In crypto, a DAO (decentralized autonomous organization) is a community-led group with no central leadership. In this Motley Fool Live segment from "The Crypto Show," recorded on June 1, Fool.com contributors Jon Quast, Chris MacDonald, and Travis Hoium take a closer look at the role DAOs are now playing in the crypto space. 

Jon Quast: There's just kind of the other big thing going on in the crypto world is this crypto gaming where you are incentivized to play the video game by earning whatever the in-game currency is or the NFT in the game. There's lots of different blockchain games out there, but then there are guilds where you're able to pull your resources, so to speak, with these play to earn games, and both Merit Circle (MC -12.20%) and Yield Guild Games are too decentralized autonomous organizations that are in this space. Therefore, their tokens are governance token. When you buy either of these cryptocurrencies, that's what they're part of the decentralized autonomous organization. Here's what's interesting here, Yield Guild Games (YGG -5.03%). I believe this is the big one in the space, right, Chris? This is maybe the largest.

Chris MacDonald: Yeah. They are the leader, I think.

Jon Quast: They invested in Merit Circle, seed round. Before this even officially launched, they got some Merit Circle tokens from it, and then they also signed a, what is it called simple agreement for future tokens, a soft. They are involved in Merit Circle but here's where the skit is interesting. Because these are decentralized autonomous organizations. Anyone who owns the tokens can make proposals, they can vote on proposals. A Merit Circle token holder named Honey Barrel, basically doesn't like Yield Guild Games says they don't contribute to the Merit Circle DAO, that it's just not a good system. That they're taking tokens from us and they're not even involved in the project. They are proposing that we nullify the agreements that we made with Yield Guild Games like there is no future token swaps, anything like that. Like we want to completely undo the seed investment that they made. This is very interesting. I'll ask a second, but Yield Guild Games, they have an official response here to the proposal.

I thought it was interesting because of this sentence right here. Basically saying they haven't engaged the community and they haven't really been communicating their engagement, and I feel like they've gone through the Merit Circle team under the bus here, they said we have possibly been too reliant on Merit Circle leadership for guidance throughout this process, and they may mentioned the Merit Circle leadership more than once in their response. Essentially saying, yeah, we've been involved in Merit Circle, isn't really accepting all of our ideas and they're not necessarily communicating with the organization. I thought it was an interesting response here from Yield Guild Games. Chris, do you have something to add?

Chris MacDonald: Yeah. It's interesting these various DAOS in the gaming space. My high-level take on it. This response, there's a little bit of vitriol it seems behind this where they're basically saying, hey, back-off, we're competitors. In a sense. The fact that Yield Guild Games invested in Merit Circle actually didn't know that they did. But when I think about it, it makes sense if these guilds are essentially communities of gamers, are looking to get paid rewards for playing these games. If they increase the number of gamers or they help promote another guild, and there's more gamers, there's more money flowing into the ecosystem the tokens are worth more, everything increases in value, everyone gets richer, then that's a good thing. However, the prices of these various NFTs have been coming down on various games, and actually Infinity is the big one. They're making less money, now they're wanting to be a competitor, and they are putting these walls up. It'll be interesting to see if this turns into unit versus the simple core oil or if they're going to be now mortal enemies from here, these two different guilds and how they want to proceed. But it seems to me that it's almost like a fixed pie and they're each after the gamers out there to entice them to join their guild. We'll see what happens personally, this is a space that has seen high-growth, but I don't know that that's going to continue unless these tokens rebound in value.

Jon Quast: To be fair, Chris, my take in just browsing through the DAO here, I don't think that Honey Barrel's proposal is going to make it through. I don't even know if it is official proposal yet. My question is, I don't even know if a dell vote can overturn. Here you have a decentralized autonomous organization, but a centralized organization leadership made an executive decision for this simple agreement for future tokens, I don't know if they even can make a proposal or vote on it here to overturn it.

Travis Hoium: That's like which one is more legal?

Jon Quast: Yeah.

Chris MacDonald: Good question.

Jon Quast: This is why I wanted to bring this to the table today not because I have any idea what's going to happen, but I think this is bringing the whole concept of the DAO to an interesting tension point.

Travis Hoium: Yeah, and we'll talk about this in the next segment because I think there are some interesting things that we can do with those. But over the next couple of years, I think we're going to learn a lot about how to structure a DAO. What is possible with the DAO, what's not possible with the DAO. Because I have so many questions. There are a bunch of projects that say like, oh, the DAO is doing this, and then all it is is just a thumbs up or thumbs down vote in discord and that doesn't seem sustainable or right. Then there are others that like we'll talk about the nouns down in a second, but that seems a little bit more thought-through. I think a lot more questions than answers from DAOS generally.