Talking Crypto #62 - Coopahtroopa
Primer: Join Gabriel Haines as he interviews Cooper Turley. Cooper spends most of his time around Decentralised Autonomous Organisations (DAOs) and he is the subject matter expert in all things DAO. He also shares some of the more interesting DAOS that he is involved in and gives some advice on how best to approach DAO as a newbie.
Who is Cooper Turley
Studying music business at the University of Colorado
First heard of smart contracts from one of his professors during the edge of the 2017 bull market
The whole degree itself is not very useful but that one class had such a big impact on his career
The class was about the future of music technology and the different ways that music was evolving
"I very vividly remember some of my class at that time, like right when the Bitcoin Cash hard fork happened, I was like on Binance in the middle of a class and my professor was like calling out, he's like don't invest in crypto, it's super risky, you could lose all your money."
- Cooper Turley
Realised that the music industry was very broken in terms of how artists are paid
Smart contracts allow you to pay people in real-time with no intermediary so it makes sense to him
Got fascinated by the entrepreneurial nature of crypto. He went to Ethereum conferences and started writing blogs during DeFi summer
Loved the creative aspect of crypto and fell deep into the NFT/social tokens rabbit hole- this is where he spends most of his time now
Organization
Organizing a DAO
The first hire of the DAO will be to have a key operator whose sole mission is to coordinate everyone in the DAO
They get a pretty generous salary and a token allocation for running the daily operation of the DAO
There will be a team lead meeting weekly, where the top representative of different divisions comes together to share with others what they are working with
The team leads are responsible for organizing within their own groups. They will be given a budget and the number of tokens to distribute to the people working with them
Every other week, there will be town halls to keep people informed of what is happening from a wider perspective
This arrangement worked across all the DAOs he had been with
💡 Key points
🔹 Make sure key owners of different divisions of the project are highly incentivised with both fiat and token allocation.
🔹 Have a venue for people to communicate to make sure everyone is on the same pageSpecialised platform for creators
Having a structure that makes it easy to organise a community so that anyone can just come in
This will bridge the adoption into crypto and make it mainstream
Hard to find a platform with all the crypto tools to do everything, and more likely to see different platforms built for different kinds of creators
E.g. Mirror is a publishing platform at heart but is now used by most people as a crowdfunding tool to raise capital to kickstart the community. They offer tools to make it really easy to do this
E.g. Catalog is more for music NFT - have all the tools needed to do just that
If you're a creator with a defined set of skills, there will be platforms to cater specifically to your skillset
Tokens
Important of tokens to a DAO
A token is the single most important thing to a DAO. The reason why internet communities works is because a token represents upside in that community
Might not need one from the start but to hold people together, there needs to be a way to retain them and keep the energy level high
Social tokens are a lot more flexible than the typical tokens from DeFi protocols
Social tokens can be given to anyone and everyone who is excited about the project
Once sufficient decentralisation had been established, fundraising proposals in the form of treasury diversification can be planned
Since the community members have a sense of ownership over the first capital formation events, the members will feel more empowered and thus more active and engaged in the growth of the DAO
Tokens are the most powerful way to build an economy because it is a form of assigning ownership to key contributors
Are all social tokens shit coins?
That is a good way to start because value is subjective. Something is valuable only because others say it is so
Creators that are willing to build small businesses and economies around their brand/community are going to be very powerful in the next few years
One will soon realise that tokens are the new equity in this new world
The more you build, the more active you are in your community and the lower the chance of your token becoming a shit coin
Value of a social token
For Friends with Benefits (FWB), there is no direct cash flow yet but they are currently working on things like event sponsorships, NFT gallery with commissions going back to the DAO, and selling social membership passes
The value of a token is not determined only by the cash flow that it generates but also by the signal and strength of that community
Currently, social tokens do not have revenues that are captured on-chain that is similar to DeFi protocols
The value of a social token is thus more on the latter half of the equation
Those with a diehard community are the ones that will win
That being said, having on-chain cashflow will show that social securities can also be profitable and sustainable like DeFi protocols
Problems with cash flow
In a way, if you have cash flows associated with a token, it can have a negative impact on the valuation of the token because now you have something to evaluate against
Sometimes not having a cash flow will end up having a stronger valuation because cash flow is just one part of the equation
Top-down approach vs Bottom-up approach
More excited about the bottom-up approach because it is owned by the community from day 1
A community can come together to define the value of something together, like Loot
This is more powerful than a set of founders clearly defining how something can be used
Possible to combine both ways by using NFT as a good on-ramp into tokenisation
Find ways to have fans do on-chain actions, then distribute tokens based on these on-chain actions e.g. giving NFT for attending events/meetings or subscribing to channels
The idea is to have them interact with some sort of smart contract
Once the NFT is distributed, a bottom-up approach can be done to retroactively airdrop to people who had done value-added actions
How the tokens can play a role in the community can be discussed thereafter
Collectibles vs Ownership
Difference between collectibles and ownership
For collectible NFTs, there is an objective rarity based on traits that are clearly defined so the price will vary accordingly
However, music NFT is not based on objective rarity - it is trying to tackle the issue of ownership
The question is about sharing ownership with the creator and earning a percentage of the revenue generated from the music
Once music NFT starts to move away from rarity towards ownership - this is where it will become more valuable than it is currently
Only about 100 musicians in the world are using crypto in a very meaningful way
Imagine making a youtube video where you can tokenise it and the token holders can earn from the ads from the video
Currently, there is no easy way of doing it and might take 4 to 5 years time before we see this happening
A lot of value attributed to NFT is based more on the collectible part and less on the ownership part
This becomes so common that the competitive advantage becomes the ownership that you're sharing with the assets you are releasing
Anyone who recognises this and starts on this has a unique edge over others
Friends With Benefits (FWB)
Origins
Set up by his friend Trevor McFedries. He was just Employee #1 if there is such a thing as an employee in a DAO
At that time, he was doing management for other creators that had social tokens because he had done a lot of token launches in his career
Both of them met up in LA
Trevor had put up an amazing group of people which are made up of creatives and people passionate about the creative culture, not the usual DeFi degens that Cooper is used to seeing
It was a good opportunity for him to join them to do more on the tokenomics side of crypto
Even though it was just a year ago, it was incredible to see the growth of the community
It is hard to meet people online that shares a similar interest with you
FWB's mission is to always deliver more value back to members in the form of a stronger community and a sense of belonging
Organization
Cooper is spending most of his days on org design for decentralised communities
For FWB, they have around 200 people actively contributing to different areas of the project e.g. a product team, membership team, editorial team and a treasury team
Very soon, they will be expanding to events, curation and M&A team
People should love the community first, then joining will give them the ability to earn both financial and social capital by working on the things they love
United by crisis
A traumatic experience can actually help build a stronger community
FWB got hacked and 6% of their supply was sold on Uniswap
$FWB dropped 98% overnight
Can't control token prices so just focus on building the community
"It's really important to help people remember that token price is not the core incentive for why you're here. You know, token price is the reflection of the strength and value of this community. If you can continually focus on deriving and delivering value to its members, I think the token price will be, you know, valued accordingly."
- Cooper Turley
Empowerment
FWB have a snapshot proposal recently with different high-quality VCs
Had a town hall meeting where everyone came together to discuss everything related
"You know, there's just never been a communication channel for someone who's a small token holder with five tokens to hear the opinions of someone that's managing billions of dollars."
- Cooper Turley
Never seen such empowerment before
We will see a lot of funds piling into culturally relevant projects
Other DAOs that Cooper is involved in
Forefront
The port of entry for learning about DAO, NFT and social tokens
A content platform with a listing site of different social tokens and their market cap - similar to Coingecko but more niche
The token is called $FF. The utility is to buy it to gain entry into the community
JuiceboxDAO
A crowdfunding platform to share upside in the projects you back
A campaign is created to fund a specific project with a crowd sale cap to raise
Any amount above this cap will go to the overflow pool and the original backer gets to share some of the collective upsides above the crowd sale cap
Nouns DAO
Has an auction for a Noun daily and the sale of every 10th Noun is sent to the founders.
If you own a noun, you get ownership over the treasury
Interesting experiment on governance
Will not be surprised to see them incubating other NFTs with a different auction format and different ways to launch governance tokens
The barrier of entry is high enough to attract only people who are serious
"But in like a deep enough pocket where you know that you're not going to have the typical like, moonboys associated with it, it's only going to be people that are really serious about this industry."
- Cooper Turley
PaperclipDAO
Minted an NFT of a paperclip
Trying to trade up to a very valuable NFT
This is a good example of how curation can drive substantial value to a community when done the right way
SONGCAMP
A good place for a musician to talk about music and the future of publishing and distributing music
PleasrDAO
Recently collected the original Doge meme and also running fractionalization experiments
Fingerprints DAO
Has a very niche NFT collection like Autoglyphs, Digital Zones, DEAFBEEF, Bitchcoin, Mutant Garden, Avid Lines
Others
Pixel Vault DAO
Shark DAO
Seed Club
Paradox of exclusivity
Gaby Goldberg had an amazing post about the Social Token Paradox
Many DAOs are becoming hard to join financially
For FWB, they only need 50 $FWB worth about $25 when he first joined
But the same 50 tokens are now worth $10,000
There is this flywheel where the earlier you join, the easier it is to join
But as the token rises, the financial barrier to entry gets higher and higher
Cooper is thinking of how to offer economic rights and governance to members who hold tokens over a long time horizon, and also use NFTs to offer social access to certain parts of the DAO, without requiring a huge capital upfront
Retaining the more sophisticated conversations for those who are large token holders will be like the analogy of a preferred stock
One way is for DAO to generate cash flow by selling social access
Another way is to find ways where people can join and earn their way using their time, energy and skillset
Curation
Use cases for curation
Huge fan of curation - always thinking how tokens can act as a proxy to signal value and allow active members to capture value in that network
Currently, we have very light use cases of curation e.g. access to a social club, or staking/delegation to a node provider to secure the network
In the future, will be looking at a world where owning tokens from an individual or an asset will give you upside as the tokens start to accrue value
Tokens are not only about ownership as a passive participant but they will be designed such that the more active you are in a network, the more upside you have compared to someone that is just a passive holder
E.g. The Graph protocol has a good curation game where you take your GRT token and stake it to a subgraph
As the subgraph earns query fees, you can capture residual cash flow from it
This idea can be extended to a non-technical use case. If you discover a great musician very early in his career, you can stake your tokens on him. As he gets more popular, you get cash flow from royalties and also share in the upside as well
The displaying aspects of curation
Displaying and economic tools
Recently invested in a project called Gallery.so
Is a platform to better curate your NFT collection by making a gallery page where people can see your collection in a meaningful way
DCinvΞstor has his gallery in it and is one of the most insane NFT collections
Showtime is another one with social interaction built around the collection
Crypto voxel museums and virtual worlds are also getting more popular
There will be more ways to display NFT both physically and digitally
The financial aspects of NFT are the least important part - like options, leverage, borrowing, lending
Cooper thinks what is missing in NFT is the accessibility and democratization of ownership
E.g. Able to buy NFTs easily without buying ETH first and using Metamask to connect
E.g. Able to display your NFT collection or show someone the NFTs you're excited about with a platform that is as easy as Instagram
The economic / opportunities side of curation
This includes allowing people to auction off assets on your behalf and to participate in auctions for you
In the future, there will be ways to allow people who do not have the financial capital to buy an asset but to still earn based on the strength of their curative ability
If you know Ether Rock is going to be very popular, you can still have exposure to it by using a platform, even though you do not have the means to buy it
Marketplaces for NFTs
Impressed with OpenSea, especially when they are starting to think about decentralisation and community ownership
Excited about ZORA Auction House - able to take any type of NFT series and add reserve auctions to it
More people are believing that your ownership is tied to your smart contract and not to the assets that you released so more people will use customised smart contracts to curate and sell in an exciting way
Merge between the technological side and aesthetic
By customizing burning mechanics, staking mechanics, investing periods etc., people who understand the technology will appreciate the customized smart contract too
Imagine an amazing looking art with amazing mechanics behind it
Advice
"Focus a lot less on making short term profit from trading and focus a lot more on getting ownership stake in the products that you believe in. So I think you're gonna find that the more ownership stake that you accumulate on the things that you love, there's going to be life-changing opportunities there."
- Cooper Turley
Find a community you are excited to join
Don't find the next NFT to flip
Working for ownership is the single most valuable thing to do because no amount of salary given to you will be equivalent to the significant ownership and stake in the project that does very well
All information presented above is for educational purposes only and should not be taken as investment advice. Summaries are prepared by The Reading Ape. While reasonable efforts are made to provide accurate content, any errors in interpreting and summarizing the source material are ours alone. We disclaim any liability associated with the use of our content.