Oct 6, 2021
The Mad Hedge Coiner : Act III
This is a fictional conversation between a brilliant thinker and macro investor called Mr. H and myself as a Rally outsider. The story revolves around the tokenization of Mr. H on Rally.io.
Act II (Creator economies: The land of Mr. H)
Act III (Show me the money)
MONETIZING THE CREATOR ECONOMIES
Q: This sounds fascinating, but also quite complicated. I have ca 50k followers on Twitter, 9k on YouTube, 7k on Instagram, a blog, a podcast and do interviews left and right. Why go through all of this token hustle instead of simply charging USD for my time or merchandise and monetize the content ads or subscription?
This is exactly why you need a token — it is perfect for you. You will be the Czar of your economy, the President, Government and Central Banker combined. A large chunk of your “economy wealth“ (up to ca. 30%) will be tied up in your own coin. Selling large amounts is hard, if not impossible and Rally is not encouraging it, because they want to align your incentives with the fans. Instead, it enables you to economically consolidate all of your channels across all platforms into one token, which will hold the value for everything you do.
Q: Ok, but still, does that mean that I won’t get paid in dollars ever again? How would I buy stuff at St. Barts?
Any services and products you offer need to strike the right balance between “cashflow” and “equity” features. The programmable features of your token make this possible.
Here are a few examples:
Equity-only features, i.e. increasing the token value over time:
1. Services, requiring the user to hold a certain amount of $H coins in order to use a feature over time:
> Access to a gated Discord server (scalable as many fans can do it at the same time). These coins will form some fundamental demand that will likely not move much.
> Continued training (not scalable and time-dependent) — e.g. you organize a limited membership investor education class for larger holders of coins.
2. Activity based features: the Rally Community Rewards are direct drops of $RLY to active communities, meaning more people have joined the economy compared to a previous period. These coins come from the Network Usage Rewards bucket at Rally.
> $RLY rewards earned by the creator for holding their own coin can be reinvested in order to grow the economy or slowly sold down (scalable)
Cashflow features, i.e. a combination of holding tokens and/or paying cash
1. Features that allow the holders to receive discounts on products, merchandise etc. In effect, the discount is the tokenized part of the dollar amount and remains locked up in the economy.
> Selling fancy hats or signed photos via your website (scalable)
> Limited private tequila party on Zoom (one off, somewhat scalable)
2. Features that directly allow you to receive payments in $H coin which you can immediately convert back to USD. Typically in the form of active campaigns. If sold right away, these sales are neutral to the overall supply since new money in will increase the price, mint new tokens and a subsequent sale will burn the tokens and decrease the price to where it was before. This is however less optimal because of the roundabout on/off-ramp and fees, so better to keep and sell later.
> Retweets with limited slots (not scalable)
> Shout-outs with limited slots on Instagram or YouTube (not scalable)
> Zoom 1on1 calls, e.g. brainstorm trade ideas (time-dependent, not scalable)
Special case: NFTs (big focus for Rally)
> NFT sales (scalable) — this is where I believe Mr. H can kickstart something big. I am not talking about tokenizing all of the old investor letters, the chart printouts from your office lavatories, video commentaries on IG or YouTube content, which, at this stage have more of a historical subjective value.
I suggest tokenizing new trade ideas and analysis, which can then freely travel via secondary marketplaces (when Rally NFTs are able to be bridged out to Ethereum) and Mr. H will get a royalty on each and every sale. Investment idea NFTs are not yet a thing, but intuitively make a lot of sense.
The copyright remains with you, check this from Rally’s FAQ:
“A NFT purchase in general means that you have bought the high-resolution digital file and the smart contract on the blockchain which contains the metadata of the creation. It does not give you any copyright ownership over the content of the art or license to use that content in any way.”
Opinions on the actual value of digital art NFTs continue to be highly polarized. Is the “First 5000 Days” Beeple NFT really worth $69m since anyone can download the jpeg and view it? On the other hand, there is only one proven owner of the file that Beeple himself signed, i.e. one autographed copy.
Let’s zoom in on NFTs on investment ideas or trades.
Imagine that you, Mr. H, think of a brilliant investment idea (as you have done in the past).
You record a video (or write a PDF or image etc) explaining for example why buying 10 year US treasuries or a 3 year call option on mining stocks is a great idea, you explain why now along with entry and exit levels plus different ways to do the trade.
Now that potentially has value. The file will live on Rally’s server. You can create one unique NFT or more than one in order to reach more people at the same time. Importantly, only the buyer of the NFT will have the link to see the file.
Once someone buys the new “Mr. H trade idea” NFT, they can decide what to do with the trade. Moreover, they now have an incentive to play with the timing of any subsequent sale in order to maximize the NFT value.
Does the owner believe the trade makes sense? Do they act on it? How long should they wait before selling? These are all interesting questions that will drive activity.
The best is, as the immortal Mortimer Duke said, I paraphrase: No matter what happens, Mr. H always collects his royalty.
NFTs it is. Ok then, let’s do this token thing :)
Continuandum.
About me: I work in technology M&A and occasionally angel invest. Sometimes, the mood strikes and I write about crypto, macro and climate investing.
Disclaimer: I own a small amount of $RLY and a few creator coins, which may increase or decrease over time.
