Here’s a crypto story full of sound and fury that might actually have a happy ending: Bankless HQ, a media brand, and BanklessDAO, a semi-related entity, are discussing divorce. And it’s the children’s fault.
The breakup is unlikely to be acrimonious; David Hoffman and Ryan Sean Adams, the co-creators of the influential Without a bank brand, submitted a proposal to the decentralized autonomous organization (DAO) which shares a name. Right now, they just want to talk.
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“We are currently in the setup phase,” Hoffman said in a video call. The professional podcaster’s live streaming quality was crystal clear, the bit rate of someone who devotes time, attention and capital to the two to four news summaries and interviews. downloaded every week.
The subject and terms being “defined?” Whether BanklessDAO can be called that in the future, after a proposed fundraising and education initiative, proposed by the DAO, apparently without Hoffman and Adams’ knowledge, blew up the entire brand this holiday weekend.
More precisely, a large part of “Crypto Twitter” (and some segments of “Bitcoin Twitter”) were seriously offended by the fact that BanklessDAO requested 1,818,630 ARB (ARB trades around dollar parity, so ~$1.8 million) to fund one year. educational initiative with the intention of integrating people into the Arbitrum network.
“It triggered the crypto Twitter reflex… people thought it was a DAO treasure raid,” Hoffman said. It’s happened before: five times in the last two years, according to Hoffman. “It seems like there are these events popping up where someone is mad at us for something and… it’s like ‘it’s time to air our grievances about Bankless’.”
The proposal, if adopted by the Arbitrum-affiliated DAO, would fund a “multilingual marketing campaign,” content writing, 22 podcasts, 50 events and 85 “how-to” training sessions, all intended to showcase the technology base of Arbitrum and the tools/protocols built on them. top of the Ethereum scaling layer to a new audience.
Whether this is a “treasure raid” is a question on which reasonable minds can disagree, and on which the Arbitrum DAO will vote. BanklessDAO has run similar initiatives in the past, the most relevant being for Ethereum rival L2 Optimism – most of which Hoffman claimed he was completely unaware of (“I asked for this information and didn’t really get any.” , did he declare) .
For Hoffman, the most recent reaction is the result of a few moving parts. First, X (nee Twitter) is a “funny mirror” and a “bad content platform for conversation.” Second, Arbitrum paid approximately half a million dollars to advertise on Bankless’ media products, making the DAO’s separate funding request a cash grab.
Most important is a problem that should be extremely familiar to anyone who has spent time in or observed DAOs: the “failure to delineate” between distinct organizations that often share a name and founders, but exist for different purposes.
Bankless, for example, is the established media brand covering the niche DeFi sector. It employs about 20 people, including its full-time contractors, and is the brainchild of Hoffman and Adams. There is a media team which produces podcasts and newsletters, a commercial part which manages relationships, particularly with advertisers, and a “software branch” which finds its feet.
Hoffman and Adams also run a separate venture capital entity that has raised $35 millionalthough Bankless LLC has never secured outside funding since its incorporation in 2020 (when the duo devoted themselves to it full-time).
BanklessDAO, on the other hand, legally speaking, is an organization that doesn’t even exist. The DAO was founded in 2021, in the midst of a bull run that saw bitcoin climb to $69,000, and although it has just under 30,000 members on Discord, it’s difficult to judge how many have joined and left. Hoffman described the DAO as a “very flat” entity made up of “sub-DAOs”, including units focused on consulting and publishing, an audio and video guild, and something called “Fight Club”.
“They all come together and merge to form the DAO,” he said. Hoffman and Adams at one point paid two Bankless employees for an additional “DAO coordination” role, who might have had the title CEO, if that term had any meaning in the world of DAOs.
DAOs are something of a crypto-specific idea, once described by the New York Times as a “bank account group chat.” Some DAOs oversee major financial operations, such as MakerDAO and Maker, but it’s usually just a social group with a Discord channel and a token that controls access to the club and serves as seed funding. And like most crypto-specific ideas: they have problems.
The Bankless founders, after initially getting defensive and deflecting blame for the DAO’s actions, are now on Twitter and the Bankless Discord, attempting damage control. There will be “an actual meeting later this week to just see each other face to face,” Hoffman said.
One of BanklessDAO’s main complaints is that Hoffman and Adams “did nothing.” This is a legitimate point of contention; the Bankless co-founders launched the DAO, promoted it across their many distribution channels, and at one point owned up to 25% of the BANK tokens used to vote on governance decisions. (They did not sell tokens, they both said, but now collectively own less than 15% after distributing some to the “DAO genesis team.”)
Bankless also passed on a profitable on-chain investment protocol called Index Coop to BanklessDAO. launched in 2021 as well as a blockchain-linked clothing unit. Although the company’s membership in the DAO has been fluid in the past, DAO members do not have voting rights throughout Bankless and “no current headquarters employee has also been a member of the DAO,” Hoffman said.
There is a reasonable argument that someone – perhaps, for example, the founders of Bankless – should have been more involved in the DAO’s operations. If only because an amorphous social club was licensing its valuable brands for free and making decisions that could materially affect the actual interests of the company.
Hoffman acknowledges that this was a mistake and seems convinced that the solution is to divide the organizations. Adams tweeted on Sunday there are plans to “submit a governance proposal to @BanklessDAO early next week to clarify the separation of brands between the entities” and burn their BANK token bank. No formal proposals have been made and there are many possible outcomes.
To some extent, there is a lesson here for crypto startup founders about the dangers of ceding partial control of your business or reputation to an outside organization. There are also lessons for DAOs and the importance of leadership. And while I personally think BanklessDAO’s Arbitrum training proposal is reasonable, the requested budget is online both with DAO compensation and marketing initiatives – there’s probably a bigger message to get across about messaging.
But for Hoffman, Bankless is also “an idea.” While from the start the co-founders knew they wanted Bankless HQ to remain a “lean” company with a well-defined audience, Hoffman and Adams are also crypto’s strongest believers and were attracted to the idea of ” decentralize” their media operation.
“So many people were privately messaging us and offering their services and experience in an adjacent field… wanting to help Bankless,” Hoffman said. “We simply didn’t have room for them within the centralized enterprise.”
Back when their podcasts started to take off, DAOs were a topic of polite conversation – the same year a New York Times reporter attended a failed event. initiative buying an original manuscript of the U.S. Constitution, for example — and the whole thing started to look like a way for Bankless to expand without actually growing.
And to a large extent, that’s true. Bankless, the media company run by two founders with no prior journalism experience, is one of the most successful organizations in the industry. At a time when crypto publications are cutting budgets and employees, Bankless is biding its time even though its audience has declined significantly.
There are legitimate complaints about potential conflicts of interest, overly positive bias, and reliance on Web2 funding models like advertising at Bankless. It is also undoubtedly an enviable operation.
Hoffman and Adams spend their time reading, writing, and communicating about and profiting from what they love. Bankless is often where I go when I want to understand the complexities of crypto, and it’s often what I recommend to people looking to get started with something new on Ethereum.
Similarly, BanklessDAO has gained momentum by leveraging the Bankless brand and is now such a force for its creators to reckon with. It seems to be one of the few DAOs worth joining, and before this weekend’s backlash it seemed relatively drama-free. “It’s a headless brand,” as Hoffman said, who may not even have the right to say such a thing.
To the extent that Bankless is a bad actor or “bad for Ethereum,” as some malcontents have alleged, it is only to the extent that crypto itself is today fraught with problems. The “movement” and “mission” that the company and DAO are “heading towards”, the idea of being “unbanked”, would be terrible, at least using the available alternatives. But give credit where credit is due, it’s still great branding.
But putting aside the problems that the Bankless brand embodies about Web3, this whole mess is also a problem that Internet crypto wants to replace. On social media, everyone thinks they can write – and so everyone thinks what Hoffman and Adams have built is repeatable. It’s not, it takes work, dedication and a bit of luck.
And while dogfights may be exasperated by Twitter’s algorithm, how you communicate is still your choice.
CORRECTION (NOV. 27, 2023): It’s Ryan Sean Adams, not Adam Sean Adams.