Exclusive clubs called ‘DAOs’ are popping up online. What’s it all about?
Ihave seen the light, and I was not convinced. This month, I was invited to a party hosted by Friends With Benefits, an exclusive club of artists and investors who have access to a private chatroom on Discord and parties in cities like Miami and New York. The image has a subversive sheen: techno DJs and venture capitalists in ripped designer jeans throwing secret raves. The club’s “manifesto” describes a “bright future” for the “ultimate cultural membership” where “prosperity is abundant” and “data and payments are fluid”, just like gender.
Friends With Benefits was founded in 2020 by Trever McFedries who, after bringing the VR popstar Lil Miquela into the world, had higher ambitions than animating a robot to make out with Bella Hadid in an underwear commercial. “Capital as a weapon is intriguing to me,” said McFedries in a YouTube speech. Having seen Occupy “fail miserably” while GameStop “toppled a hedge fund in four days”, he set his sights on creating a DAO.
DAOs have, in the past year, been generating millions of dollars’ worth of cryptocurrencies on Ethereum, managing to strike upon a technological model uniquely primed to drive up the value of their assets. At its most basic, “DAO” – which stands for “decentralized autonomous organization” – describes an online community that meets on a chatroom server such as Discord, decentralized insofar as the administration puts community decisions up to a vote, which can be recorded and verified on the blockchain using unique “smart contracts” that everyone can see.
Not every DAO mints its own currency, but McFedries decided he wanted one. For his new DAO, Friends With Benefits, he established a native token called $FWB: a publicly tradable coin, minted on the Ethereum blockchain, that rises or peters in value like stocks.
Membership to the community would require purchasing 75 $FWB. Before FWB began, McFedries decided to mint only one million $FWB tokens, so he could cap supply and hype demand. When I first heard about Friends With Benefits this year, membership was already valued at $350. Today, it’s over $9,000.
$FWB’s value soared after Andreessen Horowitz invested $5m and Li Jin put in $10m into the community. It’s a “bull market”, in the words of the white shirt who prices the artist out of bohemia. One might question the very “decentralization” of a community’s governance that both establishes community rules and regulates its own currency, as if the president and
the Federal Reserve were combined.
Most DAO evangelists will tell you that DAOs allocate voting power on community decisions to their members. But FWB, like most DAOs, grants one vote per token, instead of one vote per person. This is profoundly undemocratic. While $FWB tokens are also granted to members whose comments on Discord receive the most engagement, like gaining “likes” on Facebook, any investor can buy up their share of votes at any moment with a click.
The migraine-inducing difficulty in understanding the technological intricacies of DAO is built into its propaganda – the ignorant skeptics should trust the experts in the room who truly know what’s going on. They tell us that DAO is the beginnings of Web 3.0, pitched as the David against the Goliath of Web 2.0, which wrought monopolist platforms like Google, Facebook, and Amazon. FWB is rare in the world of DAOs because it professes cultural pretensions. But most other DAOs are simply devoted to trading assets; Flamingo and PleasrDAO, for instance, were created to pool money for speculating on NFTs.
The most photogenic aspect of FWB is that its executive professionals can mingle with artists on its Discord server, the café to the Enlightenment philosophers. Except you can have this without a native token like $FWB. I happen to be a member of two collectively run servers – one is a community for critical analysis of art, tech, politics, and pop culture started by Berlin-based artists, and the other, started by a New York-based artist and internet researcher, is devoted to analysing internet culture and politics. These communities charge an affordable monthly subscription, cheaper than a bahn mi in Bushwick.
Here, capital is not used as a weapon, but the discussion is lively. We talk about the racial bias of artificial intelligence, debate the role of the professional managerial class, share pictures of our outfits. Anyone can join. None of this is particularly profitable'; a lot of us are a tad offbeat in real life and spend too much time on the internet. But it’s how I keep in touch with friends who don’t live in the city.
Yet elsewhere in cyberspace, we are told of a future with abundant prosperity on the blockchain, where capital is a weapon, and the proletariat can pine for an invite to party with Diplo. “My next paper is probably in praise of exclusivity,” McFedries said recently. And the findings will tell us a simple truth as old as it is new: that the future is bright for those who can afford it.
Geoffrey Mak is a New York-based writer
We are told of a future with abundant prosperity on the blockchain, where capital is a weapon and the proletariat can pine for an invite to party with Diplo