The first Decentralised Autonomous Organisation (DAO) fund has now raised over $33m, making it the second-largest crowdfunding project of all time.

DAOs enable people to buy tokens in Ether, the cryptocurrency of Ethereum. Token-holders (who are a bit like shareholders) are then able to invest in smart-contract projects that run on the Ethereum blockchain – operating like a decentralised, democratic venture capital fund.

“Contractors” – the people building the smart-contract projects – are currently submitting proposals to token-holders, who’ll decide whether to fund the projects, and how much operational control the contractors should keep.

Read more: Introducing the Dao – the organisation that will kill corporations

The first DAO fund was launched on 30 April. So far, its token-holders have received proposals for funding from Slock.it, which enables anyone to rent, sell or share their property without the need for middlemen, and Mobotiq, the P2P electric vehicle firm. Three more projects are in the process of submitting proposals.

I spoke to Charles Hayter, co-founder of CryptoCompare, to find out what we should make of the DAO.

What’s your take on DAOs?

DAOs and crypto are to the internet what the steam engine was to the Industrial Revolution.

The DAO is the first of a new asset class, with this one as the first DAO VC fund. As with any nascent industry, there are high risks but high rewards – DAOs are just fleshing out another area of opportunity that Bitcoin and blockchain technology give us.

With no limit to the amount of money that can be raised, there are issues that need to be ironed out. This creates problems with allocation of capital – which projects, giving what returns, get how much? In one sense, it is turning business into the X-Factor, as DAO token-holders vote on where the cash gets spent.

And when it comes to the projects, corporate governance could become an issue. Bitcoin has seen diverging opinions aired in an unattractive manner. Internal mechanisms for minority shareholder rights, as well as a whole host of model article legal wranglings, also need to be addressed fully.

Read more: The Treasury plans to crack down on Bitcoin

At the end of this week, it'll cost more to become a token-holder in the DAO. Can you explain how that works?

The funding period for the DAO lasts for 28 Days, in which you can buy DAO tokens with Ether. The initial rate is one Ether to 100 DAO tokens. This ratchets up after 14 days by 0.05 ether per day until day 28, where you have to pay 1.5 Ether for every 100 DAO tokens.

This first DAO has raised 3.2m Ether – 4 per cent of the total supply – or $30m. There are four days left until the rate of exchange for tokens reduces from one Ether equalling 100 DAO tokens and 19 days until the end of the funding period.

This is a pretty esoteric investment opportunity. Are you worried about people piling in?

There is a risk that the DAO is an unsuitable investment for some, but this is largely mitigated by the complexity of investing in it. To do so, you will at least have to be familiar with the projects to some degree.

The dichotomy for governments is playing consumer protection against building an industry to tax in the future. If regulation isn't there, consumers can get burnt. Conversely, if government regulates too hard, the early-stage businesses will just move offshore.