Telegram has and still is the best place to discuss crypto projects. In 2017, I was lucky enough to meet some great friends in private chat channels. The quality of the discussion was incredible, as a lot of the members were founders or investors of some of the best projects we all use today.
I spoke extensively about this with Hen Tekle in an earlier podcast. Hen was the creator of Crypto Money Team, one of the most impactful and dominate telegram groups to this date. Whether it was great or infamous depended on your membership in the group.
In CMT, there was a genuine sense that everyone helped each other, both in finding new gems, making introductions to teams and other investors, and in some cases, offering jobs or advisory roles. These exciting times were partly due to the raging bull market kicking off in 2017 and also partly in that Ethereum gave a real feeling that anything was possible in this new decentralized sandbox.
A lot of this was hubris. We vastly overvalued the applications that were proposed to be built and sent untold amounts of ETH away in return for worthless ERC20 tokens. In the end, a lot of the original members left, were kicked out or simply disappeared.
The failings of CMT as it grew were that there was less incentive to give back to the community and the information became less informative. I say this now with 3 years to look back on and probably nostalgia for those first few months. Hen and team has been able to do a great job curating a solid group of people by actively moderating and kicking out anyone who doesn't participate over the long term.
Without great moderators, creating an active vibrant community is extremely hard.
What if we could create a new community where giving and helping are the primary goals?
What if we could financially reward people for making introductions, helping people get jobs, and just being a good person?
What if we could create a membership where the best of the best congregate and share ideas.
This is Karma DAO. The first private telegram group with tokenized membership. I don't think this really captures the real long term purpose of the group and its implications for later versions. Created by Andrew Lee, KARMA represents a seismic shift in how we will use telegram into the future.
I've known Andrew now for 3 years and his resume/reputation speaks for itself. Limited partner at DNA, advisor to Quarkchain, Hashgraph and a bunch of other top-tier projects. Most importantly, he's the founder of the Web3 Journal, one of the leading newsletters that called Defi before it even was a few million locked up. Andrew is the right person to lead this project.
He's built a good team for this. Let's look deeper into the token.
Karma DAO is built on Abridged.io’s Collab.Land suite of tools for DAOs. It allows for the cool part of the design of Karma to interact with Telegram.
Anyone can join the Karma DAO private telegram group if they hold 200 $KARMA in their Ethereum wallet. If the wallet dips below the required amount, the user is kicked immediately and cannot rejoin until they bring their account balance above 200 again and revalidate.
At the beginning, 50 people were given 200 Karma outright as founding members of the DAO. Uniswap was then seeded with 35 ETH and 120,000 $KARMA tokens. A few smart people snatched up a few hundred dollars worth of tokens right away. The first tokens sold for around .03 cents or 8333.3 $KARMA per ETH, making membership into the group around $8. As of writing this, each token is now worth $2.15 and access to the group is roughly $430.
That's a 86x return in just three days for the initial token buyers.
FOMO to get into the group (which is packed with some of the biggest names in Ethereum at the moment) drove the price increases. I really have no idea where the token price is going to settle at. Only 650 memberships are available (600 seeded + 50 founding members) if every token is distributed evenly, which is pretty much impossible at this point. $500 to enter into a private group that is designed to return value to others isn't that high of a price. I could see the top at $10,000 maybe?
Regardless of long term price, the method of tokenizing membership into the private group is novel and will have a lasting effect on Telegram groups.
I think there are a ton of applications for this token model even without tokens being tradable could achieve:
- New communities issuing 1 non-tradable token per person for completing actions or signing up early to join a special chat group.
- Bands or artists distributing new content to their select fans.
- Instead of email newsletters, you blast out a private token to your subs
- Simp chat (lol)
The tools used to create this DAO will allow for any content creator to selectively share their information in telegram and retain full control of their groups in a demonstrative way.
Adding the price component is where things get a little crazy. Now, private groups find true market pricing amongst their members. It's feasible that a simp group could skyrocket to $10,000s of dollars as new members clamor for entry.
What's more, the creator of the token retains all rights to sell as many as they want. Only 2% of $KARMA tokens are in circulation right now. Depending on demand, that may be enough. At some point membership will become prohibitively expensive and the DAO will have to make a decision on releasing new tokens.
It's a strange dynamic. On the one hand, the more people that join, the higher visibility of the Karma DAO and the more people that should want to join. It's a virtuous cycle that many other tokens have gone through. On the other, any inflation detracts from the value of original token holders. One way to solve this would be to distribute all new supply to existing token holders so they could choose when to sell.
Another weird outcome is if $KARMA goes to $10, some members may even be tempted to sell their full stake and leave the group to cash out. Mr. Market will constantly ask each member how much they actually value the community. I find this strange as the point of the DAO will be to increase membership to engage in the virtuous cycle described above.
But maybe increasing membership isn't the goal. High entry price would filter out those who cared less about the Karma DAO. By paying $10,000 for entry, they would have enormous sunk cost and probably would do everything possible to further increase the overall value of the DAO. Those who would voluntarily leave the group through selling tokens don't care about the long term health of the group. They just want that sweet profit.
So while it seems weird at first, the market selects those who actually want to be members and sets prices where demand is, FOMO be damned.
Over the past several months, a few other Ethereum developers have released personal tokens that give holders governance over their actions or a part of their income. I'm loathe to endorse any of these as they are so one sided. The token issuer is dependent for all growth and returns.
A DAO community is much better suited to collaborate and generate value as its not just one person for which the entire token value is dependent on. Karma DAO is on the right path which I think a lot of others will go down soon.
I truly have no idea how this experiment is going to work out. I do know that Andrew Lee, the found is as baffled as I am as to what price will do over the long term. With such explosive growth, it's on him to ensure that the community builds enough value into the DAO that it warrants the price tag of admission.
From what we have discussed, he does have big plans. The private telegram group is just the beginning. A way to bring in the top minds and encourage growth from within the community. Soon Karma DAO will broaden in scope and add a Layer 2 tipping bot and clans for even deeper specialization.
Andrew is breaking new ground here and if you are interested, you should join as well. The token price should stabilize at some point, but there are only a limited amount of spots open for right now.