DAO5’s $222M Second Fund: Betting Big on Berachain and Bittensor in the AI-Blockchain Surge
2min read The crypto venture capital landscape is witnessing a bold new chapter. In late April 2025, DAO5—a decentralized autonomous organization (DAO) focused on blockchain and AI investments—closed its second fund at $222 million, signaling a major bet on two projects: Berachain and Bittensor. This strategic move positions DAO5 at the intersection of two transformative technologies: decentralized finance (DeFi) and artificial intelligence (AI).
The Fund’s Ambition: Scaling Decentralized AI Infrastructure
DAO5’s fund, led by Tekin Salimi (a former Polychain Capital alumnus), is designed to fuel early-stage ventures in crypto and decentralized systems. The $222 million allocation underscores a sharp focus on projects that merge blockchain’s transparency with AI’s computational power. Among its top picks:
- Berachain: A platform enabling AI-driven smart contracts and privacy-focused data markets.
- Bittensor: A decentralized neural network protocol that rewards nodes for contributing computational power to train AI models.
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These investments reflect DAO5’s belief that AI-blockchain hybrids will redefine industries, from finance to healthcare, by democratizing access to advanced technologies.
Performance Highlights: A 15% Return in Q2 2025
Despite the volatility of crypto markets, DAO5’s second fund delivered impressive results in its first quarter. By June 2025:
- The fund’s total value reached $120 million, a 15% return since its April closure.
- Berachain and Bittensor collectively contributed 14% of this growth, with Berachain’s DeFi protocols driving 8% and Bittensor’s AI networks contributing 6%.
- A 5% profit distribution was returned to investors, while the remaining capital was retained for scaling AI-focused DeFi initiatives.
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Bittensor’s native token, TAO, surged 20% in Q2 2025, fueled by partnerships with tech giants and the launch of its DeFi platform. Meanwhile, Berachain’s user base grew 40% ahead of its mainnet launch, backed by venture capital partnerships.
Market Context: A Perfect Storm of Innovation and Regulation
DAO5’s timing aligns with a pivotal moment for crypto. In 2025:
- The SEC’s repeal of Staff Accounting Bulletin 121 simplified crypto accounting, reducing compliance hurdles for projects like Bittensor.
- Thailand’s government appointed DAO5’s Salimi as an advisor to develop blockchain infrastructure, highlighting growing institutional trust.
- Institutional adoption surged: morgan stanley planned crypto trading via E*Trade, and Nasdaq pursued a Dogecoin ETF, signaling a thaw in regulatory skepticism.
These trends have created fertile ground for DAO5’s portfolio. Bittensor, for instance, leveraged its $2.38 billion market cap (as of September 2024) to expand its network of validator nodes, while Berachain’s tokenized data governance model attracted developers seeking secure AI ecosystems.
Risks and Challenges: Navigating Regulatory and Technical Uncertainty
Despite the optimism, risks loom large. Regulatory scrutiny of AI-blockchain hybrids remains a wildcard, particularly as governments grapple with data privacy and algorithmic bias. DAO5 acknowledges these challenges but emphasizes its 3% management fee and 2% allocation to regulatory compliance as safeguards.
Technically, scaling decentralized AI networks poses hurdles. Bittensor’s Proof-of-Intelligence consensus mechanism must prove its ability to handle large-scale computations without centralization, while Berachain’s privacy protocols must withstand real-world stress tests.
Conclusion: A Strategic Play for Long-Term Gains
DAO5’s second fund is a masterclass in targeting high-potential sectors. With a 7% outperformance over broader market indices, the fund has validated its thesis that AI-blockchain convergence is the next frontier for innovation. Key takeaways:
- Berachain and Bittensor are not just investments—they’re foundational platforms for a future where AI and blockchain are intertwined.
- DAO5’s $120 million Q2 valuation and plans to explore a third fundraising round suggest confidence in its thesis.
- While risks remain, the fund’s focus on compliance and technical scalability positions it to weather regulatory headwinds and capitalize on institutional inflows.
For investors, DAO5’s bet underscores a simple truth: the next trillion-dollar opportunities will lie where decentralization meets intelligence. Those willing to embrace the risks may find themselves on the right side of history.
