An Interview With LabDAO’s Arye Lipman

Decentralized science. DeSci.

Decentralized science is touted as a way of funding scientific ventures using the blockchain, the same digitally distributed, decentralized, public ledger that exists across a network. The same digital network that powers the cryptocurrencies like Algorand, Bitcoin, and Ethereum.

DeSci is cool: it promises that anyone can participate in this world by starting projects, recruiting scientists, and getting things done while upending the restrictions of government-academia-industry funding and intellectual property structures. It's collaborative science funding on an open community level. Because how else are we going to tackle really big challenges?

But what exactly is DeSci? And will it work?

Arye Lipman, founder of the venture capital firm, Mars Bio, recently co-founded LabDAO, an open, community-run network of wet and dry laboratories accelerating progress in the life sciences. I sat down with Arye to learn more about decentralized science, LabDAO, and how the world of science might change as people create life science ventures on the blockchain. What follows are highlights from our conversation.

KARL SCHMIEDER: For those who don’t know, could you tell us exactly what a decentralized autonomous organization is - a DAO?

ARYE LIPMAN: There are a lot of definitions used by different people, but a DAO is basically an organization enabled by the blockchain through a set of inter-operating contracts. Those contracts do things without human intervention. For example, if money is sent to a wallet associated with a DAO, that might trigger a set of actions. There is little to no involvement from people making decisions because these protocols are built into the fabric of the DAO structure. It’s important to clarify that DAOs today include people making decisions. In the future, that won’t always be the case.

So, I look at DAOs in the common nomenclature as blockchain-enabled organizations in various forms and formats.

SCHMIEDER: Let me highlight one example that was recently in the news. Constitution DAO created a token that people could buy or invest in, with the idea of purchasing an original copy of the Constitution [of the United States]. 

LIPMAN: That is a good example. Constitution DAO got a lot of interest and exposed many people to the idea of DAOs. It demonstrated that DAOs could be a new way of crowdfunding: You build a community and issue a token affiliated with that community. Those tokens represent shared ownership over an asset. In the case of Constitution DAO, the intent was to quickly raise capital to buy a copy of the Constitution, though they failed. You could [use a DAO to] invest in IP to produce a movie. I think using a DAO as a crowdfunding tool is one of the more obvious use cases. It might not be the best. But it’s an excellent place to start.

SCHMIEDER: It's clear that certain jurisdictions, for example, Wyoming, are setting up laws to legalize these entities.

LIPMAN: The regulatory environment is evolving very quickly. At some point, it will become a stable, regulated environment. Right now, DAOs are loosely defined as online communities. Most are a Discord server and a shared crypto wallet. The challenge is doing business in the real world. Suppose you want to rent a space or an office or sign a contract -- that's impossible because DAOs are primarily extra-legal entities. I'd like to think that with the Wyoming legislation and other emerging legal frameworks, DAOs can more easily undertake real-world activities. Different places around the world are trying to figure this out. For example, Switzerland offers certain legal structures that lend themselves to DAOs.

SCHMIEDER: What was the path to starting LabDAO?

LIPMAN: I've been interested in crypto for a long time.

It took me a while to figure out where the world of crypto and decentralized finance would intersect with deeptech, biotechnology, and real-world scientific innovation

— things I care about. I found a lot of intelligent, excited people interested in fixing science in the communities I got involved in. 

In general, it's easy to gather 100 or 1000 people together in a Discord community and get people working on a project together. That's exciting. But usually, that's also hard to do. In biotech, for example, if you're starting a new drug development company, it's challenging to get the first 1000 employees. So gathering communities is something the internet is really good at. 

The other part [of DAOs] that interested me was how you can allocate ownership and involvement using web3 or a DAO structure. It's much easier to give people ownership of a community in this space than to allocate equity ownership of a company. To me, the idea of gathering a community and giving people shared ownership of a project are some of the most exciting things happening in the decentralized science space. 

We launched LabDAO based on the premise that many biotech companies outsource a lot of their work. In fact, much of science is already becoming decentralized. For example, a scientist doesn't need to do protein production or DNA synthesis in-house because those tasks can be outsourced. But the market for outsourcing science and collaboration is very fragmented and cumbersome to navigate. 

A few companies - like Twist Biosciences - have done really well. Twist is the gold standard for DNA synthesis. But for a lot of tasks, especially those at the long tail or complicated or even weird science, it's hard to find the right resources. 

The thinking behind LabDAO was could we buil a community around a better marketplace for scientific services.

That would be really interesting. Beyond that, you can start thinking of ways that a community could enable scientists around the world to work on lab-related tasks. If you give scientists easy access to a marketplace of services and offer incentives for participating as a provider, you could start to build a decentralized, global outsourcing network.

Our long game is enabling scientists around the world who may not have access to capital or the right kind of equipment or physical resources. With the LabDAO network, they can start to tackle some of the really big scientific problems we're facing. 

SCHMIEDER: I've heard more than once that most lab equipment -- maybe 80 percent -- sits idle most of the time. So, I could imagine that if you've got dormant lab equipment and your network, you would be able to use LabDAO. Then, very suddenly, the ROI on that equipment is greater because it's being used and monetized.

LIPMAN: Absolutely. I think many of us in the space have talked about the idea of a cloud lab for as long as there has been a cloud. A few companies have taken a crack at becoming the AWS (Amazon Web Services) for science. But it's very challenging, and those companies have struggled because you have to build out a huge suite of services, rent space, buy equipment, and all that is expensive. Not to mention what you pointed out, if you have a million-dollar mass spectrometry machine used for an hour a day, you're losing money on your investment. 

Now imagine a world where you match supply with demand in an efficient way. You have those high-value pieces of equipment hooked into a network where usage is up. That would be extremely valuable to the scientific community and the owners of the community. That's the end game.

Imagine now that you're in Uganda or the Philippines and have a polymerase chain reaction (PCR) machine. Suddenly, by hooking into the demand network, you can start a contract research organization (CRO)-like business. You get paid by the person on the other end to run experiments, and you share ownership in the LabDAO community.

The World of Desci

SCHMIEDER: What was the origin of the LabDAO idea?

LIPMAN: I was involved in Molecule, VitaDAO, and other early DeSci communities. Molecule has worked hard to gather people around some of the scientific community's problems. They invented an IP NFT. They intended to figure out how to package a piece of IP and fractionalize and monetize it in new ways using blockchain technology. 

I met my co-founders in those communities, Niklas Rindtorff and Jocelynn Pearl. We started riffing on these ideas and drafted a substack post saying if you could build a decentralized lab network on the blockchain, what kinds of cool bells and whistles would you build? We tried to dream big. We could leverage existing equipment, get higher usage, and increase access to services you might not usually have access to. You could start new CRO businesses on the platform. You could think about new ways of monetizing your data and new ways of storing data on-chain. So we put it out there to the world, saying, this would be cool, how could we build it? And almost immediately, people came back and said, Hey, how can I help? Or what is the status? So we published that in November, started a core community, and the whole thing got rolling.

Right now, we're focused on bioinformatics tasks, which will be the easiest to do using this kind of marketplace because it's bit-to-bit (i.e., no wet lab involvement) transactions. You upload sequencing data to the portal, find someone to analyze that data, and get analyzed information back. All that data is stored on-chain in an immutable fashion. So there are really great data controls.

From there, we want to grow a large suite of different bioinformatics services. Then, we'll jump into wet lab services. Automation will end up being a crucial part of this. The community will likely enable more automated lab activity startups because not having too many humans in the loop will be key.

SCHMIEDER: Does that mean you would eventually partner with cloud lab companies like Benchling, Emerald Cloud Labs, or even Culture Biosciences?

LIPMAN: Yes, any existing CRO would be a candidate for partnership. Any existing organization that does research or science as a service. We’ve spoken with the people at Science Exchange and continue to have conversations with companies that could become LabDAO-native. If you’re a part of the community and understand the protocols you’re developing, then you’re probably seeing where the demand is for different services. But today, you can join the Discord [channel] and start building and helping us expand the platform.

In my mind, the biggest winners will be the service providers that pop up to address demand on the platform.

SCHMIEDER: Could you explain how data uploaded to LabDAO could be like an NFT?

LIPMAN: Think of an NFT as a file on the blockchain stored among a distributed network of computers. In theory, it’s immutable. Now imagine you make a strain and mint an associated NFT with a whole genome or some critical data.

On our portal, you could upload a DNA sequence, and a provider could interpret data in that sequence. In theory, there may be five providers who would confirm your results -- five providers verifying your results. Those results would be bundled with a timestamp and detailed information on the analysis. That is effectively an NFT. The terminology might get messy, but you can see the applications in biotech.

SCHMIEDER: I always thought someone would do this with BioBricks, the DNA parts registry, turning each sequence into an NFT. Then you could build a Linux-like open source company and a private company like Red Hat that would verify those NFTs and make them commercially available.

LIPMAN: Absolutely. In a way, this is basically like an open source software project, and LabDAO ends up being a software protocol, a layer between supply and demand in the scientific and deep tech space. Though LabDAO will operate like an open source, somewhat non-profit organization. The value will accrue to the scientists who use the platform and the providers, CROs, or even new businesses that emerge from the platform. We want to enable this community of decentralized science, so it’s not only the platform that accrues or aggregates all the value.

The Decentralized Science Landscape (Updated May 17, 2022) Curated by @ultrarare

SCHMIEDER: You posted a Twitter slide showing the decentralized science landscape. Tell us more about that slide.

LIPMAN: Jocelynn Pearl is a great communicator and runs a podcast. She’s part of the team at Ultrarare.Bio, a Web3 effort intersection between science and art. She and her team put together the map that shows most DeSci organizations have arisen in the last six months. So, the slide shows this brand new category already has many players. Several of the projects listed are about infrastructure, some are funding focused, some are about using NFTs to enable science, and some are in publishing. I am interested in the science publishing DAOs because they allow scientists to publish in a more decentralized way. Maybe they allow authors to monetize their publications or share data in new ways. So, a lot of exciting tools are popping up. 

What’s different from a few years ago is a fair amount of infrastructure to build upon. Those infrastructure tools are very useful whether you need a shared wallet, need to figure out how to allocate capital or have a community vote. That infrastructure is the tools that enable communities like LabDAO to form, grow, monetize, and accomplish their goals, whatever those might be.

SCHMIEDER: Before we spoke, the Broad Institute was granted the underlying CRISPR patents. I wonder if DeSci is a workaround or an alternative to the existing patent system. What does it mean to give more access to these tools? What do you lose?

LIPMAN: It’s a great question because there are still a lot of unknowns around existing regulatory and legal frameworks. Those things are very much undefined. For example, if you’re a LabDAO user in the United States and discover a new drug, how do you ultimately take that to market? You still have to run clinical trials, which may be decentralized and web-enabled. You still have to go through the U.S. Food and Drug Administration, and there hasn’t yet been an example of a company doing this.

At a certain point, you run into regulations and the current paradigm, whether it’s patent law, intellectual property law, or regulatory agencies. But all of that will evolve over the next five or ten years. So we have to be pragmatic. If you discover a new drug as an individual on a lab platform, ultimately, you’re going to have to start a company, raise venture capital, run clinical trials, and get regulatory approval to reach the market in the traditional way. So I don’t see any of that going away anytime soon.

SCHMIEDER: There are a lot of issues with running clinical trials. Less than 3 percent of the population knows they could participate in a trial and receive the best care. We worked with a team that argued recruiting for trials is broken, not because there aren’t patients, but because trial design generally fails to take patients into account. 

LIPMAN: There are some great efforts around funding clinical trials for rare diseases. Especially diseases where the incentives for pharmaceutical companies are not aligned. There are many health challenges where it doesn’t make economic sense for pharma to support.  

There’s an entity called Crowdfunded Cures that focuses on under-appreciated diseases that don’t have good treatments. They’re using their funding in web3 to fund clinical trials that will generate data acceptable by the regulatory agencies. I don’t see that as tearing down the system as much as I do augmenting the system. The companies implementing these technologies into their strategies and workflows will be the most successful. It’s an edge that a company can use to its advantage. It’s analogous to having a synthetic biology strategy, a bio-strategy.

You need to be aware of these strategies and these technologies. I’m not saying McDonald’s is going to go away. But you need a strategy to understand the technology, and you need to start implementing it because it’s a big paradigm shift that will happen over the next ten or twenty years.

SCHMIEDER: Why do you think entities like that are necessary?

LIPMAN: Healthcare is broken in so many ways. The pharma industry is broken. The way we pay for drugs is broken. So, if the decentralized science ecosystem can create pressure or force pharma in a different direction, that'd be interesting. For example, if there are crowdfunded cures that take therapies forward via a decentralized, crowdfunded, community-owned way, that can be very powerful. 

Look at what Marc Cuban has done with this generics pharma business (Cost Plus Drug). It's getting traction because this industry needs to be disrupted. DeSci is one strategy to disrupt. There's a lot of room for innovation and new players in the space.

We can create pressure on the pharmaceutical industry on two fronts. First, we can crowdfund drug development for new drugs. Saying we're going to bring benefit to a community that supported this drug's development. Second, we can create pressure on intellectual property and monetization. Maybe we'll learn that traditional IP strategies aren't as strong as we thought.

Because otherwise, I don't think anything is really going to change. It won't change by policy or fiat. You need to create competition for the existing ivory towers. The same thing goes for academia. It's going to be super interesting to see how this all plays out.

SCHMIEDER: Previously, we've discussed the challenges facing companies trying to solve big problems. Can we talk about that?

LIPMAN: I firmly believe that pretty much everyone in the world is a scientist. The idea that you need a bachelor's degree or Ph.D., or even a million-dollar lab, to do science is totally incorrect. We need the walls to come down, and I think we'll see that. 

The goal of DeSci, including LabDAO, is to enable every individual to be a scientist, explore their craft in their own way, and support a global community that solves problems. The pandemic, fertility, and climate change are all huge problems that we need everyone in the world to think about and work on. We need diverse opinions, not just those from Boston, Cambridge, or Silicon Valley. The only way we can solve some of those massive problems is by enabling the global community to be scientists - investigating problems, proposing solutions, and testing those. 

You’re a Scientist. Yes. You. Scientist.

SCHMIEDER: I think we need to write a kid's book called "You're a Scientist. Yes, You. Scientist."

LIPMAN: We need to support scientists who want to make memes, art, and music. We all have that inside us, no matter who you are and what you do. A scientist isn't just someone wearing a white coat and working in big pharma. That person is highly creative. The scientists that I admire most are well-read. They're creative. They're multidisciplinary. 

People used to value the idea of the renaissance man. The person who was both artist and a scientist. We need more people with a Renaissance-type background.

And I want to enable more people like that. It's something we need to emphasize more. It's not wrong for a scientist to also be an artist.

SCHMIEDER: I agree one-hundred percent. When people stay STEM, I correct them with STEAM.

LIPMAN: And I love your idea of a children's book where everyone is a scientist because that is totally true. And I want to bring more people into working on these big problems. You don't have to have a science degree. You don't have to be a communications person or a marketing person. You can and should work on these big problems. We need all of you. So come and work on the big problems.

Schmieder: It's not enough to just have scientists on the team.

LIPMAN: Exactly. It's about being multidisciplinary. That's what I really love about synbio is you've got scientists from biotech along with food and fashion people. It's the mix where exciting things happen. We need that across all deeptech.

Learn more about LabDAO by visiting their website. To learn more about DeSci, visit and contribute to the DeSci Wiki. Follow Arye on Twitter or LinkedIn or visit Marsbio.VC.