Welcome back, this week Lucas and Anita dive into a conversation around OpenSea’s significant layoffs, how Binance is taking on Coinbase in a stateside battle royale and why the Bored Apes creators are trying to outdo Meta with their own metaverse. In their interview this week, Lucas and Anita chat with Alexander Taub. Taub is the founder of DAO tooling startup Upstream which lets people spin up their own decentralized governance organizations. DAOs were the space to be this year, but how many of them will stick around through a crypto winter?
Welcome back, this week Lucas and Anita dive into a conversation around OpenSea’s significant layoffs, how Binance is taking on Coinbase in a stateside battle royale and why the Bored Apes creators are trying to outdo Meta with their own metaverse.
In their interview this week, Lucas and Anita chat with Alexander Taub. Taub is the founder of DAO tooling startup Upstream which lets people spin up their own decentralized governance organizations. DAOs were the space to be this year, but how many of them will stick around through a crypto winter?
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Helpful links:
https://techcrunch.com/2022/07/14/nft-marketplace-opensea-lays-off-20-percent-of-its-staff-we-have-entered-crypto-winter/
https://techcrunch.com/2022/07/19/bored-apes-founders-on-their-plans-for-otherside-metaverse/
https://techcrunch.com/2021/11/18/constitutiondaos-bold-crypto-bid-for-us-constitution-falls-short/
Lucas Matney 0:00
Hey everyone, it's Lucas and Anita, welcome to chain reaction where we unpack and explain the latest in crypto news drama and trends breaking things down block by block for the crypto curious. Okay, so some interesting stuff happening with the crypto markets for once. Not all doom and gloom, some good stuff happening.
Anita Ramaswamy 0:23
Yeah. So actually Ethereum is up about 45%. week over week. And you know, this is a pretty significant recovery for eath. Because we saw a pretty rough, you know, a couple of weeks before this, but this past week seems to have made up a lot of the losses that Ethereum had suffered in the past month. So you know, from where it was around 30 days ago, it's sort of trading at a similar price level. And it looks like that means that the crypto markets overall are just doing better. But you know, Ethereum in particular as well, people are optimistic about it right now. Yeah, it
Lucas Matney 0:50
seemed like it went from like $2,000 to $1,000, like overnight, and now it's slowly inching its way up. It's right around like 15 $1,600 right now, but people are excited because it looks like the merge, which is the big thing, and a theory of land might actually happen.
Anita Ramaswamy 1:03
Yeah, so the merge is really interesting. You know, the, the founders have sort of in saying this is going to happen for a really long time. This has been planned for a really long time. And it was an early proposal made. And what the merge is, is basically they're going to transition from their proof of work validation system to a proof of stake validation system, along with, you know, a number of other changes, and how Ethereum functions at its core level. I think, you know, people are optimistic about that sort of mitigating a lot of the environmental impacts of Ethereum specifically. But what's more interesting is the timing, because since this has been promised, I think so many times and they really want to make sure that they have all their ducks in a row and do things right before the merge actually happens. And they, you know, send it with that. But it was supposed to happen this summer at some point. And it seems like it's sort of looming. And you know, this transition has already started to at least be reflected in Ethereum prices.
Lucas Matney 1:49
Yeah. And I mean, like, there are obviously a lot of proof of stake blockchains out there, but it's a lot easier to start with it than it is to transition. Because Ethereum is a multi multi 100 billion dollar network at this point, and it's just transitioning. The validation thing is just a huge process. So it's taken time and people have kind of been like skeptical whether it's going to happen at all. Some people are saying that the timing is just right, right now.
Anita Ramaswamy 2:10
Yeah, people are actually super excited about this. And I was reading some commentary that was talking about despite all this sell pressure, and people are kind of worried about the downturn. I'll redo this tweet. The tweet is there's going to be virtually no sell pressure when the merge happens. Everyone who's staking is locked up everyone remaining with their money and staked eath is holding until it repugs Anyone who had their money on Voyager or Celsius is locked in bankruptcy proceedings for five to 10 years. Crypto commenter Ethereum, Jesus tweeted that I have no idea who that is. But hey, you know, what would Ethereum Jesus do? I guess? Well, I
Lucas Matney 2:42
think the guy who went by Bitcoin Jesus is now like, led to the one of these platforms going under. Sure. So I don't know if Ethereum Jesus is necessarily holds the same way.
Anita Ramaswamy 2:53
But yeah, not saying you should trust Ethereum Jesus as a source just given you that that little two cents again, we have no idea who this is. Exactly. But speaking of Bitcoin, you know, bitcoins also up about 21% This week, and crypto did regain its $1 trillion market cap, I think it was a couple days ago. So, you know, things seem like they're going well. But there's also, you know, a lot of negative news still going on. And you know, that's the first thing that I want to talk about in the news today.
Lucas Matney 3:17
Well, yeah. So I mean, even when prices are going up, it's kind of weird, because it's not like, you know, Ethereum and Bitcoin prices took a dive because of macroeconomic conditions. People are worried about going into recession. So obviously, they don't want to be in risky assets like cryptocurrencies is how the thinking goes for startups that actually have to plan whether their companies can survive as they're seeing other crypto startups fall all around them. They're having to plan a little bit longer into the future. So this week open See, announced that they were laying off 20% of their employees, which I think you know, is a few dozen, they don't actually have that many employees. So after the 20% layoffs, they have 230 employees, which you might think, okay, they're they're a company that facilitates NFT trading, how many people do they need, but they're also a startup worth $13.3 billion. And in tech land, having a valuation that high and having a couple 100 employees isn't that bad. So it's not like they were led is that valuation from that valuation is from January, so they raised at a pretty pretty low time. I mean, November was the height for crypto currency prices, but January things were still looking pretty solid. So they raised it a good time. They got a wild multiple, I'm sure but now they're just kind of in a situation where they're having to look into a very potentially dark future and wonder whether they've got the money to make things happen. Their CEO, Devon fencer, I feel like a lot of the people we talk to on a regular basis are they say downturn they say potential bear market they say maybe there's a crypto winter in the future, but that's all while all these things are going down like 60 and 70%. But Devin fencer was like you know this
Anita Ramaswamy 4:47
is they say cycle actually used to mask it.
Lucas Matney 4:51
They're just like, they're like, Who knows if it's gonna go all the way back up in a month. Like Well, cycle implies it well, yeah, no one necessarily thinks that's gonna happen. So definitely As I said, we have entered an unprecedented combination of crypto winter and broad macro economic instability. So he's a little bit more realistic, a little bit more emphatic that bad times are potentially ahead. And we need to streamline the company in some capacity. And it's not like there are a lot less users on open sea right now, I think there's like people are talking about like the NFT crashed or something like that the volumes and like the number of transactions is like fairly consistent. It hasn't taken a big dive, but they're transacting with currencies that are worth a lot less money. So they're making a lot less money. So like, that's the main thing. It's just like, they're the currency that open sea primarily has as Ethereum, and it's worth 50% less, so they're making 50%, less money.
Anita Ramaswamy 5:41
One thing I want to ask you, Lucas is, well, what are your thoughts on? Is this different from what we've been seeing at Coinbase? Or Gemini, you know, some of the bigger crypto exchanges laying people off?
Lucas Matney 5:50
Yeah. Nf T's are a different beast sometimes. But I think for the most part Coinbase had a lot of employees that more than 1000. That's kind of their it's funny enough. I mean, we'll see if this tracks if open sea was to raise another round, but their current public market cap on the public markets is around 16 billion, and so open see it 13 billion, it's not necessarily they're different problems. So they need different sets of employees, they probably have like 4x, the amount of employees that open sea has, so it's just like they got a ton of employees because they have some big competitors. They got finance, they got Gemini, they got FTX all kind of knocking on their door, open seas kind of sitting pretty Coinbase was trying to eat their lunch and like release a competing marketplace, but like didn't do a good job.
Anita Ramaswamy 6:33
Gamestop outperformed, like we talked about last week on the show. And yeah, now
Lucas Matney 6:37
Gamestop is doing it. So it's like they have to worry about themselves continuing to do well. And they said with this that after they lay off these people, if volume stayed the same, they're gonna have five years of runway, I don't know anyone who thinks that volumes are necessarily going to stay the same. I mean, NFT sales, I feel like we're like a fever pitch of this bull run of like 0% interest rates, like I feel like everything led to board apes existing. Yeah. And so I don't know, NFT volume staying the same for five years seems highly unrealistic. In my mind, I think open seas, so you think they're gonna go down? Not necessarily. I would be concerned if I were them. If all of a sudden what you thought was five years of runway is actually two years of runway. I don't know how long will crypto winter lasts like most of them last two or three years. And they have enough investors who they're not going to have to worry about like getting someone to sign a term sheet if they go down the whole NFT ecosystems going down? So I don't think they're like, in a very risky spot. I'm sure they're wondering like, Could we have gotten another 100 million out of our investors and like, taken a little bit of evaluation haircut? Like, do we need all this? So it's all right there, one of the big players, but there are other big players in the US markets like we were talking about Coinbase has a lot of competition. You read a little bit about that this week?
Anita Ramaswamy 7:52
Yeah, so Coinbase is not just facing competition for their NFT marketplace. That's a relatively new offering that they launched, but their core business is seeing a lot of challenges. And I think that's because of a lot of these global exchanges, really fighting over the US market. The US market is super important. Right now, I think it's been a tough nut to crack because of regulatory issues for a lot of different exchanges. And Coinbase, for a while has just been synonymous with sort of being the market leader in the US, you know, you talk to almost anyone who's first getting into crypto, who is US based and Coinbase is like their go to exchange. But right now, things seem to be shifting with Coinbase is very public struggles. They are public companies, they have to struggle more publicly to I'll give them that. Yeah, but FTX is one of the exchanges that people have been talking about as a big competitor to coin base. And today just heard some news this morning from Bloomberg that FTX and FTX. US are reportedly both in talks to raise a new funding round, and that they're targeting a flat valuation, which might sound bad, but it's actually kind of a good thing. Right,
Lucas Matney 8:50
right. Flat valuations. If you're raising a flat valuation a couple years ago, people would be like, oh, man, your company is doing very poorly. But raising a flat valuation when the markets are crashing all around you is essentially like a big vote of confidence. And let's be clear, this is what they're targeting. Other companies have been targeting flat valuations and haven't been getting to target anything. Right, exactly. Like maybe they think it's fairly realistic and FTX. Seems like they've been having good press around them in terms of like buying the, the flaming dead carcasses of all these lending companies, right, with their CEO bailing everyone out, right, but they seem like they're at like a fairly cozy position compared to Coinbase. At least. Yeah,
Anita Ramaswamy 9:31
they are. And they're taking an interesting strategy, which is that they're really focusing on diversifying their business. They have made this big push into US equities. So they're going to be a stock trading platform as well. They're taking the approach of like, we want to be a one stop shop for our customers. Whereas historically FTX was really focused on really sophisticated traders, like people who are trading in derivatives. They were sort of the first exchange. Yeah, exactly. The traders. They were the first exchange or the first major exchange to come out with a derivative platform. They've been operating it for a while, but you know, The one thing that I think is really interesting and this is actually what I wrote my article about is that there's another competitor that people aren't talking about when it comes to the US market. And that is by Nance us, which is the US partner us arm of finance, the global the largest crypto exchange in the world. And yet somehow they have not the largest startup in the world, maybe one largest crypto exchange, largest crypto exchange. Yeah, so by Nance is huge. They're massive, but you know, they really are only really now finding their footing in the US market. I think right now. It's just such an opportune moment. It's not just Coinbase that is struggling. I mean, we also had a story on the site about Gemini doing more layoffs that Jacqueline reported, and they just laid off 10% of their staff two months ago, you know, before we dive into the Biden's stuff I want to take a second to to read you a little quote from the CEO Cameron Winklevoss, one of the two wincle by who run Gemini. He basically heard that this news got leaked, so they're doing a second round of layoffs. And he sent his staff a Slack message saying karma is the blockchain of the universe. Just take that in
Lucas Matney 11:04
here. So he said this long message and the wincle, Winklevoss I have been, they've been in the blockchain space for a while, they bought like a huge chunk of Bitcoin a few years ago, but they're kind of enigmatic figures. They just started a rock cover band, and they're currently on tour as their company somewhat implodes. But part of his message, he said, was basically just talking about the vision of the company. And he said, he told the employees in the Slack message, we're going to the moon, we're going to need cosmic consciousness to get there earthly consciousness will not be enough. If you are exhibiting the behavior of a first time, human time to level up. Wow. Imagine, imagine getting that from your boss. You're just, I mean, I'm sure there are people more operationally involved if they're kind of, you know, rocking away and leather pants on tour. But right, you gotta have some operators, it is interesting language to be getting from from the CEO of your company. Oh, absolutely. Ahead of layoffs.
Anita Ramaswamy 11:58
Right. Yeah. Well, you know, it's all going to be in the blockchain of the universe, Lucas. So I thought it'd be recorded in the ledger, right, their vision of the world for everyone to see. Now, but um, it's not just Coinbase. Clearly, Gemini is also going through a hard time. And I think that the US market in general is pretty lucrative. So circling back to what we were talking about with by Nance, they have not been doing well in the US market. And the main reason for that is they've been in so much shit in terms of regulation all over the world for so long now that I think people have really underestimated them and sort of written them off.
Lucas Matney 12:30
They've been playing fast and loose, and they've reaped the rewards in that they are the biggest crypto exchange in the world. But you make some enemies and like even their CEO, CZ of the like, overall by Nance organization. I mean, they've made some enemies. That's just a fact. So I think that like them coming into the US markets and being a Asia based entity. Just it just raises some.
Anita Ramaswamy 12:54
I think they technically say they don't have a headquarters, but Well, yeah, well, I
Lucas Matney 12:59
think that as you Well, I think they've bounced around quite a bit trying to find a friendly home and have not found one.
Anita Ramaswamy 13:05
Yeah, absolutely. But you know, they are still in some of that shit for sure. Like they're under active investigation by the CFTC. I think the Justice Department of the IRS are also investigating them for like money laundering and tax evasion. Like this is not pretty stuff, but on things, right. But the thing is that customers seem to love them, because their whole play and their whole strategy has been to undercut their competitors in terms of cost. So they've been very vocal about how they're hiring in a down market, they launched a staking product recently, they've gotten a bunch of regulatory approvals in different states. And you know, I think it's sort of a watch this space, the US is sort of up for grabs right now with Coinbase and Gemini and some of the big leaders here keep faltering and that could be the opportunity for by Nance to make huge inroads into the US market.
Lucas Matney 13:50
Yes, I don't know. It's just gonna be a weird time because like, if all these people are jockeying for power, when it's also in a crypto winter and like public markets are getting hit, this could be an opportunity for a startup that isn't kind of beholden to public disclosures and stuff to just like rocket ahead and take over Coinbase has been working on this for like a decade plus, and it just Yeah, it's weird, weird timing.
Anita Ramaswamy 14:11
That is the crypto dream, you know, skirt regulation make it to the top. No, I'm joking ish.
Lucas Matney 14:16
I mean, I don't know. But wait,
Anita Ramaswamy 14:18
let's, let's talk about something else spicy in the NFT world. Lucas, I know. I know. You're excited to chat about this one.
Lucas Matney 14:27
You know, I don't own NF T's I don't trade anything. But I am endlessly fascinated by what's gone on over the past couple years with NF T's. Board apes, you've probably heard of them. If you're listening this podcast I would imagine have they're the most valuable NFT collection. Each one there 10,000 of them. Each one goes currently for about 150 grand each. This company that made them is called UGA labs and they raised some venture funding a few months ago from Andreessen Horowitz at a $4 billion seed valuation which that's absurdly high for sandwiches a lot. And I don't think I've ever seen to see valuation that high. Yeah, a lot of money. So essentially, they've released all these monkey JPEGs. But they're essentially pre product other than that it's all on the promise of what they can do in the future. So their big thing is that they want to create the metaverse who doesn't seems fun. Why not? And they're working on this thing called other side, which is kind of like Roblox, but it's a hub for NFT avatars to hang out, or just regular avatars. I don't think you necessarily need MFTs to get involved. It's sort of like a video game, right? Yeah, it's like Roblox. It's theoretically like a big world where it's a platform. And you can have a bunch of different online virtual experiences, you can play games, you can do all this stuff. So it's ambitious and open ended. And they're trying to justify a $4 billion valuation with it. They also have a lot of people who have already paid a lot monetarily to get involved with it. This is a club penguin for the crypto balls, Club Penguin for millionaires. Yeah, that seems like something that should be worth 4 billion, in my opinion, I'll fork over the money any day. So I did this demo over the weekend. And I was one of the first people outside of the WordPress community to get to do it, I think as Yeah, as the only reporter, but they did this demo. And the big thing about it is that if you do something like fortnight, there are 100 people in a battle royale. And you can see them all and they exist in the same like multiplayer world at the same time. But it's just 100. And like, if you do call duty, like there might be a little bit more, but most of these are sticking to kind of the 100 200 range at the top of the end. So other side, it's using this tech from this company based in the UK called improbable, which has been kind of working in relative silence that not too flashy for about 10 years. And their big thing is that they want 1000s of people to be playing concurrently. That sounds chaotic. Yeah, like going into a virtual city and seeing 1000s of people walking around. Maybe you see that in other games, but a lot of those are kind of computer controlled NPCs. These are all people who are behind their laptop moving around and chit chatting. So in this demo I did there were 4500 people playing concurrently. Wow. And it was kind of it was a weird experience. It was a fairly like tightly controlled, scripted thing where they kind of like walked us through the platform and like showed us how to, you know, move and chat with each other. And like, we there was like a little bossfight in it. It was like, you know, they realize this was important. It was clearly scripted. And like it went well. But it was weird, like walking around and having 1000s of people. Yeah, chaos is really the right way to describe
Anita Ramaswamy 17:17
it. Well, and it seems like having that many people on at the same time is pretty important. If you're going to be building the metaverse, you know, and you want to acquire users everyone has to be able to participate. Right? Yeah.
Lucas Matney 17:26
I mean, there are a lot of different ways to think about this. Some people would be like, Okay, well, I have so much fun playing for v4 in Call of Duty or something. Why would I need like 1000 people that just like, opens up to just, you know, 1000 people sniping me at the same time and I'm alive for two seconds. And then
Anita Ramaswamy 17:42
I played Call of Duty, like once or twice with my friends. I'm not a gamer just for the record. But you know, I remember like walking out doing that mode where you're playing with real people. I think I died in like, one second.
Lucas Matney 17:52
There. There gonna be a lot of problems with this. I mean, it's just by virtue of having 1000s of people concurrently. Imagine if you're just getting like cussed at by like 20 people the same time. Like you don't even know who it was. It was scary. Yeah. So I mean, I think they're gonna have some challenges there. And they're just going to kind of uncharted territory. This is a big ambitious platform and they're trying to take on Roblox they're trying to take on, you know, what meta is trying to build with horizon worlds, which is their Metaverse platform, but they're trying to do a few things differently. So one of the big things about this game is that there are all of these parcels of land in other side and you can buy them and you buy them with called other deeds. So they had this primary sale a few months ago, they made $317 million selling 55,000 parcels of land. Wow.
Anita Ramaswamy 18:39
That the landlords are rich in the metaverse just as they are in there.
Lucas Matney 18:43
I know we're just getting screwed left and right. But I guess it's our decision whether we choose to pay rental rental properties and in in the metaverse. So they made all this money. This was kind of before the crypto crash. So like these other deeds are worth less money now, which probably isn't the best feeling. But if you're a lot of your wealth is in crypto, you're down across the board. So you're probably not too upset about one thing being down over another but so they have all they have all this land. And then in the future, people are going to be able to build experiences on it. So you'll be able to like build a house. And maybe if you go in the house, there's a game that people can play. And they don't all necessarily have to have 1000s of people playing them at the same time. You can build solo experiences, you can build experiences maxed out at 10 or 100 or something like that developers have the option. I think it's the thing that like you guys talking about. So it's fascinating. I mean, building a metaphor sounds like it was fun. It was interesting. I was it was I did the log on at like 8am on a Saturday which you know, I was
Anita Ramaswamy 19:41
actually going to make fun of you saying you get to play video games for your job
Lucas Matney 19:44
right? But hey, I was doing it I was doing on the weekend. This was a labor of love knows it was good. And talking with the team was interesting. I chatted with the founders and chatted with the CEO of UGA and they're very much in like they seem to be thinking they want this to be community driven, which I know is kind of a meme Amongst the NFT community, and they're obviously a $4 billion startups, so they want things to go the way they want them to go. They have a lot of community buy in from holders of the NF T's. So if they're not happy, they want to try to make them happy. But they're trying to expand their world. So they're going to have a lot of users who aren't NFT holders and don't have multi $1,000 NF T's. So there's there going to be a lot of like different interests kind of going at them. So if they make something that's super fun, that's great. A lot of crypto games that have been made are not fun. And they cost a lot of money to play. And they're scams. And that's going to be what they're going up against.
Anita Ramaswamy 20:41
This week, we talked to Alex taobh, co founder and CEO of upstream, a startup that provides no code tooling and resources for decentralized autonomous organizations, or Dows. Hey, Alex, it's great to have you on the show. How are things going?
Alex Taub 20:58
Thanks for having me. Thanks for good. Yes.
Anita Ramaswamy 21:01
So you are a founder you have founded upstream, which is a Dow tooling company. And I think there's been a lot of hype, a lot of talk a lot of just sort of attention on Dows. And I'm curious upstream didn't start as a doubt tooling company did it.
Alex Taub 21:14
No, did not. I also, I co founded upstream with my co founder, Michael Schoenfeld. He does all sort of like the technical stuff, I do more of the business stuff. We try as a combination to do product stuff, mostly failing, and bringing on a head of product right now. But yeah, we did not start as a dowel company. Well, my quick background is about a decade ago, I worked at one of the earliest crypto startups company called Dwolla. And Dwolla was one of the first ways to get money in and out of basically exchanges. So you basically fund your to wall account, you move it to bid instant Bitstamp, Mount Gox, sort of all those fun places. My co founder and I, we joined together and we ended up leaving together to start a company, but we joined Bitcoin was like, under $5. We had a front row seat to sort of this crazy stuff definitely didn't buy enough.
Anita Ramaswamy 21:58
The good old days. Yeah, I
Alex Taub 22:00
mean, when I hit like, 40 bucks, 100 bucks. We're like, Oh, this is amazing. We're rich, like let's sell it. I like I think I bought Nick tickets with Bitcoin in like 2010 2011. It's really bad. Yeah, probably the most expensive sports tickets of all time. The reason I'm giving that backstory is because we were in the game. You know, we were in an early, even when we left and we started a company called Social Rank, which was a social media analytics company that we ended up selling in 2018. We were still like, we had an Aetherium rig in the office. We were playing around with ICOs and then d phi, and then NF T's. So we were always sort of like, around the game. It wasn't like, oh, everyone's talking about with three, let's go to web three stuff, right. But what ended up happening is end of 2018, beginning 2020, we started upstream. And the idea around upstream was what is the future of community look like? And at the time, COVID, was just sort of poking its head, it felt like virtual events, virtual communities. And we felt like That was the really interesting sort of use case, which is like, I'm home alone. I don't know how to meet people anymore. And I go to this event with like minded individuals, and I get to meet them and I socialize. And we had all these communities sort of pop up Miami tech community, a business development, community, sports business community, a future of our community, and a serial marketers, community, all these different communities that were sort of popping up and doing these virtual events during COVID. And one of them that was an upstream, right? And yeah, and this was on upstream. And it was always about what's the future of community. And then we have a really popular community, we have a really popular community called the NFT community meets every Friday at one o'clock, I run it with a guy named Drew Austin. And essentially what we realized was this past summer, we started to think about what is the future of community? What is the web three version of community and realize pretty quickly that Dows are basically web three communities, we start to dig in and try to figure out okay, how do you start a Dao, how do you join a doubt? What are they used for? And we realized fairly quickly that there's two pretty big problems. The first was starting to doubt that sort of like starting a website in the 1990s. You know, either you're technical enough to do it yourself, and you just sort of built that website, or you paid someone a bunch of money, and then they built it for you. Similarly, like, unless you know solidity and know how to spin up a smart contract, not really going to be able to start a doubt yourself. So then you need to pay someone to do it. You know, when websites in the 90s You didn't have Shopify, you didn't have Wix or Squarespace or, or even something like a WordPress. So that was the first opportunity were like, alright, easy way to start a doubt that could be really useful, like a no code solution. Then the second issue was, once I started out, how do I actually manage it? And the tooling out there was just really fragmented. So you'd basically do like governance with one tool and you do voting with another tool and proposals with another tool and the actual community somewhere else and token gating, and it was just all these tools that were just really fragmented for no reason besides is one company working on each thing or one organization like snapshot isn't really a company, it's just an organization. They're just working on that piece of the puzzle. So we felt like okay, here's the opportunities. Like building no code sort of full stack down a box that you could spin up really easily. And we started working on it last summer, it was sort of felt like, you know, a lot of be like, Oh, you pivoted into this, but the vision was always what's the future of community. And this just felt like a really natural progression of where we're going. And then we ended up launching it in mid November, we actually launched it around the same time as the Constitution doubt. So everyone was talking about 1,000th. Time. So definitely was to our favor that like good time. Nobody planned that, but it was just good timing. Yeah, it's like, you know, 20 years from now, we'll claim that like, we did it on purpose. But you know, yeah. So that's how we sort of got into the Dow space. And then I'm happy to chat more about in terms of like, the different use cases and how people are using them right now. And how they can sort of take off and be bigger or as big if not bigger than N fts. But I want to jump ahead. No, no, no, I'm
Lucas Matney 25:47
curious. Because like the past year, there's been so much action happening in the Dow space, there's been a lot of iteration. A lot of companies are like startups that are embracing them for decisions that are kind of maybe secondary from decisions made from the executive team. But you know, it's been a little chaotic. There have been like decisions that have been made that maybe the whole community didn't, didn't agree with, but it's just been kind of a learning experience. So I guess like, on your end, it's great to have a lot of customers, but how do you feel like the community has learned where Dow has makes sense and where they don't necessarily?
Alex Taub 26:16
Yeah, I think a lot of people just say the word Dow, and it's sort of like this, like, catch all right now. So it's like, sure, like a small project to a big company, could be a Dow and like, Yeah, that's probably true. But I think that there's like a few use cases that make sense today. And then there's a few cases that maybe make sense in the future. The first use case that sort of seems to be working right now is investment clubs. So I want to with 10 of my friends, we want to pull our money together. And we want to buy something that maybe we can't buy individually. So whether it's a digital asset or a physical like a collectible. So let's say there's a Kobe Bryant game worn Jersey that's going on sale, maybe it's his final game, and it's just game worn jersey, it's going on sale, and it's there, the asking price is you know, $2 million. I can't afford that by myself, but maybe me and 50 friends or 100 Friends can can afford it all together. So that's an interesting use case. That's a physical item there. But I think buying digital assets with people, as long as you're under 100 people, you're considered an investment club. And the idea is that I think there's a very clear use case there that like works, you know,
Anita Ramaswamy 27:21
in terms of the physical assets. I just want to jump in for a second I you know, for people who don't have context who might be listening on constitution doubt, basically, it was exactly what you were just talking about, right, Alex like people coming together, and they wanted to buy this copy of the US Constitution that was being auctioned for sale. So yeah, and
Alex Taub 27:35
the Constitution ultimately didn't work out for a number of reasons. Obviously, they lost the auction. But also like, you know, it's very hard when it's a public blockchain to play your cards, open face, so everyone can see them. So there's, you know, the team there were great, but there's very little that they could do in such short notice to be like, actually, we need to obfuscate how much money we have. Because if everyone knows how much money we have, then they know how much they need to beat us.
Anita Ramaswamy 28:00
They're just going to get outta bed, which is exactly what happened. And they know how much
Alex Taub 28:03
demand there is. Yeah, so investment clubs are really interesting. And I think they work both in bulls and bears. And what I mean by that is, when everyone's buying stuff, and everyone's making money, and everything's going up, like obviously, people want to buy more, but then when things are sort of on the downswing, you maybe can't afford the thing anymore, and now you with a few friends can afford the thing. So I think it actually works both in booms and busts. So that's investment clubs. That's one. The second use case is NFT projects that want to maybe put aside a portion of the sales and actually give it to the community to decide what to do. So let's say you have a NFT project called crazy koalas that probably already,
Anita Ramaswamy 28:45
but it probably does,
Alex Taub 28:46
I guarantee it exists. So let's say you have crazy quality tomorrow,
Anita Ramaswamy 28:50
that project is going to take off.
Alex Taub 28:53
So let's say they sell a million dollars worth of entities, and they say okay, 10% of that million that came to us, we're gonna put it in a dowel for the community to decide what to do with it. So maybe they want to make maybe this actually is like a nonprofit entity, so that the community can like do things. So it's like an instant community engagement tool. So you know, I launched an NFT project with a few friends back in January, with this premise. So the idea was a the NFT project is called Illuminati NFT. And the joke was like, if Illuminati existed, they probably be a doubt. And we sold the NFT with like, beautiful iconography and stuff like that. And 50% of the mint was going into the Dow, and this Dow has 1000 active members, over 1000 active members, and they are, you know, they have a few million dollars to sort of play with and like one of the things we're doing right now is they're literally building a project that they're gonna like launch. There's more to it. I don't want to go too into the details because it's a little bit secret because it's the Illuminati, but the idea is like the Dow can do like, really fun, amazing things. That's the second use case which is Is NFT project put aside some money community engagement tool, a third use case that I'm playing around right now, which is actually needed, we need to probably talk about when the enemy sure is something we have coming soon and involves around more like security and using your Dow as like sort of a a way, like a lot of people click on bad links, they lose all their assets. There's hardware wallets, the core of a Dow is a multi signature Wallet. So what ends up happening is you can in theory, put your assets in this sort of like, we're calling it like a vault Dow where you can essentially I don't know if you guys watch Rick and Morty, but like the citadel of Rick's. Right? So like, imagine like all the signers are like you but like different wallets, different seed phrases, but you have like, you click on a bad link, you don't lose your stuff anymore. This is a very different use case. It's a security product that we're sort of privatizing right now. And, you know, we'll we'll talk more about it sounds good. The fourth one that I've been spending a lot of brainpower on right now, which culminates to the sort of overarching theme. The first one is the concept around participate in earn, I think a lot a lot of the blank to earn get a lot of, I don't know, if I'm like cursor, a lot of crap. But like,
Anita Ramaswamy 31:12
you're allowed, it's podcast, not radio, very
Alex Taub 31:15
cool. So like, play to earn gets a lot of shit even move to earn, there's like step in, there's x infinity. And the problem is when you're doing that thing to earn, as opposed to and earning, I think there's gonna be a big change in how people talk about it. They're gonna say, play and earn, move and earn, eat and earn, sleep and earn praying,
Anita Ramaswamy 31:34
right? Because they want to show it's an entertaining activity, regardless of the part of it,
Alex Taub 31:38
you're meaning you're doing the thing. And now you're just getting rewarded for doing things like the Peloton that's right here, if I could earn like a sweat token, right? And every day that I went on my Peloton, and then I can actually use that to either pay for my subscription, or I can use it to buy like better shoes, or better, like, I don't know, what's the thing you use? Either way, it's like there becomes an ecosystem. And actually, the token actually makes sense. So I think this Blinken urn is going to be a lot more popular as time goes on, and people figure out tokenomics That aren't like, you know, they're not Ponzi actual Ponzi scheme to call like Ponzi tokenomics. So some of them probably works. Yeah, Ponzi schemes
Lucas Matney 32:21
are I feel like that's kind of the learning of the past few months of just like some of these things that were called Ponzi schemes. Well, there might have been, but yeah, either have to change the definition of Ponzi scheme or Yeah, right, exactly.
Anita Ramaswamy 32:32
So you've outlined a bunch of use cases for Dallas that make a lot of sense, right, from your perspective. But I'm curious. I mean, at least from my perspective, it's like not every group necessarily has to be a Dow Right? Or needs to be I guess, I'm curious what your tastes are on, like, what are cases where it doesn't make sense, but people are still sort of experimenting in?
Alex Taub 32:47
Yeah, like so at the core Dows. Blockchain, it's programmable money. That's really what it is. So you can program money to do what you want it to do. Not everything. Not every community requires money. If I want to share cute photos of my dog, with other people who want to share cute photos with their dog, I don't necessarily need any money there. Now, obviously, we want to maybe add a meetup to it and you want to add some IRL stuff and events and stuff, well, then maybe you start to get into money. And maybe that doesn't make sense to to create some sort of entity where the actual community controls the governance, like the way I sort of see it as like, I used to pay money to the community as like an admin fee, and like, the admin would get the money and then they decide what to do with it. If I was in like a paid community type of thing. And what changes here is like, you're still paying them money, but like, it's basically collectively being decided by the group of how to use that money. So like, more transparent, more sort of equitable. So I don't think everything needs to be a Dow I'm not one of those like, everything's going to be a doubt everything's like I think that was make sense for like, digital communities. I think Dows makes sense for digital entities. I think a lot of people and I've been seeing this a lot on Twitter, a lot of you know, let's call them web two founders, they think they're dunking on the web three and stuff. But ultimately what they are. And this isn't the nicest way, they're ultimately people that were like riding a horse and buggies. And they're complaining about like, going and getting gas at the gas station for your car. That's essentially what they are. And, you know, I'm happy to debate anyone
Anita Ramaswamy 34:22
who wants to talk about No, we appreciate a hot take around here. So but but that's ultimately their
Alex Taub 34:27
their horse and buggy owners who are complaining about having to go to a gas station to fill up your car's gas, because the horse can just keep going, you know, needs to rest a little bit, but the horse can keep going up the gas.
Lucas Matney 34:40
There's so many questions asked about Dows in terms of just like how do they promote democratic organizations or like do they need to be this way? And I think that like existing Dallas, they function like shareholders, people who have a lot of shares or have a lot of the governance tokens, they have an outside vote, and that's just how it works. And like otherwise, you know, someone could just set up 2000 wallets and just have one Sharan each. And like, that's not a great situation, either. Yeah, there have been like projects like world token or whatever that have world coin that have, like, you know, tried to have like one person one vote and tried to like confirm that a person is a human. Do you like think any of these have legs? Or do you think that like the idea that just someone voting with the amount of tokens they own is probably just how things are gonna shake out?
Alex Taub 35:21
I think a lot of people look at the word Dao, and they think the D stands for democracy. And that's just not
Lucas Matney 35:28
sure, yeah,
Alex Taub 35:29
people aren't sitting in a circle singing Kumbaya and being like, Oh, we're all going to do this together, that can happen. And that does happen. There are communities where it's like, hey, everyone's gonna get an equal say, and that's how it's going to be done. But that's just like, it's like saying, like, there's only one way to start a company, or one way to launch a project or product. There's different things like even companies, there's different even public companies, there's different types, you know, there's the structure that Facebook has with Mark Zuckerberg, and his super rights or whatever. So like, there's different structures, if you want it to be a democracy, great. If you want it to be a dictatorship, you know, people shouldn't join your doubt if they are not okay with your dictatorship notice. So like, I think that each one of those things where it's like, what will be the most popular versus like, what you can actually do? Is this sort of the spectrum. And to be completely honest, I the last sort of overarching thing of all those use cases, which sort of ties back to this is like, how do Dows actually take off? Right? Why are people joined out? I did a chat with Julia Lipton recently, she started down masters. She's really smart. And she basically broke it down to its basic core. And she's like, everything that's ever taken off in life basically ties back to, did this make people money? And if you think about it, whether it's a web two or web three thing, Airbnb, why did Airbnb take off? People made a lot of extra income, Uber drivers, they made money, you know, why did any crypto thing ever take off, people made money, and if these people made money, so if Dows want to take off in the same way that that happens, people need to find a way to make money by being in Dallas, and whether that means that they're investing with some people, and they're making money. But that's like a lot of work to make money, or like just participating in a community and earning so like this concept of participant earn. But I think ultimately comes down to can this thing, there's a there's a more inappropriate version of the like, it's like, I don't know, can this be
Lucas Matney 37:20
that for the after dark? Action,
Alex Taub 37:23
this will be an actor, no, but there's like, you know, companies either get you paid or get you something else. And that's like, the successful version of any company. It's like, that's like the core of like, any successful company, is they have to make money, or the other thing.
Lucas Matney 37:37
So I mean, I guess like in the like, democracy versus decentralized, I think one of the problems that people have identified is just that, like, when you're operating a 24/7 democracy, and someone can put something up to vote at all hours of the night, maybe someone has 1% or 2% of the governance tokens, and they can rush something through, that's different than if you're at a shareholders meeting, you know, what's happening three months in advance. So I guess that's like, one of the elements of the structured versus unstructured. So I guess, in your point of view, do you foresee Dows, kind of embracing more structure rather than going the opposite direction?
Alex Taub 38:09
Yeah, I mean, Dows, do not, you know, spontaneously appear in our I mean, it's like a wild Pokemon that just comes out of nowhere, like it is
Lucas Matney 38:17
what's kind of felt like that, like,
Alex Taub 38:20
someone has to set it up someone has what they want to do. And then at a certain point, that's when people come in, and they say, Okay, what's this dow about? What are we doing, etc. Like, it just doesn't like this idea that the like, run themselves, and there's like normal, no core contributors, and they come out of nowhere, I don't know who like, why that's the prevailing sort of thought, the truth of the matter is, is that like, they could be anything in terms of like branding something through. So for the Illuminati Tao, and ft doubt, we basically made it so that like, there's a whole proposal process that you need to like, this is the structure of a proposal, if you want to put it up to the team, it adds a layer, it's a combination of adding a layer of security, meaning we have a mandate for the Dow, if something puts up a proposal that violates that mandate, it should not be going to vote and then to is like, we don't want anyone to just put up something there. And then it's like, there's a like just spamming the whole group all the time. Sure. And that's what we decided from the outset. And if you don't like that, you shouldn't be in our doubt. And that's totally fine. You know, but and like you can buy a Dow token on open sea and join literally today, if you want to, not every dollar is going to be for everybody. And that's my personal take on it. It's not like this open kumbaya story.
Anita Ramaswamy 39:34
Right. So yeah, speaking of that, and you know, the differences and some of the challenges that we face, I want to talk about the elephant in the room, which is, you know, the crypto market right now and crypto winter, everyone's talking about it these days. But specifically, I want to talk about Dow treasuries. I know that a lot of dogs tend to hold their treasuries and tokens and with token prices being hit so hard, a lot of those treasuries have been absolutely battered. And I'm wondering like, you know, how are these dollars going to make it through and is there any tooling functionality or anything that You have seen or are working on that can sort of help these dollars with more like cash liquidity so they can actually operate and actually afford their basic day to day expenses.
Lucas Matney 40:08
pay their dollar costs, right?
Alex Taub 40:10
Yeah. Yeah, it's a great question and definitely was easy for me now. It's I think 50% This past week. I haven't checked in the last hour or two. So I don't know. But who the hell knows? Yeah, but ya know, I mean, listen, the highs of Thanksgiving when people were telling their family to buy crypto to what it is right now and being disowned by your family. I think always Thanksgiving. Yeah, of course. I mean, yeah, it's down more than 50% Some of these things down, you know, 80 90%, some of these zeros like the terrorism the Lunas of the world. So for some of the Dow's that I'm in, it's all an eighth. And we've, we wrote it up, we wrote it down. And we're right, hopefully writing it back up. I think a lot of people who spend time using Ethereum cannot see a world where it doesn't exist really anymore. Like I think I spend more eath than I do dollars these days. And like, I just don't see a world where like, the merge is coming soon. Or even if it's delayed another time, like, I just don't see a world where like, eath isn't the like, there'll be a flippin maximum smart contract. Well, yeah, but also there'll be a flip from eath to Bitcoin, probably in the next
Anita Ramaswamy 41:11
year. I'm just curious. You said you spend more money on in eat than in dollars? Like what kinds of things are you buying with? Nf T's?
Alex Taub 41:20
Too many? Okay. daos NF T's I buy things with eath? I send I mean, I, I use it for a lot of
Lucas Matney 41:28
tickets for fewer Bitcoin these days. Yeah, that was that was
Alex Taub 41:31
a bad, bad choice. But um, no, I think for me, I also live in a world where a lot of people using it. So like, it's very easy for me to be like, Hey, we went to a movie together. I'll just send you back. Sure. Like, yeah, you know, so that probably isn't everybody. But like, Listen, if it depends on what you believe, in the end of the day, do you believe that? You know, right, now we spent X amount of time online, right? So and this actually goes back to like, the, you know, okay, so we're in this bear right now. We're sort of like seeing and maybe it's a dead cat bounce? Or maybe we're coming out of it? Who knows? But like, I think the way we actually come out of it is like a true Metaverse situation where people are actually spending time. And the only way that Metaverse is actually work is that there's fun games and friends. That's it. Metaverse doesn't make sense if like, there's nothing fun to do there and your friends aren't there. Like nobody's going to spend any time. And we could talk about like fully immersive like a ready player, one type of thing versus just like a web browser and like, you know, a second life or an other side or something like that. I think all those things are sort of Metaverse and there's different degrees of immersion into it. But I think that in a future and I'm not saying it needs to be dystopian outside and the world needs to be like on fire. They might be but like, you can want a Ready Player One Future of Metaverse where it's super fun to be there. You're playing games, you're going on adventures, you're chatting with friends, you're fully immersed without having all the other things where like, the world sucks. I think like the whole concept. In Ready Player One was like, the world sucks so much that people spend so much time there. But I also think that if you have your friends there, and you have fun things to do there, people will spend time there. But if you can, like open up your your trenchcoat, and have all your assets that you have accumulated over time, and that, you know, like why do people buy Lamborghinis and Air Jordans? Like you can buy a Chevy Toyota and you can wear, you know, some basic crocs. Why did they do any? They do it because of status. And they do because it's community and status. Same thing with digital things. Like if you believe that we spent X amount of time right now online, and we're going to spend more time online as time goes on. Then digital things become as valuable if not more valuable, then or equally valuable to offline things. Now, I could touch my Lamborghini and I could I could shine my Jordans. You know, you could drive it from A to B. But I could also get a Lamborghini in the metaverse and drive and drive that too. I'm not saying that that's necessarily like apples to apples. I'm just saying, if you believe that we're becoming more and more online, then this is inevitable. This stuff is inevitable in terms of people not only spending time there, but also caring about what you have there. Yeah.
Lucas Matney 44:10
So I mean, taking a little bit back to Dallas. And I guess as we as we wrap things up, so I mean, there's the element of the crypto community that's like the status, but there's also kind of hidden, they're like generating passive income and not being super active. Maybe they're just like sending some money into these dowels. And they're just kind of like sitting back letting other people do the governance, but there's probably a finite amount of people who are actually interested in doing the hard work of governance, maybe that's the founders, but maybe that's just some hardcore community members that are in a bunch of Dows. And they're really putting the time in to make these things successful. So I guess like, as a winter comes and the idea of their money going up, because of how the Dow was operating kind of like that dissipates a little bit. What is your outlook overall, just in terms of all of the doubters out there like assumedly some of these are gonna fail. Do you think that a lot of them are gonna fail over a winter?
Alex Taub 44:57
I think as time goes on, it will probably go to something like how many companies succeed versus how many companies fail. And I think also, you'll probably start to see Dows that are just like meant, I think single purpose Dows you would probably call like the Constitution down and things like that, where it's like, there's one goal for this dow. And it's just to do this, I'm in a bunch of single purpose Dows. But it's like me and five friends decided to buy like a clone X, like a mirror kami clone x, and we wanted to buy it, and CO own it, it's five of us, we all put in a little bit of money. And now we clone it, maybe we'll like do some fun stuff with it, maybe we'll create a community around this clone X or a story or, you know, we'll figure out what the rights we have, I think that there's you know, the single purpose Dows will have a life a shelf life, and then they may have accomplished a goal or not accomplish a goal and then be done. So it's a little bit different, because you sort of have to compare like the company like successful companies. And then you also sort of have to compare just like digital native projects with money, which aren't necessarily companies, right. Because if you think about like, the legal stuff around this, even investment clubs, like if you stand or 100 people, right, and then you pull money together, let's say you everyone puts in $10,000, and you're 50 people, so now you have a nice chunk of change. Because you have 50 people, you probably want to create an entity, because the entity is going to protect you from liability. So you're going to create an LLC, if it's a profit generating thing, and you can have up to 99 people for investment clubs. So you're gonna have 50 people. And if you create an LLC, you don't legally need to make an LLC. The downside is it gets looked at as like a general partnership. So essentially, if let's say we buy a board eight, right, and there's let's make it easier. Let's 10 people we all put in 10 grand, I don't know how much authority it goes for now. 100k. Yeah, let's say the board it's 100k. And we put in 10 grand each, and we vote and we buy decide to buy 47 people vote yes to buy it. Two people abstain. One person voted no. Right. For whatever reason, I don't know why they joined this group if they're not wanting to buy it, but they decided to vote. Okay, now you buy the board eight, and it goes to zero. Sure. Right? You all people are gonna sue your ass? Well, maybe two people abstain, but the one person who voted no can sue, you can sue anyone for anything in America, it's America. Yeah, that's the American Dream, the American dream is that if you have an entity, at least you have no personal liability, then that's the same with why you create an operating agreement between so it's like, Hey, we're all on the same page. You basically do those things for conflict. But if you go and you buy that board aid, and alternative you are into it, and then you go, and you sell that aid for a million dollars, and you all walk away with 100k now pay your taxes and everything, but there's no legal reason you need an entity you just have, we have maybe a higher risk tolerance of what might happen during a conflict. Anyway, the point I'm trying to make is success for these type of things will really determine at different levels is different flavors. And I think that it's very easy to dunk on daos. When you're sort of like putting them all into one. It's like all they're all sort of like replacement components. It's like some of them are and some of them could be but it's not completely true. And there's like a little bit more to the story here, which I think is the point of like, nuances tough on the internet.
Anita Ramaswamy 48:03
Yeah, we're trying our best here.
Lucas Matney 48:06
Well, that's, that's definitely true. Yeah. Well, hey, we could jam on Dallas for hours. And hopefully we'll have you back at some point. But why don't we appreciate you coming on the show and chatting through some of the stuff the winter is going to be an interesting time for Dows. I'm sure we'll have more to talk about in the future. Yeah. Thanks for having me. Thanks, Alex. Thanks for listening. We'll be back every week with the top crypto news and interviews with experts in the space. You can catch us on Spotify, Apple Music or your favorite podcast platform and subscribe to our companion newsletter also called Chain reaction@techcrunch.com. Forward slash newsletters. You can also follow us at chain underscore reaction on Twitter for the occasional Twitter space about breaking crypto news. We'll see you next week. Chain Reaction is hosted by myself. Lucas Matney along with my co host and Anita Ramaswamy. We are produced by Yashad Kulkarni and our associate producer is Maggie Stamets with editing by Cal Keller Bryce Durbin is our Illustrator Alyssa stringer leads audience development and Henry pic of it manages TechCrunch his audio products thanks for listening