Note: this reveal ended up being a bit longer, and I had more thoughts than I could figure out how to corral for this week’s Startup or Story. Therefore, I decided to push its release to next week and just stick with the longer reveal here in this newsletter. So no podcast or new Startup or Story this week. Consider it a catch-up week if you’ve fallen behind 🤝🏾. I’ll be back next week with Episode 4!
Today, we’ll be covering:
Jokedao reveal - startup or story and why
Timeless Recommendation
Jokedao Reveal
In case you missed it, here’s last week’s pitch 👇🏾:
Jokedao was a pitch for a decentralized autonomous organization (DAO) that was seeking to promote effective governance in the world of web3.
A brief tangent regarding FTX
Before I share the answer on Jokedao, I want to briefly address the elephant in the web3 world - the collapse of FTX. For those who are blissfully unaware of the situation, here’s how the story goes:
Two options if you want to try to get a basic grasp of what’s happening.
A Twitter thread:
(The one thing to add to this thread is - as of Wed, Binance has pulled out and it looks likely FTX will die, leaving chaos in its wake)
Video from Dave Portnoy of Barstool Sports explaining the situation to dummies:
You may be thinking - why are you still talking about web3 when the market is collapsing? To me, Web3 isn’t interesting from a speculation or investment point of view. It’s the technology and its applications that interest me. So, I’ll continue to share web3 thoughts through bear and bull markets as long as the sector is building technology with potential. 🤷🏾♂️ OK, tangent over - back to Jokedao.
So Jokedao. This one was the first where more people guessed wrong than right. Jokedao is, in fact,…a real startup!
Jokedao is a company that is, in their words, “building a platform for all DAOs to perform gamified governance on-chain.” (On-chain means recorded for posterity on the blockchain)
Not only is it a real DAO, but it’s one that I have participated in basically since its inception. Why did I first get interested? Well, in their initial announcement, they included this line:
“We’re standing up for internet jokes and creating tokens that represent ownership in them. This post will dive into the ethos of making a joke—and more importantly, making money from a joke.”
Wow. On one hand, I get that may sound like the dumbest idea for a new entity ever. But, on the other, how does that not pique your interest at least a little?
So let me try and explain this to the person who’s never been exposed to web3 and wants to know why I think this could be one of the coolest entry points to learning about the crazy things that are possible in this world.
Let’s start with my explanation of what the hell Jokedao is and does.
Well, the thing they might be most known for is a weekly Jokerace, run every Friday. The Jokerace is almost like Cards Against Humanity built to demonstrate how Web3 technology works. I realize I may have to unpack that a bit.
In Cards Against Humanity, you get a fill-in-the-blank prompt, and try to tell a joke that pleases the Card Czar who provided the prompt. If your joke is selected as the funniest, you win.
In Jokedao, you get a weekly prompt, and you must tell a joke related to it (note: you don’t have to worry, your joke need not be original. copying jokes from the internet is not just allowed, it is the majority of entries).
After the submission period is over, you get to the weekly race. On Fridays from 12-1230 pm EST, voting is open on all the jokes, where ostensibly, you are voting on what you think is the funniest. The only people who can vote are those that submitted jokes or bought $JOKE tokens (we’ll get into that later). The catch: the winner is never the joke with the most votes. Instead, it’s the joke that receives the 2nd most votes that “wins” the race.
Why? Because by doing so, it turns a voting contest into a strategy game. How do you gather enough votes on your joke to get past all the others, but not all the way to 1st place? What if others maliciously vote on your joke to send it to 1st? It doesn’t take much thought to realize that there’s a lot more strategy involved when the winner isn’t the entry with the most votes. (I could spend hours describing the various strategies I’ve employed unsuccessfully over countless races, but I’ll spare you.)
Anyways, it’s a pretty basic game. Tell a joke. Vote on your favorite (or your 2nd favorite). 2nd place wins. And, if you cast votes on that 2nd place joke, you earn more of the $JOKE voting token.
Now why is it the one project that has taught me more about Web3 than any other? Let’s go through the good, the bad, and the ugly.
The good
It’s about as accessible as a Web3 project can be.
The nature of Web3 is inherently technical, creating a difficult value proposition for Luddites like me. Creating your own crypto wallet, actually buying tokens…these are not easy tasks if you want to embrace the true decentralized ethos of Web3. There’s a reason Coinbase is the most common tool for investing in crypto - they’ve abstracted away all the challenges for a Robinhood-like centralized experience that’s seamless and easy. Unfortunately, that really only works for investing; it doesn’t help you at all when it comes to participating and understanding Web3 technology.
For Jokedao, once you get through those initial barriers around creating your wallet, the platform for voting and submitting is relatively seamless. In so many Web3 projects, it’s about minting at the right moment or taking advantage of a gold rush that plays out over minutes or hours. So much of it feels too hurried - “get in before you’re too late.” Here, you have all week to submit your joke. And the race is at a set time that most people can carve out. 12-1230 EST on Fridays, where you can hop in for as little as 3 minutes to cast your vote.
It captures the weird way money can be made in crypto.
In the early days of Jokedao, if you submitted a joke, you got 69 $JOKE tokens sent to your wallet. The current value of the $JOKE token is $0.22, which means that a joke earned you ~$13 at current market rates. It doesn’t even have to be an original joke. Once again, there’s no validation whatsoever. To people with real jobs (e.g. doctors), this makes NO sense but starts to open the door to what’s possible in a Web3 world.
If you vote on what ends up being the 2nd best joke in a given week, you get more $JOKE tokens airdropped to you. For example, in week 5, the winning joke was submitted by Alicia Katz.
Every $JOKE token that was used to vote on the 2nd-place joke earned 0.44 additional $JOKE tokens. So if you voted (or ‘staked’) the free $13 you earned for submitting your joke on Alicia’s joke you earned another $6. Again, hard to overstate how weird this feeling is to someone completely unfamiliar to Web3 economics.
It’s like Cards Against Humanity telling you - fill in the blank. I’ll give you $13 for doing so. Then, vote on your favorite one. If you end up voting on the ‘right’ one, I’ll give you another $6. If that was how it worked, I bet you a lot more of us would find time to play Cards Against Humanity once a week.*
*Important caveat, everything deals with an in-game currency, the $JOKE token. By comparing to USD using current market prices, that’s a sleight-of-hand trick.
The better analogy would be It’s like Cards Against Humanity telling you - fill in the blank. I’ll give you 69 CAH for doing so, a completely worthless currency that I just made up. Then, vote on your favorite fill-in-the-blank. If you end up voting on the ‘right’ one, I’ll give you another 30 CAH. Then, you’ll have even more of my made up currency.
But, in the world of Web3, all made up currencies are tradable for others, including the ones we know and trust (like USD). So the market always tells us what that in-game currency is worth.
Not all is roses, however, in the world of Jokedao. The Jokerace also exposes so much of what is problematic about Web3.
The bad
Shit just doesn’t work reliably.
We’ve been spoiled by Web2 technology that works so well so much of the time. In Web3, you can pretty much guarantee that something will not work the way it’s supposed to.
In my first race where I was looking to really meaningfully participate, the tokens I was supposed to get weren’t accounted for at the time of the race so I couldn’t end up voting. In several others, I’ve had last-minute transactions not go through because the network is too clogged, foiling my attempts at claiming victory time and again.
This is a product of the technology being early. I’m willing to give a lot of grace to this one and believe strongly that the right people + time will resolve this naturally without any changes.
The ugly
Money is worth too damn much.
Much like everything in Web3, money is too important in Jokedao. There are a few $JOKE whales that own enough $JOKE to really control the jokerace. In fact, for several weeks, they formed a group called The Joke Cartel (you can’t make this shit up) and picked the race winner (or 2nd place) ten weeks in a row.
They control so much $JOKE that they get to pick who wins (or gets 2nd place), and get to reap the rewards for doing so. Which makes it less fun for anyone else participating in the race for 2nd. Right now, it’s 1 $JOKE token, 1 vote. Which means it’s hard for newcomers to compete with participants who have been accumulating $JOKE for months on end.
Promoting governance may just be an intractable problem
If you notice, in all this description of Jokedao, there hasn’t been much talk of governance. The Jokerace is meant to be Jokedao’s Trojan Horse for tackling good governance. As they’ve said,
Yes, jokedao will remain devoted to weekly jokeraces, our NFT collection of winning jokes, and governance to decide the rules of different contests.
But we’re also building the platform these contests will run on—a platform that can be used not just for jokeraces but for all DAOs that want the full benefits of on-chain voting.
Because on-chain voting isn’t just about keeping open-source records of votes and contributions that can be used to build the reputation of DAOs and contributors over time.
It’s about enabling whole new forms of governance that have never existed before.
In our case, we’ll be building a platform for gamified governance that enables DAOs to reward participants for working together and building relationships to come to the right decision for the group. Those who vote on winning options can win tokens.
The platform they’ve built is being tested by several major DAOs to get their members to vote. But the Jokerace exposes a pretty serious issue with the underlying thesis. Despite Jokedao’s best efforts, including trying to throw free money at the problem, they just haven’t been able to incentivize voter participation. They have floundered at ~25-40 voting participants for months, unable to grow in any meaningful way.
In my pitch, I started with a few topics that really intrigued me, including if DAOs can be a meaningful part of a well-functioning economy. I really do believe the answer to that will come down to governance. If DAOs can’t figure out how to get people to participate in effective governance, the odds of DAOs being anything more than a minor sideshow drop precipitously.
I still have some hope that Jokedao could hit on some innovation that can meaningfully drive voter participation and engagement. If they don’t, at least I’ll have had a few laughs along the way.
P.S. In a wild turn of events, I won last week’s Jokerace (by finishing in 2nd)! In the longevity-themed race, my submission ended up coming in 2nd thanks to some strategic collusion.
If you’re thinking, Arvind, that joke isn’t that funny? I hear you, but let me defend this. This is a real story that happened not too long ago. I’m the guy asking my friend (who will not be named). I was in a typical sci-fi mindset and was thinking about life-extension technologies. I was totally expecting him to say some number like 200 or at least 90 or something. The way he thought about it and delivered that punch line so deadpan absolutely slayed me. I don’t think I’ve laughed harder this entire year. So, when the submissions asked for a joke related to longevity, I decided to use it as my first original submission to the Jokerace (usually, I just find a joke online). In fact, when I submitted, I thought to myself… “Wouldn’t it be awesome if…my first original joke won the jokerace?”
Long story long - it ended up winning. Now, that story is forever engraved on the blockchain, minted as an NFT by jokedao (joke 36), for future generations to ponder and perhaps chuckle at. I believe it’s a worthy winner.
PPS If you made it all the way through the above and don’t think I’m an idiot, you have earned my gratitude 🙌🏾. And if, by any chance, you’re interested in participating in a mini-web3 experiment (using Jokedao), do me a favor. Like this post. That means scrolling to the bottom, below the share button, the little heart that says “Like.” Obviously no real commitment there, but will give me a sense of general interest because…
I have a little idea I’m noodling on - “forking the jokerace” (that means making my own version) to make the game more fun while making it less about money (e.g. less than $10 to participate, but no real big financial rewards).
Startup or Story? Previous episodes
Catch up on the previous episodes here
Timeless recommendation
This week, I want you to start thinking about the world of education in preparation for next week’s Startup or Story. This week’s recommendation is by Scott Aaronson, a CS professor, a quantum computing researcher, and the writer of a popular blog. I’m not a consistent reader, but this piece blew me away.
It’s called - Review of Bryan Caplan’s The Case Against Education. Not exactly the best title, and full disclosure I have not read The Case Against Education, but after reading this piece, I felt like:
I had read the book, or at least taken away the gist of it (this is a masterclass in steel-manning someone else’s argument), and that it made an interesting, thought-provoking argument
I found a kindred spirit for some of my own beliefs on the role of education and its purpose in Scott’s views. There are a ton of sentences that resonated deeply, including the conclusion of the piece.
First and foremost, save education from those who’d destroy it because they hate the life of the mind. Then and only then, let people experiment with taking a surgical scalpel to education, removing from it the tumor of forced enlightenment, because they love the life of the mind.
Anyways, I hope you get the chance to check it out and read it here.
Last week’s preview still applies. So tune in next week for a look at a familiar business model applied to the latest craziness in the courts.
Wouldn’t It Be Awesome If…? is the beginning of many questions I ask myself about the future. WIBAI has become my place to attempt to make sense of the world we live in and imagine ways to make it better.
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Awesome! Mind blown. What was 1st place joke?