back to the VITA-FAST token sale itself, I find it so interesting because it’s the latest milestone in DeSci’ pursuit of creating liquid markets for bio IP. We already have the IP-NFT standard that enables IP transactions on marketplaces like Molecule and an ecosystem of buyers in bio DAOs that anyone can join by purchasing their native token. Now, individual IP can be fractionalised so that anyone can get direct ownership in bio IP. I think that’s important because the creation of liquid and efficient markets promises to tackle a lot of the issues in the funding of bio IP, which if solved, can speed up the rate of scientific progress.