New article from the founder of BIO: From science fiction to scientific finance, how does Desci drive the biotechnology revolution?

Original title: " From Science Friction to Science Finance: A Community-Driven Revolution in Biotech "

Author: Paul Kohlhaas, founder of BIO Protocol

Compiled by: zhouzhou, BlockBeats

Editor 's note: This article introduces how the BIO protocol solves funding, R&D and market issues in the biotechnology field through the decentralized BioDAO network. Through tokenized intellectual property, decentralized governance, and real-time liquidity, BIO enables patients, scientists, and investors to participate in decision-making, supporting neglected areas such as rare diseases, long-term COVID-19, and more. BIO breaks through the traditional fund structure, promotes innovation in biotechnology, accelerates scientific research process, achieves more efficient and fair capital flow and achievement transformation, and ultimately promotes scientific progress and global influence.

The following is the original content (the original content has been edited for ease of reading and understanding):

"We live in a society that relies exquisitely on science and technology, which few of us understand." - Carl Sagan

TL;DR

• The Broken Biopharmaceutical System: Science Hits a Bottleneck
• Andrew Lowe’s Megafund Theory: A Milestone in Biotech Finance
• Beyond Mega Funds: The Emergence of the BIO Protocol
• From Fund to Ecosystem: Advancing Luo’s Vision in the BioDAO Network
• BIO Protocol in Practice
• Orphan drugs, rare diseases and long-term COVID-19: the ethical and economic fit
• Lessons from megafund-inspired biotech holding companies
• From scientific friction to scientific finance
• Funding evolution from bottom up

A universal truth looms over our modern era, where scientific knowledge is exploding but life-changing treatments—from long-term COVID-19 to rare autoimmune diseases—remain out of reach for millions of people. This stark contrast reveals a twisted paradox: the problem is not scientific impossibility, but inefficiency in market structure.

Big Pharma invests billions of dollars in incremental improvements to existing drugs (such as enhancing existing PD-1 cancer drugs or GLP-1 anti-obesity drugs) through strategies such as patent life cycle management, chasing the latest and greatest. Hot clinically validated drug targets in a fiercely competitive market—while research on patient needs languishes.

What's the result? An industry mired in scientific friction, where inflated costs, capital bottlenecks and intellectual property silos have slowed progress or even shelved potential transformative innovations altogether.

1. Broken biopharmaceutical system, science encounters bottlenecks

Every day, thousands of people battle complex, debilitating and underfunded illnesses like COVID-19. Many people find that the research that helps them is not scientifically "difficult"; it's just that it's too "complex" for the return on investment (ROI) of traditional pharmaceuticals. It's just emblematic of a wider crisis, as Eroom's Law reveals: As biotech R&D spending soars, productivity in discovering new drugs plummets. How did we get here?

1.1 The Valley of Death and the “Safe Bet”

Promising discoveries made in academia often have difficulty transitioning into early-stage clinical research because no one wants to fund the dangerous transition between animal and human trials. This notorious “valley of death” blocks potential treatments that Big Pharma considers both unprofitable and too risky.

Many venture capital and pharmaceutical companies adopt a "fast follower" strategy, waiting and hoping that other companies will successfully address these risks. These risks may include decoding disease pathophysiology, resolving regulatory challenges (such as the lack of clear clinical endpoints), uncertain commercial desirability of pharmaceutical mergers and acquisitions, or health insurance company dynamics in reimbursing treatments. It’s a minefield of incentives and constraints, but it doesn’t tap into any collective mechanisms to give patients a voice.

1.2 Excessive concentration of capital

The main sources of funding for biotech—Big Pharma and large venture capital firms—tend to focus on investing in “best-selling” categories. More than 90% of biotech capital is concentrated in highly competitive, less differentiated areas, causing once-promising breakthrough research (such as longevity, complex immune system diseases, or neurological research) to stagnate.

Although these low clinical risk and commercially attractive therapeutic areas are very attractive to pharmaceutical companies and venture investors, many areas also represent the most expensive failures, as only 5% of approved and marketed drugs can Realize top-selling sales potential.

Otherwise, it is a waste of a lot of R&D money. In Bruce Booth's famous Atlas 2024 Review, Bruce commented that less than 15% of biotech funding rounds have received more than 66% of available venture capital funding, which is the same as 10 years ago. A huge change from the situation. We need more meritocratic mechanisms to deal with public health problems and the coming tsunami of aging in Western society.

1.3 Intellectual property lock-in and data silos

Under the existing business model, knowledge is trapped in thick patent walls and closed-door transactions, making progress slow. Labs around the world often repeat the same costly experiments due to a lack of shared insights, adding unnecessary friction. Patient data and clinical insights are so fragmented that they would have significant inferential value under a unified data architecture, but are bogged down by the bureaucracy of hospital administrators, data aggregators, and biobanks alike.

Intellectual property rights can be time-limited, and only certain forms (such as composition-of-matter patents) are of significant value to venture capital and pharmaceutical companies, which is in contrast to the longevity community's interest in repurposing drugs (such as rapamycin, allantoin A, and metformin). ) is the opposite of enthusiasm. Overall, inefficiencies in resource allocation and business constraints inhibit healthy transformation in the real world, and real-time transparency can help alleviate some of these issues.

1.4 Opaque R&D and limited accountability

The process of unrolling the R&D pipeline is slow and intricate. Funding flows are hidden; outsiders can't see if (or why) a trial fails until it's too late. There is limited accountability, leaving patients and the public in the dark.

Management and the R&D team are constantly changing, and as the team changes, so does the R&D pipeline. Companies like Roivant have built successful large businesses by licensing and developing drugs that were strategically shelved.

1.5 More than 10 years of capital lock-in period inhibits innovation

Traditional biotech investments often take a decade or more to pay off—almost an eternity in a fast-paced market. This illiquidity results in a lack of funding for early-stage research, especially when outcomes are uncertain.

Biotech competes with other asset classes (e.g. more understandable revenue/EBITDA growth, etc.) for allocation of capital compared to clinical and scientifically explained drug therapeutic potential. In this case, an open community can help bridge the education and socialization gap in the relative value of these therapies.

Biotech has been at a disadvantage in attracting investors and gaining market share, while other health-related topics, such as longevity, have become cultural phenomena. Certain biomedical breakthroughs (such as statins, PD-1 inhibitors or anti-obesity drugs) demonstrate impressive commercial potential (e.g. Obesity 5 (NONO, LLY, AMGN, ZEAL and VKTX) with a 93% yield in 2024 ), but investment structures need significant revision to ensure the value of these transformative innovations is not diluted and to ensure better investor accessibility – this is where tokenization will be transformative.

Eroom’s Law goes against the tremendous scientific progress we are experiencing – such as Deepmind’s AlphaFold2, the 2024 Nobel Prize in Chemistry, mRNA therapy, GLP-1, cell and gene therapy, etc. Business and stakeholder models in the pharmaceutical and biotech industries have little doubt that they would enthusiastically welcome operational structures that would contribute to greater efficiency.

2. Andrew Lowe’s Megafund Theory: A Milestone in Biotech Finance

In 2012, MIT professor Andrew Lo and his collaborators proposed the concept of a “megafund”—a large, diverse pool of early-stage drug candidates. Owning 50 to 200 relatively uncorrelated assets spreads risk: A single biotech startup might fail if its only treatment fails, but a portfolio can withstand multiple failures as long as a few successful projects deliver returns.

This theory pioneered the structural inefficiencies in how we fund life science R&D. However, Lowe's approach remains top-down: big checks from institutional investors, allocations of funds at the top, and little opportunity for rank-and-file scientists or patients to participate in meaningful decision-making.

3. Beyond Mega Funds: Enter the BIO Protocol

Now, a new wave of decentralized science has emerged, furthering Lowe’s vision. The BIO Protocol draws on the core philosophy of mega funds—managing risk through broad diversification—but reimagines how this diversification, governance, and capital formation occurs. The BIO Protocol is not like a single giant fund managed by a central authority, but:

• BioDAO is curated and incubated as a decentralized governance protocol for token holders. These are dedicated bottom-up communities that own and guide R&D through an on-chain research portfolio.
• Tokenizing intellectual property and data through IPT (Intellectual Property Token) makes it a tradable, liquid asset, giving BioDAO’s researchers and community earlier access to liquidity than is common in the biotech industry.
• Deploy capital in real time and enter the "Valley of Death" directly.
• Put patients, scientists, and everyday people at the center, like a Reddit community with a shared bank account.

3.1 Unpermitted stakeholders

In BioDAO, anyone directly involved with a disease—whether a patient, clinician, or scientist—can join through on-chain governance. Rather than passively hoping “someone” will fund their endeavors, they raise capital through collective crypto-funding, form a DAO, and collectively source research ideas from internal and global scientists to decide how to allocate and prioritize resources.

3.2 Tokenized intellectual property and data

BioDAO issues IP Tokens (IPT) through @molecule_dao, which represent decentralized governance rights for research. These tokens can be licensed, traded, or pooled, effectively providing a new way for DAOs to progressively de-risk early-stage science based on the deployment of milestone funds. Shared data and data replication are no longer an afterthought but a core, liquid asset that drives scientific discovery. Bonuses can also be issued to various researchers, creating incentives for decentralized science and drug discovery.

3.3 Bottom-up capital formation

Unlike mega funds, which rely on large institutional investors, the BIO protocol coordinates community-driven capital raising. Through its launch platform, BioDAO founders can pitch their research, set up private or public token sales, and reward early backers with governance rights—without the scrutiny of VCs or Big Pharma.

4. From Fund to Ecosystem: Advancing Luo’s Vision in the BioDAO Network

4.1 Decentralized “meta-portfolio”

Rather than a single entity holding 200 assets, the BIO Protocol facilitates a governance treasury of thousands of BioDAOs, each focused on a certain scientific niche. This greatly expands the space of possibilities while also allowing communities to govern themselves. There is no single manager making decisions; instead, the protocol guides the asset development, risk management, and synergies of all these DAOs through its community of token holders.

4.2 Permissionless launch platform and acceleration

BIO’s real-time decentralized launch platform mechanisms—such as bonding curves or auctions—enable new BioDAOs to launch quickly. Early stakers or token holders can indicate which areas are worth investing in. This approach both democratizes biotech funding and accelerates the flow of funds to areas that have been overlooked, such as long-term COVID-19 or rare autoimmune diseases.

4.3 On-chain risk management

Mega funds reduce risk through portfolio theory, as does BioDAO, but on-chain analytics allows them to share standardized reporting of clinical milestones, intellectual property valuations and treasury data. This facilitates real-time insights, allowing the protocol to further spread risk or rebalance by allocating funds across multiple DAOs, or by establishing research-based obligations.

4.4 Sustained Liquidity and Evergreen Capital

While traditional funds lock up capital for ten years, BioDAO’s tokens and intellectual property tokens remain liquid, allowing participants to exit or reallocate capital. If a BioDAO therapy starts to show promise, it will naturally attract more liquidity. The game theory here is that the cure will naturally become the "Schelling point" of capital. At the same time, revenue from successful treatments flows back into the protocol treasury (BIObank), recycling capital into new or existing DAOs.

5. Protocol practice: a holistic, bottom-up ecosystem

Imagine a team of scientists proposes a new “NeuroDAO” aimed at developing innovative treatments for traumatic brain injuries. They upload their preclinical data and funding roadmap to BIO's user-friendly launch platform. The global BIO community stakes tokens to approve or reject the proposal—there is no small committee operating behind closed doors. After approval:

• NeuroDAO mints its Intellectual Property Tokens (IPTs).
• These tokens are sold through a bonding curve or auction to raise initial capital.
• As milestones (such as preclinical endpoints) are achieved, more capital is automatically unlocked.
• The wider community can track progress, invest further and accelerate the flywheel effect.

If NeuroDAO reaches a major breakthrough moment—such as discovering a new molecule that speeds brain recovery—an intellectual property licensing agreement could funnel revenue into the coffers to fund further research. This mechanism creates a sustainable flywheel effect, driving an evergreen, self-reinforcing cycle.

Since its inception, the BIO ecosystem has grown rapidly. In less than two years:

• 8 BioDAOs have been funded
• $30 million raised for research
• Total value of tokenized intellectual property exceeds $50 million
• BIO has over $60 million in funds in its vault (AUM)
• $8 million has been allocated to BioDAO-funded scientific projects to date
• 60 active R&D projects
• 34,000 ecosystem token holders (3,716 of them hold BIO governance tokens)

Multiple BioDAOs have rapidly advanced from seed-stage research to advanced pre-clinical research stages, verifying the premise that decentralized capital and open collaboration can accelerate biotechnology innovation.

6. Orphan drugs, rare diseases and long-term COVID-19: the ethical and

economic fit

Long Covid is just one example of an “unpopular” but urgent condition. Similarly, orphan diseases—those that affect smaller patient populations—are often ignored by big pharmaceutical companies because they see limited profit potential.

But in a network like BIO, a patient-led or family-led BioDAO can be formed around any disease, using new structures to fund research that larger companies are unwilling to fund. Smaller patient populations can accelerate clinical trials, shorten timelines, and unlock significant returns without a “bang or bust” mentality. The moral alignment is clear: it's not about market size, it's about impact.

7. Real-world momentum: Lessons from mega-fund-inspired companies

Before decentralized science, multi-asset risk sharing models had been attempted in different forms:

• BridgeBio (NASDAQ: BBIO): Focuses on rare diseases and uses a hub-and-spoke pipeline.
• Roivant Sciences: Launches separate “Vants” for each therapeutic area to consolidate overhead and capital.
• Royalty Pharma: A portfolio with billions of dollars in diversified royalty revenue streams, demonstrating that securitization can reliably fund pharmaceutical intellectual property.

These companies all exemplify Lowe’s principles of diversity. The BIO Protocol extends this principle further by democratizing access, distributing governance rights, and enabling continuous liquidity through tokenization.

8. From scientific friction to scientific finance (SciFi)

Close your eyes and imagine it's 2026. Under the BIO framework, there are hundreds of BioDAOs, covering various diseases from pancreatic cancer to autoimmune alopecia. Each DAO is a "community collective mind" composed of patients, researchers, and philanthropic supporters. they:

• Get real-time research data shared across networks to accelerate progress at every clinical turning point.
• Coordinate clinical trial participants and best practices (if multiple BioDAOs are addressing related areas, BIOs can facilitate shared trial participant pools, data registries, and best practice governance, reducing administrative overhead).
• Use AI to assess risk, potential synergies and capital allocation.

It is no longer a decade-long lock-in of funds or a heavily guarded system that limits breakthroughs. Instead, the entire network is like a living, breathing organism—fluid, adaptable, open.

8.1 The golden age of biotechnology

By “tokenizing everything,” from preclinical data to end-stage intellectual property, coupled with decentralized governance, BIO brings the industry’s biggest friction points to the public. Suddenly, drug development is becoming more like science fiction than a long marathon.

8.2 Inclusive communities, global impact

This revolution isn't just happening in the lab. Ordinary investors—those with loved ones who may have rare diseases—can stake tokens to support new research and see transparent progress along the way. Collaboration is no longer a buzzword but an on-chain reality, driving the formation of multinational research teams.

8.3 Reversal of Eroom’s law

With friction removed and communities from any region able to access global funding, we may finally see the cost/time curve of drug development bend downward instead of upward—enabling the exponential scientific progress that was originally promised.

9. The bottom-up evolution of biotech financing

Andrew Lowe's megafund theory points us to an important path: Large, diversified portfolios can tame the high risks of biotech and attract larger scale capital. However, top-down structural and institutional inertia still inhibit the realization of some innovations. In contrast, the BIO protocol flips the script:

• Community-driven: Anyone with a stake—patients, scientists, or curious funders—can participate in governance, propose new BioDAOs, and jointly shape research directions.
• Tokenizing intellectual property: Data and intellectual property become liquid, paving the way for new funding and collaboration models.
• Real-time liquidity: Freed from ten-year capital lock-ins, capital can flow quickly to breakthrough innovations.
• AI-driven risk management: On-chain analytics continuously track performance, synergies and correlations, allowing capital to flow efficiently across multiple BioDAOs.

By stacking decentralized science solutions (via BioDAO) under BIO’s top-level coordination (launch platform, funding, liquidity, meta-governance), the science and pharma industry’s toughest challenges can be addressed in a community-driven, transparent and sustainable solved in a fluid environment.

Putting families, patients and scientists at the heart of decision-making, BIO aims to “boil the ocean” and solve the dilemma of early-stage innovation. Stop letting half of the world’s great ideas rot in the “Valley of Death.” Instead, we are witnessing the dawn of an era of science that is no longer tethered to its old gatekeepers and friction-filled pipelines.

So next time your family is faced with a rare disease, the deciding factor will no longer be a boardroom analysis of market size. Rather, it is a global network—scientists, patients, and ordinary believers—working together to coordinate, fund, and accelerate the treatments that really matter. In short, we are back in a sci-fi world where humanity finally unites to transform the impossible into the inevitable.