From Science Friction to Science Finance (SciFi): A Community-Driven Revolution in Biotech
“We live in a society exquisitely dependent on science and technology, in which hardly anyone knows anything about science and technology.” —Carl Sagan
In this post, I'll cover:
- The Broken Biopharma System: Where Science Hits a Wall
- Andrew Lo’s Megafund Thesis: A Landmark in Biotech Finance
- Beyond the Megafund: Enter BIO Protocol
- From Funds to Ecosystems: Advancing Lo’s Vision in a Network of BioDAOs
- BIO Protocol in Action
- Orphan Drugs, Rare Diseases, and Long COVID: A Moral and Economic Fit
- Lessons from Megafund-Inspired Biotech Holdings
- From Science Friction to Science Finance
- Bottom-Up Evolution of Biotech Funding
A universal truth looms over our modern era: scientific knowledge is exploding, yet life-changing treatments for crippling diseases—from Long COVID to rare autoimmune disorders—remain painfully out of reach for millions. This stark contrast reveals a twisted paradox: the barrier isn’t scientific impossibility, but structural market inefficiencies. Big Pharma channels billions into incremental improvements on the standard of medical care through strategies like patent life cycle management (like enhancing already existing PD-1 cancer or GLP-1 anti-obesity drugs), pursuing the latest and hottest clinically validated drug target in over-competitive markets —patient-desired research languishes. The result? An industry mired in science friction, where ballooning costs, capital bottlenecks and IP silos slow down or outright sideline potentially transformative innovations.
1. The Broken Biopharma System: Where Science Hits a Wall
Each day, thousands struggle with conditions like Long COVID—complex, debilitating, and notoriously underfunded. Many discover that the research needed to help them isn’t too “hard” scientifically; rather, it’s too “messy” for traditional pharma ROI. This is just one emblem of a broader crisis captured by Eroom’s Law: as biotech R&D spending soars, productivity in discovering new drugs plummets. How did we get here?
1.1 The Valley of Death and “Safe Bets”
Promising discoveries made in academia often fail to transition into early-stage clinical research because no one wants to fund the perilous middle ground between animal testing and human trials. This infamous “Valley of Death” halts potential cures which Big Pharma sees as non-lucrative or too risky. Many VCs and pharmas exercise a “fast follower” strategy, waiting and hoping for someone else to successfully navigate the risks. It can be a matter of decoding the pathophysiology of a disease, addressing regulatory challenges such as a lack of clear clinical endpoints, an uncertainty of pharma M&A commercial desirability for treating the disease or health insurance company dynamics for reimbursing a therapy. It is a minefield of incentives and constraints, but it doesn’t leverage any collective mechanism empowering the voice of patients.
1.2 Over-Concentrated Capital
Biotech’s main funding channels—Big Pharma and large VCs—tend to bet on “blockbuster” categories. Over 90% of biotech capital piles up in hyper-competitive, marginally differentiated spaces, leaving once-promising breakthroughs in fields like longevity, complex immune system disorders, or neurological research to languish. While such clinically de-risked and commercially attractive therapeutic areas are desirable to pharma and VCs, many represent the most costly failures as 5% of approved and launched drugs ever reach their blockbuster sales potential. Otherwise, it's a ton of development dollars down the drain. In Bruce Booth’s famous Atlas 2024 Year in review, Bruce comments that less than 15% of biotech funding rounds have secured more than 66% of the available venture funding, a dramatic change from 10 years prior. We need more meritocratic mechanisms to address public health concerns and the impending tsunami of an ageing society in the West.
1.3 IP Lockups and Data Silos
Under existing business models, knowledge lives behind thick walls of patents and closed-door deals, slowing progress. Labs worldwide often replicate the same costly experiments due to lack of shared insights, adding costly friction. Patient data and clinical insights are so compartmentalised that under a common data architecture, they could hold significant inferential value, but are caught up in the bureaucracies of hospital administrators, data aggregators and biobanking initiatives. IP can have time limitations and also only selective forms (such as composition of matter IP) hold significant value to VCs and pharmas, contrary to the longevity communities’ enthusiasm for repurposed drugs, like rapamycin, urolithin A and metformin. In all, a myriad of resourcing inefficiencies and commercial constraints stifle real-world health transformation and real-time transparency can help alleviate a number of those issues.
1.4 Opaque R&D and Limited Accountability
R&D pipelines unfold in slow, labyrinthine processes. Funding flows are hidden; outsiders can’t see whether (or why) a trial is failing until it’s too late. Accountability is limited, leaving patients and the public in the dark. Management and R&D teams consistently change and with that so do their R&D pipelines. Companies like Roivant have built large successful businesses from out-licensing and developing strategically shelved drugs.
1.5 10+ Year Lockups That Deter Innovation
Traditional biotech investments often require a decade or more for a return—an eternity in fast-paced markets. This illiquidity starves early research of capital, especially when outcomes are uncertain. Biotech battles for capital allocation across other asset classes increases, which are simpler to understand on key performance measures (e.g., revenue/ EBITDA growth etc.) relative to the clinical and scientific interpretation of a drug’s treatment potential. Open communities help address the educational and socialisation gap for the relative value of these therapies. Biotech has been losing out on the mindshare and investor access game, but other health-related subjects such as longevity have become a cultural phenomena. Certain biomedical breakthroughs, such as statins, PD-1s or anti-obesity drugs have demonstrated extraordinary commercial potential (the Obesity 5 (NONO, LLY, AMGN, ZEAL and VKTX) returning 93% in 2024), but the investment structures need significant revision to ensure that the value of such transformative innovations isn’t diminished and greater investor tractability is ensured - this is precisely where tokenization will be a game changer.
Eroom’s law is at odds with the enormous scientific advancement that we are experiencing –Deepmind AlphaFold2, Nobel Prize for Chemistry 2024, mRNA therapies, GLP-1s, cell and gene therapies, amongst others. The scarcely questioned business and stakeholder models of the pharma and biotech industry would welcome operating structures that could enhance efficiency gains.
2. Andrew Lo’s Megafund Thesis: A Landmark in Biotech Finance
In 2012, MIT professor Andrew Lo and collaborators introduced the idea of a megafund—a large, diversified pool of early-stage drug candidates. Holding 50–200 relatively uncorrelated assets buffers failures: a single biotech startup might collapse if its lone therapy flops, but a portfolio can tolerate multiple misses so long as a few successes pay off. This thesis was groundbreaking because it recognized the structural inefficiency in how we fund life science R&D. Yet, Lo’s approach remained top-down: large checks from institutional investors, top-down allocation, and limited routes for everyday scientists or patients to have a meaningful say.
3. Beyond the Megafund: Enter BIO Protocol
Now, a new wave of Decentralized Science (DeSci) emerges to push Lo’s vision further. BIO Protocol borrows the megafund’s core insight—managing risk through broad diversification—but reimagines how that diversification, governance, and capital formation happen. Instead of a single massive fund run by a central authority, BIO:
- Acts as a decentralized token holder governed protocol, which curates and incubates BioDAOs. These are specialized bottom-up communities that own and direct R&D through a portfolio of on-chain research.
- Tokenizes IP and data via IPTs, enabling them to become tradable, liquid assets, which allows BioDAOs researchers and communities to tap into liquidity much earlier than is commonly standard in biotech.
- Deploys capital in real time directly into the “Valley of Death”.
- Puts patients, scientists, and everyday people at the helm, just like Reddit communities with shared bank accounts.
3.1 Permissionless Stakeholders
In a BioDAO, anyone directly invested in a condition—patients, clinicians, scientists—can join via on-chain governance. Instead of passively hoping “someone” funds their cause, they rally capital via collective crypto funding, form a DAO, and collectively source research ideas from within and from scientists across the globe and decide how to allocate and prioritise development resources.
3.2 Tokenized IP and Data
BioDAOs issue IP tokens (IPTs) via Molecule that represent decentralized governance rights of the research. These can be licensed, traded, or pooled, effectively unlocking new ways for the DAO to deploy milestone-based funding and progressively de-risk early-stage science. Shared data and replication of data is no longer an afterthought, but a core, liquid asset that can fuel scientific discovery. Bounties can be given out to various researchers, creating incentive structures for modular decentralized science and drug discovery.
3.3 Bottom-Up Capital Formation
Where megafunds rely on large institutional investors, BIO Protocol orchestrates community-driven funding. Through its launchpad, BioDAO founders can pitch their research, set up private or public token sales, and reward early backers with governance rights—no gatekeeping from VCs or Big Pharma required.
4. From Funds to Ecosystems: Advancing Lo’s Vision in a Network of BioDAOs
4.1 A “Meta-Portfolio” of Decentralized Hubs
Instead of a single entity holding 200 assets, BIO fosters a governance treasury of 1000s of BioDAOs, each specialized in a scientific niche. This massively broadens the possibility space—while also letting communities self-govern. No single manager is calling the shots; rather, the protocol through its community of token holders guides asset development, risk, and synergy across all these DAOs.
4.2 Permissionless Launchpad and Acceleration
BIO’s real-time, decentralized launchpad mechanics—like bonding curves or auctions—allow new BioDAOs to spin up quickly. Early stakers or token holders can signal which areas deserve capital. This approach both democratizes biotech funding and speeds up time-to-capital for overlooked areas like Long COVID or rare autoimmune conditions.
4.3 On-Chain Risk Management
Megafunds reduce risk with portfolio theory. BioDAOs do likewise, but on-chain analytics let them share standardized reporting on clinical milestones, IP valuations, and treasury data. This fosters real-time insights, so the protocol can rebalance or de-risk by distributing funding across multiple DAOs, or build research-backed obligations to further diversify.
4.4 Continuous Liquidity and Evergreen Capital
Traditional funds lock capital for a decade. By contrast, BioDAO tokens and IP tokens remain liquid, letting participants exit or reallocate capital. If a BioDAO’s therapy starts showing promise, it naturally attracts more liquidity. The game theory here is that cures become natural Schelling points for capital. Meanwhile, revenues from successful therapies flow back into the protocol treasury (BIObank), recycling capital into new and existing DAOs.
5. The Protocol in Action: A Holistic, Bottom-Up Ecosystem
Picture a scientist team proposing a new “NeuroDAO” targeting novel treatments for traumatic brain injury. They upload preclinical data and a funding roadmap to BIO’s user-friendly launchpad. The global BIO community stakes tokens to approve or reject the proposal—no small committee behind closed doors. Upon approval:
- NeuroDAO mints its IP tokens (IPTs).
- Sells them via a bonding curve or auction to raise initial capital.
- As milestones (like preclinical endpoints) are met, more capital unlocks automatically.
- The broader community can track progress, invest further and accelerate the flywheel.
If NeuroDAO hits a major eureka moment—say a new molecule that speeds brain recovery—IP licensing deals can funnel revenue into the treasury funding further research. This creates sustainable flywheel effects fueling an evergreen, self-reinforcing cycle.
Since its inception, the BIO ecosystem has grown rapidly. In under two years:
- 8 BioDAOs funded
- $30 million raised for research
- +$50 million in total tokenized IP value
- +$60m in BIO’s treasury (AUM)
- +$8 million allocated to BioDAO-funded science so far
- 60 active R&D projects
- 34,000 ecosystem token holders (with 3,716 holding the BIO governance token)
Multiple BioDAOs have accelerated from seed-stage research to advanced preclinical studies at unprecedented speed, validating the premise that decentralized capital plus open collaboration can jumpstart biotech innovation.
6. Orphan Drugs, Rare Diseases, and Long COVID: A Moral and Economic Fit
Long COVID is just one example of an “unpopular” yet urgent condition. Similarly, orphan diseases—which affect smaller patient populations—are often overlooked by large pharma players who see limited profit potential. But in a network like BIO, patient-led or family-led BioDAOs can form around any disease, using new structures to finance research that large incumbents won’t. Smaller patient cohorts can lead to faster trials, accelerating timelines and unlocking substantial returns without the “blockbuster or bust” mindset. The moral alignment is clear: it’s not about market size, but impact.
7. Real-World Momentum: Lessons from Megafund-Inspired Companies
Before DeSci, multi-asset risk-sharing models were tried in different forms:
- BridgeBio (NASDAQ: BBIO): Focuses on rare disorders, using a hub-and-spoke pipeline.
- Roivant Sciences: Launches discrete “Vants” for each therapeutic area, pooling overhead and capital.
- Royalty Pharma: A multi-billion-dollar portfolio of diversified royalty streams, proving securitization can stably finance drug IP.
Each of these resembles Lo’s diversification principle. BIO extends it further by democratizing access, distributing governance, and enabling continuous liquidity through tokenization.
8. From Science Friction Back to Science Finance (SciFi)
Close your eyes and imagine it’s now 2026. Over a hundred BioDAOs exist under the BIO umbrella, tackling everything from pancreatic cancer to autoimmune hair loss. Each DAO is a “community hive mind” of patients, researchers, and philanthropic supporters. They:
- Ingest real-time research data shared across the network, speeding each clinical pivot.
- Coordinate clinical trial participants and best practices (if multiple BioDAOs are addressing a related area, BIO can facilitate shared pools of trial participants, data registries, and best-practice governance to lower overhead.)
- Use AI to gauge risk, potential synergy, and capital allocation.
No longer is the friction of decade-long lockups or top-heavy gatekeepers stunting breakthroughs. Instead, the entire network acts like a living, breathing organism—fluid, adaptive, and open.
8.1 A New Golden Age of Biotech
By “tokenizing everything,” from preclinical data to final-stage IP, and layering in decentralized governance, BIO brings the industry’s biggest friction points into the open. Suddenly, drug development feels more like science fiction than a glacial marathon.
8.2 Inclusive Community, Global Impact
This revolution extends beyond the lab. Everyday investors—people whose loved ones might have rare diseases—can stake tokens to champion new research and see transparent progress along the way. Collaboration isn’t a buzzword but an on-chain reality fostering cross-border research teams.
8.3 Reversing Eroom’s Law
With the friction removed and communities from any geography able to access global funding, we might finally see the cost/time curve for drug R&D bend downward instead of upward—fulfilling the original promise of exponential scientific progress.
9. Bottom-Up Evolution of Biotech Funding
Andrew Lo’s megafund thesis illuminated a crucial path: large, diversified portfolios can tame biotech’s high risk and attract bigger pools of capital. But top-down structures and institutional inertia still held back certain kinds of innovation. By contrast, BIO Protocol flips the script:
- Community-Driven: Anyone with a stake—patient, scientist, or curious funder—can join governance, propose new BioDAOs, and collectively shape research.
- Tokenized IP: Data and IP become liquid, forging new funding and collaboration models.
- Real-Time Liquidity: Freed from decade-long lockups, capital can move quickly to breakthroughs.
- AI-Fueled Risk Management: On-chain analytics keep tabs on performance, synergy, and correlation, letting capital flow efficiently among many BioDAOs.
By stacking DeSci solutions (via BioDAOs) under BIO’s top-level coordination (launchpad, funding, liquidity, meta-governance), the scientific and pharmaceutical industry’s toughest challenges can be tackled in a community-driven, transparent, and continuously liquid environment. Placing families, patients, and scientists at the heart of decision-making, BIO aims to “boil the ocean” of early-stage innovation. No more leaving half the world’s brilliant ideas to rot in the Valley of Death. Instead, we witness the dawn of a science unchained, unshackled from old gatekeepers and friction-laden pipelines.
So the next time your family faces a rare ailment, the deciding factor won’t be a boardroom’s market-size analysis. It’ll be the collective will of a global network—scientists, patients, everyday believers—coordinating, funding, and expediting the therapies that truly matter. In short, we step back into science fiction where humanity finally rallies to transform the improbable into the inevitable.
Want to learn more? Join us:
