The Delphi Podcast Host and GP of Delphi Ventures Tom Shaughnessy sits down with Cooper Turley, crypto strategist lead at Audius, and manager of social DAO Friends With Benefits.
The Delphi Podcast Host and GP of Delphi Ventures Tom Shaughnessy sits down with Cooper Turley, crypto strategist lead at Audius, and manager of social DAO Friends With Benefits. The two discuss the culture and community around projects, DAOs and NFTs, value flows in NFTs and much more!
We would like to thank our sponsors for making this podcast possible.
Kava: Kava connects the world’s largest cryptocurrencies on DeFi’s most trusted platform. Mint stablecoins, lend, borrow, earn and swap safely across the top crypto assets with a simple user experience and the confidence of institutional-grade security. To learn more visit kava.io
Celo: Celo is a mobile-first platform that makes financial dApps and crypto payments accessible to anyone with a mobile phone. Celo supports over 1000 projects who are everyday building applications and issuing digital currencies from 100+ countries around the world. Learn more at Celo.org.
Every Delphi Podcast is dropped first as a video interview for Delphi Digital Subscribers. Our members also have access to full interview transcripts. Join today to get our interviews, first.
(00:00:00) – Introduction.
(00:00:28) – Cooper’s background.
(00:01:30) – What NFT culture means to Cooper / The fun aspect of NFTs.
(00:04:58) – The relationship between public exposure and building in the NFT space.
(00:07:30) – Culture and community around NFT projects.
(00:13:50) – Managing creative control in NFT projects.
(00:15:34) – The crossover between NFTs and DAOs.
(00:19:33) – Cooper’s thoughts on being “too late” to a project.
(00:22:09) – What a bear market for NFTs could look like.
(00:25:04) – Tribalism in NFTs.
(00:27:00) – Judging NFT communities independent of price.
(00:28:45) – Cooper’s thoughts on NFT art.
(00:31:47) – Fractionalized assets versus full assets.
(00:37:20) – The creator economy and NFTs.
(00:46:43) – Overview on Rally.
(00:48:14) – What creators need to be successful.
(00:53:18) – Value flows in NFTs.
(00:57:04) – Cooper’s thoughts on NFT curation.
(01:00:53) – Governance rights for token holders VS NFTs for social access.
(01:03:22) – Rapid fire questions: Multi-chain NFTs, Audius, Loot.
- Our Video interviews Can Be Viewed Here: https://www.youtube.com/channel/UC9Yy99ZlQIX9-PdG_xHj43Q
- Access Delphi’s Research Here: https://www.delphidigital.io/
Disclosures: This podcast is strictly informational and educational and is not investment advice or a solicitation to buy or sell any tokens or securities or to make any financial decisions. Do not trade or invest in any project, tokens, or securities based upon this podcast episode. The host may personally own tokens that are mentioned on the podcast. Our current show features paid sponsorships which may be featured at the start, middle, and/or the end of the episode. These sponsorships are for informational purposes only and are not a solicitation to use any product, service or token. Delphi’s transparency page can be viewed here.
- Cosmos by From The Dust | https://soundcloud.com/ftdmusic
- Music promoted by https://www.free-stock-music.com
- Creative Commons Attribution 3.0 Unported License
Hey everyone, welcome back to the podcast. I’m Tom Shaughnessy. I’m your host. I help run Delphi Ventures. I’m one of the co-founders there. Today, I’m thrilled to have on one of my close friends, Cooper of Variant Fund, Audius, well known all over the space. Cooper, how is it going?
Doing wonderful, man. Thank you so much for having me on today.
Cooper, how many bear markets have we been through together, man? Like one or two? That’s how I gauge my long-term friends now. Is it two?
Not enough. I think we need another one to really build this friendship even more.
Man, it’s been too long. Cooper, for those who don’t know you, man, give a brief overview. And if they don’t know you, they shouldn’t be listening, but shoot.
Absolutely. Yeah. What I’d say is I’ve been working in crypto for close to five years now. I’m really passionate about the intersection of culture and crypto. I started out very early on with curation of music, started to get into crypto through things like ICOs and community building, traveled the world, went to Ethereum conferences, stumbled upon this cool thing called DeFi. Started writing for a bunch of DeFi blogs. Went through the whole DeFi Summer wave, then realize that I was really passionate about crypto, and sort of the ethos behind it.
Making money wasn’t necessarily my MO, and so I found things like NFTs, DAOs and social tokens as a way for me to really get into my roots of curation, culture. And sort of what I think is really the catalyst to mainstream adoption here.
These days, I spend my time as an operator and an investor across the internet communities. I help to launch tokens. I help as an angel investor. Really just connecting the dots and doing everything I can to help bring projects to life.
Cooper, what is NFT culture mean to you, man? There’s so many ways to dive into that. What exactly does it mean to you?
Trading the vibes. I mean, that’s what I’d say is the short answer. I think that NFT culture is basically a recognition that culture has financial value to it. And people are rewarded for being able to recognize what does community value and respect, what does digital identity look like, and what is a way that we can actually place a financial asset behind something that would typically be seen as either a meme or a social capital asset.
I love the culture in crypto and NFTs. We say good morning every morning. Like GM, you brought that up before we even started the pod and it’s exciting, and it’s hilarious, and it’s fun. I’ll play devil’s advocate for part of this podcast.
Do you think that the fun and geekiness and excitement, do you think that ends as we start to build real … We continue to build, or do you think that fun, excitement is going to be here for a long time?
That fun and excitement will never leave. I think it will get a lot more segmented. Right now, I think as an industry, it’s a very small world. You know most of the key projects in this space. You know most of the key players in this space, but looking at this as the start of an internet renaissance.
There’s not a world in which you know every LLC in the world. Right now, you can almost count all of the DAOs in the road if you try hard enough, but very quickly, we’re reaching an inflection point where that’s not going to be the case. And so, what you see right now is these subcultures of crypto, things like NFTs, things like DAOs, things like DeFi, they have this pocket of influencers and people who are really leading the charge on that front.
And for those specific individuals, it’s a very small network. And I think that within those groups, you can really help populate and propagate narratives very easily. Something like GM, someone like Loopify is a great example of this where he’s been doing it for the past three months. And it really just builds community.
I think that when you look at what makes a crypto person that’s working at full time valuable, it’s the sense of community and ownership that you have in the space. The people respect what you have to say and be able to connect people in a meaningful way. And something like GM for as stupid as it is, it’s incredibly addicting.
I love going on Twitter, spending 10 minutes just replying GM to everything. There’s a sense of belonging, ownership, community and connection. And when you think about beyond crypto, life is just a game of connections, and I think that crypto is a way to really catalyze that and make us feel like we’re on the same team.
No, it’s a really good answer. Still playing devil’s advocate, because we’re already getting into it pretty fast here. How do you go from wake up GM, good morning, to actually building, like structurally building a project? Like get off Twitter, go on the Discord, build, write code. How do you get from the fun, exciting inclusion to real building?
It’s a great question. I will start out by saying that GM was started within highly exclusive Discord servers and has now made its way to Twitter. Something that’s really interesting here is that GM culture was typically hidden in the very depths of a Discord server, when people were investing together, building products. Kind of as like a fun meme like, “Oh, hey, we’re all working now.” The same as joining a Slack group in the morning. And it’s gotten bigger, because I think that the whole community has gotten bigger as a whole.
To answer your question directly, I think there needs to be a sense of responsibility and ownership in these working groups. So, it’s one thing to go out, say GM on a Twitter post, share an NFT that you want to buy, buy that NFT. It’s a very different thing to recognize that everyone holds the same assets, and that we now need to come together and expand the likeness of those assets.
What I see across the working groups that I’m in, you’ll have a Discord server, you all have people segment into the different specialties or skill sets that they’re passionate about. And within those teams, they’ll be building different work streams that are then kind of unified under the rainbow of sort of this DAO world or some sort of culture collective where people can be collaborating on work and sharing the likeness of that together.
No, it’s a good answer, Cooper. We dove in so fast and even introduced you as the second guest in our NFT series, but I’ll rewind and go to that. But just moving forward, do you think there’s a dichotomy between the amount of public exposure and push that all these empty products are getting and the real building? Or do you think that they’re one in the same, or that public exposure is kind of a facet of building?
I think they’re one in the same. The amount of new creatives that are getting into this space and building by launching a PFP project, it’s an incredibly powerful signal. I think that at some point, we’ll hit a scale when it’s just complete shit and none of it matters. But here in Los Angeles, I talk to creators all the time. People ask me about NFTs. I expect them to know nothing, and I’ll hop on the call and be like, “Hey, we’ve been out for the past seven hours building a PFP project. We want to drop it next week.”
They’re looking for smart contract developers, they’re hiring designers, they’re bringing in cultural leaders from their networks to help propagate the likeness of the project. And while I think it is very dangerous from a financial perspective, I do really like the fact that NFTs have opened up this umbrella for you to be creative and building crypto without having deep financial experience.
I think for a long time there, we were basically bucketing, contributing to crypto to either being a developer or having some sort of efficiency and financial markets. But now with NFTs and DAOs, you can build on the back of a brand and internet community, an NFT PFP project. You don’t need to have formal education or a financial literacy to kind of get started in this space. And I think that reduced barrier to entry is exactly why we’re seeing so much interest in the NFT sector as a whole.
Yeah, it’s a really good point. I mean, it kind of feels to me like both sides are way bigger. In DeFi, you have like a limited set of people who understand how to code and finance. On the other side, you have a limited set of users who know how to rebalance their CDP and keep eyes on interest rates, the whole breadth.
With NFTs, you open up the whole creative space, anybody that’s an artist. On the NFT side, you open up to anybody that can access OpenSea and things like that. Do you think that’s pretty accurate? Or would you disagree on the kind of the market depth there?
I think that’s exactly right. I think DeFi is the backbone behind all of crypto, regardless whether it’s NFTs, DAOs whatever it might be. DeFi protocols are going to drive the next 100 years of tooling within crypto. And I think what’s interesting to note here is that the NFT community is very different from the DeFi community. I think there are very rare examples of people like me and you who can speak proficiently to both of those. And those people who have a deep understanding of DeFi, a deep sense of usage in these protocols, but also can see the cultural value of things, I think those are the people that are highly skilled to be able to take this to the next level. And that’s who I try and invest my time and effort into.
No, I totally agree with you, man. It’s kind of like a sandwich in both sides. Or both sides of the funnel are way bigger on a sandwich. Yeah. When you think about communities, and NFTs, and culture, do you think there’s a big difference between the culture around CryptoPunks and the culture around Art Blocks, or shop Squiggles. Then you have the DAO side or Friends With Benefits.
How do you judge the culture and community around all these projects? What makes you think that one will last longer than the other or at its infancy, one has the potential to be large?
It’s a really tough question. It’s one that I try and figure out every day. I would say that the sense of ownership and responsibility that people take over expanding the likeness of that project directly correlates to its long-term success.
So, it’s one thing to change an avatar to your profile picture. It’s another thing to spend your free time contributing actively to that community to make it better over the long-term. Something like Friends With Benefits, we now have close to 100 contributors that are going out of their way to spend meaningful time and effort building products and services.
I think this is very different from buying a PFP project. And so, when I look through the weeds of something like CryptoPunks, Bored Apes, Art Blocks, I start to look under the hood at. “Is this just a speculation game? Are people here to make a quick flip? Or is there a larger precedent here where people want to come together and expand the likeness of this project? And are there working groups being established to make that a reality?”
If that is the case, and I started to notice that through the weeds, there are highly competent people working on very sophisticated internet communities. I’m going to invest all my time and effort to make sure that I understand that because I think there’s something extremely, extremely valuable there.
No, I’m totally with you, man. And do you expect everyone to be a builder? Let’s say I buy a CryptoPunk, let’s say I buy Squiggle, let’s say I buy XYZ NFT. In your mind, do I have to be out here like grinding, building the community? Or is there a market here that could just be buyers?
I think there’s a huge market that’s only buyers. I would say 1% to 5% of every community is where the builders exists. I think the goal of operators and people creating communities is to make that percentage as high as possible. But realistically, the typical breakdown I see amongst these groups is 90% passive participants, people who buy an asset and hold it. They never contribute more than simply like looking at a Discord server every now and then.
9% of like kind of on the fence, maybe I’ll contribute here or there. And then 1% people like actively contributing on a day to day basis. I think the success of these projects is highly correlated to that top 10%. How much of that top 10% is actually actively contributing? And the more you can push that needle towards it being hard towards the 10% side, I think the more you’re going to see success on the token side as well.
Yeah, you’re right, man. I mean, there’s always a market to buy NFTs, but I’m always … So it’s kind of like a dumb question on my part, but I’m always concerned with what percent is actually building.
Yeah. I think that the reality is most people don’t want to build, most people don’t know how to build. They still see crypto as this giant speculative game. I think in a market like today, we have a bunch more buyers than we do sellers. I think if one prominent cultural leader from Instagram post about an NFT series, you will start to see buyers of all calibers flooding in simply to be a part of that. They have no intention of doing anything beyond buying that asset and selling it later, but I believe that speculation is just a way to channel excitement in a project.
And when you start to look under the hood about why these things are getting speculative interest and demand or whatnot, I think you’ll start to notice that there is a high expectation that many of these projects will be able to go much beyond what they are today. And when you start to look at that from like a five to 10 year horizon, it’s really exciting to think that we are still extremely early in many of these asset classes. And as they start turning into small businesses in large companies, these are going to be extremely valuable assets that have tremendous amount of weight over a long term period.
So in DeFi, the running thing for you and I was always you make your community rich and you have your community forever. You make your early supporters wealthy, they’ll stick around, they’ll help build. With NFTs, it’s I guess the same thing. You want to make your early supporters wealthy, but you also want to make sure that they’re here to build. How important is speculation to you in an NFT community? And I’ll tie that in with how important is it with the long-term viability and build out of the actual community and project?
That’s a really good question. I mean, thinking about off the cuff, NFT communities are fundamentally different from a DeFi protocol. I think the founding team can have a lot more ownership over the lifecycle of that NFT project. I almost see the collectors as more community advocates more so than builders. So, I would be less concerned about someone like Keyboard Monkey or 888 coming in and building a product or service community.
My expectation for them is to help steward the ethos and sentiment of that project. Something like a Bored Ape Yacht Club, I would not expect them to go out and build a valuable product or service, but I would be really excited for them to host a meetup in a city to go ahead and do a giveaway. And what you start to notice is that NFTs are much more about the diversity of holders. I think the repertoire of products and services, and the more sort of branding you can put behind it and the more likeness you can establish. I think that, that’s where success comes in.
I mean, you think about Stephen Curry just changed his profile picture to a Bored Ape. Chainsmokers just bought a Bored Ape. Cultural leaders are buying these exclusive NFTs, and we all know they have no expectation to build anything. It’s a status symbol to them, and I think their onus and responsibility is on the core team, and that top 1% of core contributors to make that valuable. And people like a Steph Curry or The Chainsmokers, their role is to passively hold the asset and keep it as their profile picture. And there should be no expectation for them to do anything else beyond that.
I totally agree with you. I don’t really expect Steph Curry to build out, but it’s kind of like all the building the community does, like getting Steph Curry to change their profile picture. That’s a milestone for the community, right? That’s a goal.
Absolutely. I think that all of these projects want to have cultural icons representing their NFT collections. The ones that have, you’ll notice they’re not doing it overnight. It’s the result of months, and then eventually years of hard work that result in that sort of moment, or that sort of just moment in time.
I think that what you’re looking for as NFT project today, don’t focus on the primary sale, don’t worry about making a ton of money out of the gate. I’d say really optimize for longevity and secondary market. But if you can continue to deliver over a longer time horizon, people are going to pay attention. And especially in the wake of five drops a day, I’m far less excited about, “Oh, we’re raising this much money at this mid price.” I’m far more excited about, “We’ve been around for six months, and we now have 10,000 people on our Discord and they’re still contributing day to day, despite the fact that there are a million other products out there that they could be working on.”
Yeah, I totally agree with you on the longevity. One of the other things I want to switch gears on is you have a community, they propagate a culture that they want to instill in the world that supports their project. Generally in DeFi, that started from a core team, one prolific leader that’s charismatic that can code, that’s very smart and intelligent. Sometimes, it takes two people. It’s hard to get the entrée in everyone, right?
What’s that like in NFTs and DAOs? Do you have this one creative artist who has full control over the project? And is that also kind of a risk factor? Because you want the community to eventually take over. Where do you draw the line on something like the creative process behind an NFT project?
I think it’s collective creation. I think that at inception, you do need a highly competent graphic designer, a visual artists to help drive sort of the initial narrative there. But what I expect to see here is that ownership over these narratives and creative ideas are eventually opened up to the community.
So, things like governance on the next form of a Bored Ape Yacht Club drop, something like Mutant, something like the Bored Apes Kennel Club. Historically, these choices have been made by the core team. Now, I would expect looking at this a year or two from now, if I hold a Bored Ape, I can contribute to the conversation around what future derivatives look like. And I think the more involved you get those players in that conversation, the higher the value of those assets is going to be.
I noticed now that there’s a lot of community crowdfunding, so things like the Ethereum documentary. I think that’s a perfect example where people are going to utilize NFTs for capital formation. So, purchase NFTs that represent the right to fund a project. And then hopefully, over time, in the same way that DeFi protocols now have governance, I think you’re going to see governance of NFT projects where it’s going to be much more on the creative side than it is on actually the economics of the protocol itself.
Yeah. No, I totally agree with you, man. It’s exciting. Where do you see the crossover between that NFT membership and the DAO side of things? Because I feel like DAOs are obviously a much bigger thing than NFTs. But now, NFTs have the spotlight. Where do you see kind of the crossover there?
I think that all NFT products will become DAOs. I think that DAOs are just the new age internet LLCs. In the same way that you think about a startup today, that is basically a DAO, and what that encompasses is kind of up for you to decide.
I think that DAOs are a way of really formalizing any type of project. I think that when you have interest and intention to build over a longer time horizon, it’s extremely obvious that you need to be sharing your value with your community. And the best way to do that is to start a DAO.
For a lot of these NFT projects, there’s an initial sale where some amount of capital is raised. My recommendation is for all those projects to put that into a community treasury, and then actively work over the course of three to six months to get that community involved in the distribution of those funds.
I think we’re extremely early on in that. And honestly, there’s probably 10 to 15 products in the world that are doing this in a meaningful manner. As you start to look over a longer time horizon, it’s less about the core team being responsible for everything more about them starting the flywheel at inception and over time bringing in contributors to help democratize and decentralized project’s ownership.
Yeah. No, I’m with you there. Have you seen a DAO or an NFT project successfully, progressively decentralized to date?
I think the most obvious answer here is Loot. I think it’s extremely, extremely early on in that front, but the rate at which derivative projects were spun up, the rate in which the governance token was airdropped, the inception of the project itself, I think that’s the closest parallel to one today.
I would argue that CryptoPunks is very decentralized as well from the community standpoint. Obviously, Larva Labs is going its own way with sort of these IP deals. But in terms of CryptoPunk community doing extra community building exercises and status symbols, that’s been going really well.
I’m really excited about SquiggleDAO. I think this is one that’s still in progress. But for those who don’t know, Squiggles, Chromie Squiggles are curated art block series. There is now a DAO behind Chromie Squiggle that owns most of the supply. And I think over the next couple months here, we’re going to start to notice that, that’s a very community run project. And I think that’s one of many examples where it starts with the series of diehard collectors. And as those diehard collectors want to go to that, take the product to the next level. They come together, form a DAO and then really ramp things up.
Yeah. No, I’m a fan of Squiggles. I own a couple. The cool thing to Squiggles was Art Blocks is all generative art, it’s their first release. The Squiggles are pretty cool. There’s everything from … There’s a couple different versions. There’s Perfect Spectrum all the way down to Pipe, and Slinky and below, so it’s pretty cool. It’s also pretty dynamic.
How does the SquiggleDAO kind of interact? Their goal isn’t just to buy … What would you say their directive is? Is there a directive or for any NFT DAOs directive to just buy up the supply of NFTs in the market? Or is it to promote the community? What would you say would be the goals for a community like that?
I’d say at its core, the objective is to make that series of NFTs as valuable as possible. I think the way in which that happens can vary drastically. On one hand, you have things like market buying NFTs putting those into a community treasury and locking up the supply, making the assets more scarce. That’s pretty straightforward.
But then I think more holistically, their goal is to actually expand the likeness of that project, things like education videos, things like bringing on strategic partnerships, helping someone like a Steph Curry get a Squiggle. I think that at the end of the day, these are culturally relevant asset classes. The value of them will be directly correlated to the strength of who holds them. As a DAO, I think that your goal is to make it as safe and secure as possible. So, people feel like if they are investing significant amounts of money into this asset that they know there’s a core team behind it.
And then over the longer time horizon, incentivizing people that want to go to bet for that community. So, if I’m someone who doesn’t have a Squiggle before me, me being able to come to that community, help spread the likeness of it, do an education video, write an article about it, I can work my way into a Squiggle in a way that I couldn’t just by buying it off the secondary market. I think the DAO exists to really empower people who want to expand the likeness of whatever project it is.
No, I like that, man. And the other question I have for you is, how do you know when you’re too early or too late? I mean, the fore for Squiggles is like 10 eth, it’s like 40 grand. I mean, the rare squiggles as you go up the spectrum in rarity could go for a couple 100 grand if not more a pop. Where do you decide as a collector like, “Hey, you know what, I’m just too late on Squiggles. I’d rather find something sub one eth. I’d rather get an early …” Where do you draw the line on, “Hey, I may have missed it, or hey, I might still have time to get involved here?”
I think about how active do you want to be in a community. If you’re willing to make a serious investment into a high value asset like a Squiggle, and you are looking to be able to come in and do some cool stuff in that community, it’s 100% worth it. If your intentions are to come in and start flipping NFTs for eth, which power to you, I’ve flipped a lot of NFTs in my life. I think it’s the single most exciting part about crypto. That’s a very different asset class.
But I would say if you’re looking to make a serious mark in this industry, and you’re looking to get a name for yourself beyond what you post on Twitter, contributing to a DAO and more specifically, collecting a high profile asset is going to earn you exponentially more capital than flipping the floor on some random PFP project that came out yesterday. Which in reality is really just a speculation game to add another zero to your bank account, which I think goes back to the core of what we talked about earlier where crypto is about far more than making money. And what you should really be optimizing for is the strength of your network and your contribution to the space, because those are going to directly correlate to the amount of value that you create in the industry as a whole.
Yeah. No, I’m totally with you, man. I mean, the connections I’ve made, and I’m sure that you have made just through being authentic with people is worth a zillion times more than flipping someone’s project.
I had another comment like …
Oh, sorry. Yeah, sorry.
I was going to add a comment quickly that if you are buying NFTs today, you are still extremely early. This is an asset class that has been around for maybe five years. If you look at this over 100 year timescale, the amount of assets that will be created in the next generation is going to be unprecedented. So, it’s very easy to look at something like a Squiggle and say that I missed the boat. But there are less than a million people in the world collecting NFTs right now, and this will be the single largest asset class in existence, in my opinion.
And so, if you think about, am I too early or too late, you might be too late for the local top that’s coming here in the next couple of months. But over a very long time horizon, you are extremely early. And I would use this as a learning time to think about what are the values that I stand for as a leader in this space and as a creator in my communities. And how do I find an asset class or an NFT collection that allows me to really double down on that and take these learnings to my friends and family and feel like I’m very confident in the ideas that I’m promoting?
Yeah, I’m with you, man. I was going to ask you. We’ve never been through a bear market on NFTs. We’ve never seen liquidity dry up for $100,000 asset. It’s a one for one trade, right? No buyer, liquidity zero, it’s literally worthless. Can you walk me through what you think would happen in a bear market? Not just for prices, but I mean for communities, for creators, for builders, for the people on Discord? What is that going to be like?
Illiquid JPEGs? I think it’s everyone’s favorite term here. And I think there’s a reality on that. I think there’s a lot of high value assets that simply will not be able to sell. What that looks like in practice is floors becoming lower and lower to the price that they are not up 100x from where they bought, but they’re actually a lot closer to where they were sold at.
And more specifically, I would say it’s going to be consolidation … Right now, if you look across the board, there’s maybe 100 to 150 assets on wgmi.io. They’re tracking the floor price across all these assets. I would say in a bear market, most of those will die. I think that most of the capital will flow into a very select amount of communities that are doing a really exceptional job. And your goal as a collector in this space is to trade your way into those high value communities.
So, as we enter a bear market, you’re not stuck holding illiquid assets with no true community ownership. You’re left holding extremely valuable assets that have collectors that will be there during the bear market, because their mo has never been to make money, it’s simply to create culture, and to create community and they will be there regardless of what the price of that asset is.
Yeah. That’s fair. I do think a lot of people are going to get scared. NFT bear market is tough, because liquidity is just the driving factor, man. I’m just concerned that the thing that got everyone attracted to NFTs in the space is number go up in the community, but that could really take a hit in a bear market.
It will take a hit. I tell a lot of my friends, “Always be optimizing for your eth stack.” It’s really easy to get caught up in like, “Oh, my NFT is worth this much because the floor is worth this much.” But what I say to people is your NFT isn’t worth shit until you’ve actually sold it. You can have paper values where you think that something’s worth a lot, but until someone actually buys that thing from you off OpenSea and you see the ether in your wallet, you have not made any money yet.
I think it’s very common for people in NFT community say, “Oh, I’m never selling, it’s going to keep going up. Don’t sell, paper hands, etc, etc.” But you really need to take profits in this space. I think we are in an unprecedented territory where the amount of money being made on NFTs every day is unlike anything I’ve seen in my five years in crypto that is not sustainable. It’s extremely addicting, extremely exciting, but it will not last for a long time.
So, if you’re someone who’s been fortunate enough to buy NFTs which have gone up five or 10x against eth, please recognize that, that is an extremely unlikely scenario to happen over a consistent period of time and make sure that you’re going back to eth, so that as things start turning up here in the next couple of months, you’re exposed to the assets that will be crushing the most over a very short time period.
Yeah. No, I totally agree, man. I think a bear market is going to be terrible if it happens. I mean, it’s inevitable. Not that it will happen, but you’re total right, man. I don’t think people understand how crazy the gains are sometimes.
I mean, just to switch gears a little bit. Are you seeing any maximalism in NFT groups? Like, hey, Punks for Squiggles or anything like that? I’m always kind of concerned because I hated the tribalism on Bitcoin versus eth, and I’m hoping it doesn’t happen in NFTs and DAOs, but what are you seeing there?
Yeah. I won’t name any names, but I think influencers in the NFT community are starting to go head to head with one another. What’s happened in the past couple months is that a lot of these NFT influencers have made so much capital that they’ve now had the ability to start their own projects on the back of their brand or likeness. So, things like launching a product, things like launching a virtual world, things like launching an NFT marketplace.
This is happening consistently. I could look across Twitter and find probably 10 to 15 individuals who started off just as a collector of NFTs that are now launching serious projects in the back of their likeness. And as that starts to happen, the maximalism that we’re seeing is basically that my NFT collection is better than your NFT collection.
What I’d say is interesting, though, is this is not happening on like a Punks versus Ape scale. It’s happening on a much more micro level, where it’s almost like specific creators are having beef with one another. But as you start to look at something like a CryptoPunks or a Bored Ape Yacht Club, the reason why they become so valuable is because there is no tribalism in it. I think that people recognize their high value asset classes. There’s not enough of them for it to be like highly competitive. And I think they’re very complimentary in the sense that most people who own Punks also happen to hold Apes. Most people who can’t afford Punks by Apes by default, but they don’t shame Punks, because they recognize that it’s the OG.
And there’s kind of like a trade off there where people recognize they’re standing in the NFT community today. And I think as we get more expansive and deeper into this. There’s going to be a lot of cultural respect for these asset classes, and that’s going to make it much more difficult to beef with one another or fall into maximalism because people recognize NFTs are very, very positive sum. And I really hope we can maintain that ethos throughout a bear market as well.
No, I totally agree with you, man. Yeah, I hate the tribalism. It’s stupid. I guess I want to ask you like, how do you judge the success of one of the culture around a community outside of price? Because if you start to see culture take place, a really ingrained, strong community, obviously, that NFT collection community will outperform. How do you judge that totally outside of price?
I look for the number of active contributors in a Discord server. I look for small things like the amount of people saying GM on a daily basis. And I look for the engagement and retention in a community.
If I come to a Discord server and I see there’s been no messages in general channel for three days, that’s a signal to me that this asset is not as effective as it was at inception. If I go into a server, and I see that there’s five different working groups with people coordinating Zoom calls and saying GM every morning, I think that’s extremely bullish, and that’s an asset that I’m willing to invest my time and energy into.
I mean, that’s a really killer metric. And to be honest, I don’t think many people are doing that. I don’t think people spend the time, because I think people will look at a Discord, and they won’t be objective about it. They’ll just be like, “Oh, there’s a couple messages who were active.” But to your point, you’re looking for working groups, you’re looking for Zoom calls, you’re looking for real building. Do you think a lot of people do what you do there? Or do you think people will just trick themselves into something is active just looking for anything?
People do not do that. I think for many people, their metric of success is going to the OpenSea collection and seeing what the floor price is. It’s unfortunate, but this is the reality. It’s very similar to just pulling up the token on CoinGecko. I think what I’m noticing now is that if you want to be a serious collector in this space, you need to go much deeper into looking at floor prices and sell history. You need to start looking at who these collectors are. And you need to go into those deep topics where deep collectors are talking about what they’re buying and have a very strong identification on trends that are happening in the market to make sure you’re staying one step ahead of the curve.
I’m with you, man. So, switching gears a bit, I want to talk specifically about art. There’s obviously a full spectrum of different types of NFTs. You have Axies you can battle with. Or in Yield, you have land and Axie number and others. Then you have pure art, you have generative art, you have people’s art, you’ve all different types of forms. What gets you so excited about pure NFT art? There’s Netflix documentaries around provenance and transparency and all these things, but what is it that gets you really excited about like a Fidenza, or a Ringer, or something else?
It is a metaverse status symbol. I don’t think we’ve ever had the ability to place such a high financial value on digital assets. I think that art in the traditional world is how this works and exists. If I’ve been extremely successful and I want to diversify my assets, having art is a way for me to show that I’m culturally relevant while also having a high degree of social and financial capital.
This is what NFTs are to me. These blue chip art projects are ways for people to say, “I have made it in crypto, but I am not going to flex the amount of ether in my wallet, I’m going to flex my NFT collection.” And that allows you to come across as a very culturally successful person without flaunting your gains in a profit and loss perspective.
I think that ability has not existed prior to this recent trend in NFTs. I think this is the single biggest reason why they will continue to go up in price even over the course of a bear market, because a lot of these collectors could not care less if the price of ether goes up and down. They have made their wealth 10 over. And what they’re looking to do is really establish themselves as a cultural leader in the space, and those assets will never leave their wallet again.
The mega buyers of the space, the [Zuzus 00:30:19] of the world who Ken and Kyle are absolutely incredible guys, but they have a hell of a story. They tweet stuff that they buy it. I mean, magnificent works like Fidenzas that are over a million bucks a pop. You’re saying that these guys will literally never sell. As a status symbol, they don’t really have to worry.
How does that affect like me and you? Maybe down the line we’ll end up buying some Fidenzas, but it’s hard for us to get access to that outside of a fractionalized version, or it’s hard for the masses to get access to that. How does their inability to sell help us on a price floor or something like that, I guess? Or does it not?
I think it pumps our bags. I think the more high profile people that are collecting these assets, the higher likelihood is that they will continue to go up in price both from a floor perspective and from a high rarity perspective.
I say to people when I’m collecting NFTs, I use two strategies. One is trade the floor, trade the most common versions of the asset class, or buy the top 1% of those assets. When you start to look in the middle, I think it gets very nuanced, and so as you start to enter into these collections, I think that buying the floor is as simple as trying to buy the cheapest thing on OpenSea and really just having exposure to it.
And then to Tom’s point here, if you are looking for exposure of that top 1%, maybe it’s not about making sure you’re spending $5 million on a Fidenza. Maybe it’s about looking on things like fractional.art to find the top 1% Fidenza that’s fractionalized, and having exposure to that through a fractionalized token.
I asked a couple of guests on the series so far. We’re an investor in Fractional, and full disclosure, I own some of the NFTs we mentioned during this podcast. But one of the things I found interesting was I totally agree with you, either by the floor or by the top rarity, because the middle of the stack rarely gets repriced up. Granted, you may have other reasons for buying that. Maybe you like the art. Maybe it’s the most you have access to financially.
But one of the questions I had for you, Cooper, was let’s say you take the best Punk in the world and you fractionalize it and everybody can get a piece of that. Enough of the collectible supply is fractionalize, and enough is in the AMM where the price isn’t insane, it makes sense to just buy $1,000 or something like that. That obviously bids up the implied valuation of the rare NFT yada-yada.
But why the hell would I buy a floor Punk when I could buy part of a Zombie or part of an Alien? And the other question for you is, what does that even do for the floor Punk? Does anybody want to buy a floor Squiggle or floor Punk if they can buy part of the best version?
I think there’s a lot more autonomy and a lot more sense of ownership over having the whole asset. I think that fractionalization is a great way to get exposure, but I think the level of ownership you feel like you have over a fractional piece of a top rarity asset versus owning a floor asset is very different. I think that there is less need for third-party trust and secondary market liquidity to be successful.
For example, if I’m buying a top 1% fraction of a Punk, I need to expect that there’s a Uniswap v3 pool. I need to be aware of things like the reserve price and by up decisions. I need to be contributing in a very fundamentally different way. For me having a floor asset which I can list at any point in time, I don’t need to ask anyone else, I don’t need to look for any secondary market liquidity. I have the free rein to basically do whatever I want.
I think there’s a world in which you have a mix of both. For example, I own a lot of fractional tokens and I also earn a lot of floor assets, but I think the values and principles behind them are fundamentally different. There’s a specific set of actions that comes with collecting those types of works.
It’s actually a really good point, because my thesis or one of my thesis is around fractionalized ownership was everybody can use the likeness of something to create a killer community. You and I could share the same NFT as our profile picture. We could go in the community for just this one punk and everyone’s mind could go wild there.
But to your point, I don’t feel like I own anything. I just feel like I have financial access to the upside. I don’t feel like I’m part of the punk community, right?
Yeah. I think we’re starting to see examples that are shifting this narrative. One that I’ll call out is a hoodie by [Dspy 00:34:22]. This is a fractionalized hoodie punk that is on fractional.art. If you hold one hoodie token, you can have access to a private shot and the fractional Discord specifically for hoodie owners.
That’s an example of something where you do feel like you have more of a sense of ownership over it. The likeness of that specific Punk becomes higher because of the fact that it has community backing. But I think as an investor and as a collector, my intentions are very different. If I’m buying fractions of a hoodie asset, I am buying that for social access to a community, which is fundamentally different from me buying a floor price asset to make a financial return off of.
I think they share a lot of qualities and I think that is a very blurred or gray area, but I think that I notice that communities that form around these assets are fundamentally different, who’s responsible to which kind of level you get involved with. And what I would say for creators of this project is making sure that there are opportunities for community to get involved at very different levels. So, it’s not only about buying a top 1% to go into exclusive community.
Even if I have $1,000, I should be able to have exposure to a niche subset of something like a Punks by going into a Discord server and saying GM every morning to everyone else who holds the fucking hoodie tokens.
Well, it’s funny. I’m trying to think through this. Let’s say you and I ape into that fractional hoodie. Me and you build … We say good morning every morning, we’re on the Discord, we’re having a good time, we’re building a community around it. And then Zuzu comes in and bids the reserve price, starts the auction and nobody competes with that, and he ends up buying it.
I get escrowed eth for my fractions, and I’m no longer a part of the community. I’m literally forced out. I never really thought about it like that. But to your point, that’s a really good reason why you’d want a one of one.
Yeah. I think closed cycle fractionalized projects is actually a really powerful thing. I think that we see across things like Mirror crowdfunds across fractionalized assets. A lot of what we see today is that once the act of fractionalization happens, that asset will never be made whole again. There are very little buyouts. There’s oftentimes very little secondary market liquidity.
In the event that someone comes and buys a hoodie, or comes and buys Party Of The Living Dead, that story that comes from being a part of that specific moment in time will translate over into the next community. It’s not like the members of that community are only there for that one specific asset. They’re there because of the ethos and intent behind it.
And as something like that goes through a buyout process, you’re going to make relationships, we then DM the person on the side and say, “Hey, hoodie just got bought out, where are we spending our time next?” And that kind of rolling nature of always having community mobilizing to different assets, I think, is exactly why NFTs are so powerful as a financial asset class.
No, I’m totally with you, man. I totally agree. The community aspect of the fractions versus owning a floor or something is pretty interesting to your point. It’s actually funny, man. If all of the top tier get fractionalized, the top tier floor, I guess, becomes the middle rarity. Maybe not. Maybe I’m just grasping here.
Love to switch gears, Cooper, to the creator economy. You’re very active in things like Sea Club, and Rally, and Friends With Benefits. I don’t exactly know what the tie-in with NFTs is here. But I’d love to kind of hear your thesis for the creator economy, and we could take it wherever we want.
Absolutely. My thesis for the creator economy, it is the single easiest way to invest in culture. I think up until this point in time, we have not had a way to have financial exposure to the creators, communities and brands that we love. But using things like tokenization, we can now have financial and social upside associated with the communities that we spend our time in.
And so, a lot of the work that I do here is helping creators here in LA and sort of around the world understand this technology better and start to make very tactical decisions about how I can poke around with something like NFTs, and then over time evolved into a social token that represents true and pure ownership in my community.
What is the ideal creator in your mind? And I don’t want you to speak for Jeff of Sea Club who I have a ton of respect for, I love him, we’re investors. Somebody comes to you and they say, “Cooper, I have XYZ idea. I am this person. I want to do this token.” Who is the perfect example of somebody launching a creator coin?
It is someone who has a highly active community already. They understand the community is not something that can be done passively. They don’t just have a lot of followers on Instagram, they have a highly engaged community in Discord. They already have moderators lined up. They have people taking ownership and responsibility of that community on a day to day, and they have a high proficiency for storytelling and narrative building.
I think for a lot of these creators, to have highly successful line communities, you need to have narratives built over a very long time horizon. And it’s not just about buying into a project at the inset, it’s about making projects for people to work together on. As a creator, I think that your single most important job is to present frameworks and foundations for people to come together and build narratives and products on top of what you think is a good starting point or a good shared mission to build on top of.
Not financial advice here, I’m just talking hypothetically, but I kill to buy a creator coin in you because I know you’re active. I know you’re going to be here for a long time. I know you’re passionate. Other people, somebody launched a coin, how do I know they’re going to be here in a year?
How do you know that not only are they going to be here for the long term, but they’re going to shift the way that they engage with their fans, their communities from Twitter and Instagram to like Discord gated communities and members-only podcast? How do you know that they’re going to be here and how do you know that they’re going to use like the Web 3.0 avenues to talk with their fans?
It’s a great question. There are two parts here. One, you do not know that. I think that the reason why these assets have such high financial potential in them is because we have no clue whether or not they’re going to work out. In the event that they do work out, it will go insane. In the event that it does not work out, which is the more likely scenario, it will go to zero. That’s a very binary thing. I think your goal is to try and find the creators that are willing to go down that rabbit hole and really do it very meaningfully.
To your point about how we get there, I think that, that is your responsibility as a token holder. If you’re going to invest significantly in one of these creator economies or community tokens, you should take it upon yourself to make sure that you are not only a bad coder, that you’re actively contributing to this community with whatever skill sets you have.
I think the more that you play a role in that happening, the higher likelihood it is that, that creator will see that being valuable, and then spend all of their time and energy doing the same thing that you are.
So, it’s kind of interesting. I mean, we talked about the NFT space for the first half of the pod and it was decentralized the community, let them take over. But with the creator economy, it’s all on one person or a group and then I’ve never really thought about it, but God forbid they pass away or something. I guess you have a creator economy around that person’s life and their work, which could obviously continue, but do you see creator coins progressively decentralizing? Or that kind of go against the ethos of having a creator coin?
All successful creator coins will not have to do with the success of one individual, it would have to do with the success of their community. The single biggest metric I look for in investing in a creator coin is how removed can that creator be from this community for it to be self sustaining.
If that creator were to go to Puerto Rico for a week and that community were to do nothing, that’s a signal to me that they are far too involved in the success of this project. But if they can leave for a week and still see that that Discord channel is bumping, that people are taking ownership and responsibility, that’s how I know that this is a successful project.
I actually think, contrary answer here, if a high prominent creator with a token were to pass away, and they’ve set it up in the way that it was meant to be, that token would go up more. I think the community in a state that forms around a tragic event like that would be so powerful that people would be doing anything and everything they can to preserve their legacy. And chances are the financial value of those assets would also appreciate in tandem with that success.
I totally agree. It sucks that death propels people to fame. I want to come back to creator coins, but you brought up a really interesting point. Generative art is formed pretty much algorithmically on-chain. You mint it, it uses an algorithm to create a specific piece of art right as you mint. Things like Fidenzas, I’m pretty sure Squiggles as well.
I don’t exactly know the ins and outs of the algorithms, but the crazy part is when Picasso dies, he can never make another work of art. If the creator of Fidenza dies, hey man, the algorithm is out there. Obviously, the initial release is capped, but it’s just a weird thought. Do you think that death matters? Because these artists’ code can create works of art forever, right?
Yeah, I think this is the single biggest unlock of crypto is that these codes live on forever. I mean, something like a DeFi protocol, like Uniswap will live on forever. And I think as you start to look at NFT assets, this is why artists are now moving towards custom smart contracts, because they want to have prominence and ownership over minting from now through the end of time.
I think in the early days of NFTs, it was okay to allow platforms like Nifty Gateway, SuperRare, Foundation, OpenSea deploy those assets for you to have them come from a factory contract that lists all the NFTs. But as you mature as an artist, you start to recognize that your fingerprint and identity is debatably more valuable than those assets.
Even in the event that you were to pass away, that contract can have ownership and provenance. That should those community members have governance over the smart contract, which is what will happen, we’ll see decentralization in the same way as DeFi protocols, that community can come together and say, “Hey, we want to mint another asset from this artist contract, because we as a community decide that, that is valuable and important to us.” We can go ahead and access that code using on-chain protocol governance to be able to create more works of art that resemble their likeness.
So Cooper, let’s say I’m dumb, branded NFTs and generative art. And I say, “Hey, Cooper, man, I know the cap for this NFT project is 10,000 drops. But you know what, I took the code and I made 10,001.” What is your answer on why that 10,001 is not valuable?
It’s a good question. I think that the cosign from the artist is extremely important. I think that if you look to do anything derivative based on a project without the cosign of an artist, they will inherently have less value. That’s not to say that it can’t be sustainable and have some sort of market price, but I think that the further you go away from that initial creator and the initial cosign of those core founding members, the higher the likelihood is that it’s going to fail.
And so if you’re looking to spin off a derivative project of something, if you’re looking to make things like the fast food Squiggles, which I thought was hilarious, there is a high likelihood that you’re doing it for a meme spec, and there’s going to be a short-term market that forms around it. So, that’s called anywhere from 48 to 72 hours of really fun, flipping and speculation.
But beyond that, the likelihood that it has sustainability is going to be very similar to what we saw with early DeFi forex where for a little bit there, the APYs were very high, people are excited about the prospect of catching something after they missed the original one. But as it goes beyond that first month, the value is always going to accrue back to the original. And if you’re not in that original asset class, you’re going to get left in the dust.
I’m totally with you, man. I totally agree with you. It’s just interesting to think about generative art. You literally can take Picasso’s paintbrush and just run it 1,000 times. Yeah, it’s just a weird concept to think about.
Switching gears back to the creator economy. I know we went off on a tangent, but we had to there. What do you think is the current state? Do you think people are getting it or not getting it? And I asked you, because we’ve seen things like BitClout kind of mess this up. And then we’ve seen things like Friends With Benefits really get it right. What are you seeing as a status of the creator economy and the DAO side as well?
It’s a fantastic question. We are in a highly experimental phase right now where people are willing to take risks to kind of be involved in the picture. I think that most of these projects don’t have any clue where they’re going to be a year from now. But I actually think that’s the reason why they’re extremely exciting.
I think for a lot of these creators, they’ve been looking around the edges for five years on how to get involved with crypto. They’ve been looking at things like Dogecoin. They’ve been looking at things like Cardano. Really dumb assets that their friends are telling them to buy, and they’ve been buying it because they’ve never had a reason to really get deeper into the community.
What I see with creator coins is the potential to really engage those people in a meaningful way. And even though a lot of them will be extremely speculative to start with, I think there will be a select handful of creators that do this in a really meaningful way. And that small batch of creators will drive the entire narrative exponentially further than 99 experiments which fail, but we’re still sort of a driving factor in allowing those to launch in the first place.
Do you see a big market for what Rally is doing? And if you can give a brief overview there, because there’s a lot of time with them and the crater economy. We’re talking about Sea Club a lot and BitClout. But if you could give a brief overview there, it would be helpful to.
Absolutely. Rally is a platform to launch creator coins. If you’re a creator that wants to launch a token but doesn’t have the technical know how to do that, Rally offers tools and services for you to be able to easily make a token.
What I like to call out is that to me, Rally is for non-crypto native communities. If you have an audience of people who have never touched MetaMask, they’ve never touched eth before, but they want to get involved with things like NFTs and crypto, Rally offers onboarding tools to make it very easy to get involved with the token.
So, things like buying with a credit card, signing in with an email or a password, showing donations on a Twitch stream, sending gifts to one another through things like Discord. There are tools and services that allow you to be a lot more flexible in how you use a token, but are inherently designed for more new creators who are excited about the prospect of tokenization, but maybe don’t have that really deep experience that I mentioned earlier for people such as me or you who have gone through a DeFi Summer, who have gone through an NFT decentralization where they understand the value of things like a community treasure and governance. Instead, they basically want to start up a token and just experiment with at a very, very high level. And to me, I see Rally is a good place to get started and having a strong backing of team members and tools in place to allow you to do that in a really meaningful way.
It’s kind of abstract for the artists or creators listening, right? Everyone says, “Hey, come to us, we’ll give you the tools, we’ll give you the software, we’ll give you the support.” It’s like a normal sales pitch, and I like it. But what does it mean to give a creator the tools to launch their own economy? Is it gated Discord access? Is it a token? What do you have to give them for them to be successful?
Direction, I think first and foremost. I think that the act of creating a token is not valuable, the act of telling them how to do that really meaningful in their community is extremely valuable. So, beyond the act of actually setting up that token, setting up a Discord server with some private roles, I think educating and inspiring creators to really allow that creator to take ownership in their project is the single easiest way for them to have a high success rate with it.
I think in inception, creators think, “Oh, I’m the only one with these tokens. I’m going to give them out to my fans. It will be great. Maybe they’ll make some money.” But as I start to talk through with them, I start to say, “Hey, what would it mean for your moderators to be get paid a salary every month to do this full time? What would it mean for someone else to take on the content side of your arm? Or what would it mean for someone to run a newsletter for you?”
And as you start to see that shift in narrative around people recognizing that their community can be highly active and mobilized for them, they start to see this asset is no longer just a speculative vehicle, but as a means for compensation and incentivization to really take your creator economy to the next level.
That brings up a really interesting point in scaling a creator’s vision and their breath. Instead of just the creator firing off behind trunk tweets at a club and people getting excited or something. They’re now launching legitimate communities. Do you see any early signs of decentralization where the community starts to take over? Let’s say you run a creator coin, and I’m the guy running your blog. I’m obviously not you, I’m not Cooper. I can’t speak in your voice. Do you see any issues with this creator coin scaling, like the voice of the creator or the founder starts to get diluted?
I think that’s extremely powerful. I mean, speaking from experience with Friends With Benefits here, we have so many incredible people that are helping out to the voice and influence of that project. Very recently, I recognize that I am a very, very small piece of that community. It is not my job to make sure that I steer the narrative or conversation in one direction. It is my job to steward open communication channels for people to take that conversation wherever they would like.
I think when you get to a successful creator economy, you start to recognize that, that creator always have the most influence and steering a conversation, but they are no longer the sole decider of what that conversation is. They are solely a means of contributing to it and allow those community members to really have full authenticity and voice over what that narrative looks like.
Yeah, that’s fair. That’s a good point. I never really thought about like that. I guess for the DAO side, it’s not as much of an issue. For the creator side, it might be. I guess, switching gears a little bit, what did Friends With Benefits do right? You’ve been involved there for a long time. They’ve crushed just the community side. Somebody wants to copy Friends With Benefits in an alternate reality where it doesn’t exist. What do they do to just make it successful?
Yeah. I’ll start by saying it is my one year anniversary in Friends With Benefits. I’m very excited about that. It’s absolutely crazy to think back to how much has changed since then. What we did right was we facilitated a really amazing culture of people who are excited to learn about the future of technology.
We were very inviting to people who are very new to the space. We took the time and energy to really educate and inspire people. We made them feel very welcomed when they came into a Discord server. That irregardless of where they came from, or how competent they were in crypto, there was going to be other people around them to really guide them and give them a feeling of belonging.
For other people that are starting social token communities, I would really challenge you to think about those very, very early users, how do they get involved with the community, and how do they feel like they learned a lot and got a lot of value out of that. That value should not be denominated in terms of a financial token price. The success of your token will be directly correlated to the amount of value you drive to those members.
I would think very deeply about things like the onboarding experience, things like the membership experience, things like how people get involved in working groups and governance. As you start to curate more ways for people to get involved in a meaningful level, I think you’ll start to notice that your token price will be directly successful relative to how easy it is to get involved and to feel like you’re a member of that community.
Cooper, one of the overarching things you’re saying most of this podcast is inclusion. And I’m wondering, why is there so much inclusion on the DAO and NFT space relative to the DeFi or Layer 1 space?
I think it’s easier to digest. I think people are more willing and able to contribute to those conversations. I think that it’s a naturally more positive sum ethos. There’s no competition for basis points. There’s no competition for liquidity. The competition is for human capital and sort of mindshare. I think what you start to realize that for a lot of these NFT and DAO communities, there is more value in allowing your members to go and contribute to many, many DAOs than there is by trying to segment them to one individual community.
As they start to spread those ideas and likeness across many communities, the whole space kind of comes up. I think what you’re going to start to notice here is that there is not competition among DAOs for members, it’s going to be actually encouraged that people in different DAOs contribute to many communities, because those learnings are going to positively influence the way that, that community succeeds over a longer time horizon.
Yeah. No, I’m with you there. I hate to bring up value flows as we’re talking about culture and community, but value flows are important. We don’t have a token price anymore to look at. We have NFTs. There’s a lot of different ways to do this. I aped into a GEN.ART membership the other day. It’s like a decentralized version of Art Blocks where it’s NFT membership, but they’re also planning a token, and they have the individual NFT drops. It’s like three different segments of value flows. It’s hard to keep up with it. It gets a little bit harder with DAOs as well because you have to reward people for their work.
Let’s say you go into Friends With Benefits and you’re giving a list of everyone and everything everyone does. How do you reward them in a way where they’re incentivized? And then two, how do you make sure the value flows to that community? Because it’s hard when you have to start thinking about like revenue streams and stuff. And we’re probably too early for that stuff, but how are you thinking about that side of things?
I think that membership is extremely important. As people start to join a community, taking the time and effort to make sure that they know what channels to contribute to, taking note of what their skill sets are, and building out very easy ways for them to get called upon to do really meaningful things is extremely, extremely important.
I think, to your point about revenue, I do agree that it’s too early for some of these communities, but we’re now reaching that cusp. I think over time, you’ll start to find that a core contributor’s goal is to create products and services which drives on-chain revenue back to a community treasury. Historically with DeFi protocols, that’s been in the form of smart contracts. In the form of these DAO communities, I think it’s in the form of things like an NFT sale, things like membership access passes, etc, etc. And over time, you’re going to find that there are ways to drive on-chain revenue back to social communities. But they’re fundamentally different from the ways in which we think revenue flows to DeFi protocols.
My other question for you there is, people today are caught up in speculation. Like you mentioned earlier, like make a five or 10x on NFT. People are just like, “Oh, I could do it again.” The long-term building through a bear market for a community generally doesn’t reward people with a five or a 10x tomorrow, right? They build for long periods of time, months or years. They show their work, they get their incentives, and eventually that value is unlocked, because the community realized that and there’s a reprice.
Do you think people working today in DAOs, working in NFT communities understand that you really have to work for months or years to get it? Or am I just too much of a boomer and everyone is going to make 10X their money forever and I’m an idiot?
I think it’s a mix of both. I think the most beautiful part about working for a DAO is you can pay people on liquid ownership. You can pay people in tokens, which have a financial value on a secondary market that they can choose to liquidate if they so choose to. I think what you’ll notice is that for those early contributors, you are taking a long-term bet on that community. And in exchange for that, you have a vesting period that is in accordance to that.
So, there’s almost two worlds where if you want to come in and just work on a bounty basis, work on one project and get paid for that, you can be paid in the form of tokens that have secondary value with high upside potential. But more realistically, for some people like myself, I am working for ownership stakes in networks over a very long time horizon.
I think that the former is very exciting for those getting started in the space. It’s a great way to earn tokens from working on different communities. It’s a great way to have exposure and build social capital. But very soon, you start to realize that one-off projects only breed so much confidence. The true trust and the genuine respect you’re going to earn from a community is based on the amount of time you spend with them. Taking on a larger ownership stake for being a core contributor over a longer period of time is going to deliver you the most value. I think that your goal is someone that’s exploring crypto is to find one or two communities that you really deeply believe in and do everything that you can to become a core contributor, so you can capture that upside in tandem with the growth of the project.
Yeah, I totally agree with you over playing the long game, man. Always long-term games with long-term people. I agree. And going back to the NFT side a bit. Something that’s really important is curation. There’s a lot of whales in the space, a lot of social figures who are able to say, “Hey, I like this.” Or, “Hey, I like that.” It doesn’t really scale on a global scale as we get big. You want the community curating.
I mean, on one end of the spectrum, you have whales buying stuff saying they like it. And the other end of the spectrum, you have stuff like Art Blocks where they curate launches, but there’s a spectrum. They’ve curated, they have a factory, they have a playground, like there’s different levels to their creation. Then you have SuperRare trying to use their token to curate works of art. There’s a lot of different facets of curation.
I guess, in your mind, what would be the ideal scenario? Because you want the best artwork to be shown, but you also want anybody to be able to reach the stage. How do you think curation plays out on a global scale for art?
Yeah. Curation is my single favorite topic to talk about. I think it is the future of all token economics. I think we’re very early in their design, but I believe that curation is an extremely powerful topic.
The way that I think about this is that every network has value flowing to some place or some amount of protocol fees or treasury. Your goal with the curation token is allow people to signal to that value and capture upside for being correct in their assumption of where value is going to flow.
I think right now, those models do not exist. We have not seen these work at scale. But my ambition intent here is to create on-chain revenue, first and foremost, so a degree of ownership stake flowing into community treasury that is very meaningful. And then once you have that solid funnel or river flowing into community treasury, adding in curation games to allow people to capture percentages of that upside solely for being correct in their assumption of where that’s being curated.
Maybe to say that another way, I think that curation models are solid one to two years away from being fully fleshed out. I think, first and foremost, what we need to solve is steady on-chain revenue from all of these different protocols to allow it to be sustainable. And the shift now becomes, rather than just having governance over a passive pool of capital, you now have people actively able to contribute to a network in the same way they would providing liquidity. But with their curation skill sets to be able to say, “Hey, I think this artist is going to have the most sales this month. I think that this series is going to be the most successful.” And as you use those tokens as a proxy to be able to stick to that value, you should be able to capture upside more so than someone that is passively holding tokens on the sideline.
Yeah. No, I’m with you. I really hope we get to a point where the people who find the best work early and the best artists and put their name reputation behind that, they also share in the upside as that artist gets discovered. I mean, you only have so much social capital. Let’s say you know me and I’m an artist. Let’s say I’m really good even though I’m not. Down the line, you should be rewarded for putting your social credit on the line.
Yeah, and I think that we’re seeing the early stages of this. The ability to be able to buy these assets and have them appreciate on a secondary market is a very early form of curation. This speculative nature did not really exist in the past. Or if it did, it was a very niche community.
I think historically, social capital has been the reward for that. So, if I find an artist very early on, chances are I have a relationship with them, they’ll hook me up with access to a show or something like that or I’ll have their number. But it’s sort of stopped short at being able to capture financial upside.
And why I think that tokens are so exciting is because you can actually buy a financial instrument that represents direct upside and a creator’s future potential. And this ability to tie together social and financial capital has never existed in history. I think this is the single biggest reason why every major creator in the world will make some form of a token. As someone involved in crypto today, it’s your job to go and discover which of those are going to be the most valuable over a five to 10 year time horizon.
Cooper, to close out kind of the whole conversation here, I’d love to kind of close on governance rights for token holders versus NFTs for social access. And it’s a question you brought up that I thought was awesome.
Right now, you’re seeing a lot of, “I need to hold Friends With Benefits to access the Discord, but I need to own a Squiggle to access SquiggleDAO. And I need to own, to your point, one fractional hoodie to enter their DAO. And then on GEN.ART, I need the NFT to enter.” It feels like there’s a lot of experimentation with access, and then the token for value flows. What’s your take on the dichotomy between those two things?
Yeah, thanks for bringing it up. This is something that I’ve been spending a lot of time on. I think the reality is that fungible tokens’ access work really well at the inside of a project. Being able to use it as a distribution mechanism to get people involved, to get them caring about something, it’s phenomenal. I can send tokens to someone’s address, they can do one command on Discord, and they can be part of a permission community, which allows there to be high quality conversation.
Where it breaks is once that club becomes so exclusive, that the financial value to join is unattainable, you start to get into this weird dynamic where you’re no longer able to include the very people who made that community special. And so, what I think a lot about is how do we lower the barriers to entry without diluting or sort of disincentivizing people who are really early to the game.
So, if I’m someone who bought 75 FWB in September of last year, and I’ve written the whole layout, it’s not fair for me to now allow new members to come in at a lower token threshold. So instead, what we need to do is think about ways to allow people to access the community, but also drive on-chain revenue.
What we’re thinking now is that if you hold a certain threshold of tokens, you will have lifetime access to this community, you will have governance and economic rights over the community in a way that you would not from a social membership pass. But as a way to invite others into that community, we’re looking at social season passes that are represented as NFTs. They’re priced in either eth or USDC, and it drives value back to the community treasury, but it offers a very different set of scope than if you’re a governance participant in that.
So, you can come out, hang in the discord, go check out a city guide, go to a Coffee Time, listen to a conversation. But if you want to start contributing to things like payroll conversation, a fundraising announcement, core contributions to a product or service, that’s what’s going to require you to purchase ownership stake in this network. And it’s my fundamental belief that the value that will come from you being active in those conversations makes that price point worth it even if it seems very outrageous on paper.
No, man it’s pretty cool. I mean, it’s like buying a gym membership to use the gym but if you want to share in the revenue, you got to buy shares of the stock, I guess.
Yep, that’s exactly right.
That’s pretty cool. Cooper, you run through so much so quick, man. So, we don’t have to go on for too long, but I have a couple of rapid fire questions for you. Multi-chain NFTs, thoughts.
Already happening, big bull on Solana. I own a lot of SOL and I’m upping the Metaplex protocol come to life. I think this is the first of many. And I think that if you’re building an NFT marketplace, I encourage you to be inviting of other chains as well.
I love that. Next one up, any updates on Audius?
Audius is absolutely [crosstalk 01:03:51].
[crosstalk 01:03:51]. Yeah.
Yeah. We were at the highest monthly listeners we’ve ever had on the platform. We’re working on some really amazing stuff with Solana right now. We just integrated Phantom wallet on that side. You have not seen anything relative to what Audius’ potential is yet. Over the next year or two, Audius is going to become a household name in every music community, and I would highly encourage you take the time of day to check it out.
Last one for you, Cooper. It might not be a rapid fire question, but can you give a brief really quick overview of Loot project? Because I want your take on it, but I want to make sure people know what it is.
This man just asked me to rapid fire Loot. [crosstalk 01:04:27].
There’s like 100 synthetic versions at this point, so I’m hoping somebody could sum it up in a minute. But hey, man, we could take as long as you want on this one.
I would say Loot is an open source adventure game. It was completely fair launch at inception. People got really excited by this and the prospect of having an online MMORPG that was completely community owned and operated from day one allowed there for to be a high level of speculation associated with it.
For crypto listeners out there, I would say that this is the exact same thing as WIFI was to DeFi Summer, but this time for NFTs. And for those who are new to this space, I would say that this is the first time that a highly significant NFT asset class has been released through a fair launch since CryptoPunks in 2017.
And so, you’re going to see a lot of derivatives solely because of the amount of excitement around it. But if you’re new to the space, I would say keep an eye on what’s happening in the core Loot community. Focus a lot less on the derivatives popping up around it. The success of Loot is going to be directly correlated to whether or not that project can have a core contribution team come around and actually bring the game to life. But the prospect of owning this metaverse money and true open internet adventure game items is extremely exciting. And I think that the financial price of the assets are direct correlation of that.
I love that. No, that was a really good summation, Cooper, but I have one more for you. Playing devil’s advocate. Loot is so sick. There’s so many derivatives. There’s so many spin-offs, there’s so much energy, man. You literally can’t keep up with it.
But on the other side, you literally need world class devs to build out this MMORPG, and I don’t think that exists. How do you incentivize those devs if they don’t have the upside from the initial Loot drop? And also, it will be years out. I don’t know, man, it’s just such a weird dynamic, because there’s so much energy on Loot now, but it’s such a hard long-term thing to build, and you need world class devs. What’s your take on the meeting of those?
My take is that I think you’re exactly correct, and the assumption that building the game is fundamentally different from speculating on its future. Right now, we are in a phase where a lot of people made a lot of money very, very fast. And so, they’re naturally very excited about the prospect of building on top of it. I think that’s fundamentally different for building on it throughout a bear market.
And I think your point is extremely valid that right now, one of the downsides of Loot is that there is not a community treasury that is built to incentivize active core participants of that community. What we saw with WIFI is that new tokens were created to add those incentives into that token economy.
What I expect to happen with Loot is that there is either assets that get deposited from other Loot holders into community treasury, or there’s some sort of event in which there are core incentives added to a community treasury, but that does not exist today. And I think that is a challenging hurdle, but one that I’m confident that can be overcome.
I think maybe to round that out, I’m still on the fence about Loot. I don’t know if it’s going to be as crazy as it is. I don’t know if it’s going to go down or up. I think we see some people buying eight figures worth of it. We see other people saying that it’s a flash in the pan. Something of this magnitude, it’s impossible for it to phase out. And so, if you’re looking to become deeply ingrained into the NFT community today, but not sure where to get started, I think popping into a Loot discord and trying to find a way to add meaningfully to that project is a high value opportunity for you to take advantage of.
Cooper, it’s a great way to round up and you said you couldn’t cover Loot in a couple of minutes. Come on. You’re Cooper Turley, man.
I got this. Come on.
Cooper, I love having you on, man. For those who haven’t heard Cooper, he’s been on our podcast a couple times for a couple different topics, so feel free to check it out. Cooper, I love you brother. Thanks so much for coming on.
Tom, the feeling is mutual, man. I look forward to hanging out. I’m sorry, I may not next week. I’m going to a GRiZ concert. It’s going to be a great time.
Well, man. See you soon.