Over the weekend, CryptoTwitter™ was ablaze over what to make of BanklessDAO's proposal of 1.82 million ARB tokens to onboard people onto Arbitrum. Almost immediately it was met with backlash, with people going so far to call it as a treasury raid and "shameless." Although BanklessDAO is technically separate from Bankless, the media company, many were not aware or did not see it that way, which led to more attacks on the brand as a whole. To rectify the situation and avoid further confusion, David Hoffman announced that BanklessDAO would be taking steps to change their branding to avoid confusion and that him and Ryan would burn their tokens.
As a contemporary in both content creation and and protocol politics, I paid close attention to the debate. It struck such a deep chord with me to the point where I authored a 1000+ word thread on Twitter recapping the situation with my thoughts, nuances, and relation it has to Flywheel. Several points I touched on in the thread included the nature of DAO politics as well as the state of non-technical business development services in DeFi and Web3 in general.
It's Politics All The Way Down
Politics is field of activities that revolve around the allocation of resources. There are three parts to this the equation for DAOs: resources (the treasury), who decides what to do with the resources (token holders), and who actually receives the resources (funding recipients). In a sense, politics are the Layer 0 of DAOs, a social layer that relies on people instead of protocols in making decisions. Although crypto generally strives towards automating the latter, it's still individual users that bring life to the chain and those individuals have needs, interests, and desires that drive their decisions.
Time and time again, it is grossly underestimated by funding recipients what it takes to have grants approved by tokenholders. In a space that is already battle hardened against rugs, grifters, and mercenaries; the immune response will naturally be high. BanklessDAO is not alone in this regard in the Arbitrum DAO. Earlier this month, a proposal by Blockworks, Gauntlet, and Trail of Bits to form "The Arbitrum Coalition" which would grant the trifecta $2 million worth of ARB to aid in the decision-making process was voted down by the community. Whether it be BanklessDAO or the Arbitrum Coalition, there were a few reasons why their proposals were unsuccessful.
Building trust in a community does not happen overnight, it takes years to prove yourself day in and day out building enough cred to show your body of work and effectiveness. It's a given that core teams with lockups do this and are undoubtedly aligned with the success of a protocol. That is why it is still standard practice for projects to hire internally whether they be developers or business development. The community will trust someone whose job description is to further advance the protocol. On the other side of the spectrum, we see firms hired to perform jobs that protocols choose to have externally. These most often include auditing firms and PR/marketing agencies and although different, what they both have in common is a second set of eyes that helps point out things that are missed internally. It is accepted and encouraged by the community that these tasks are performed externally.
When a group like BanklessDAO publishes a proposal to perform tasks that are usually the internal responsibility of the DAO, accompanied by exorbitantly high fees and a limited track record at best of contributing to Arbitrum in the past, then it should come to no surprise that it received the pushback that it did. Now although the Arbitrum Coalition did not have the same level of scorn as the BanklessDAO proposal, with all three parties in the Coalition contributing to Arbitrum in the past, the main gripes with it were its potential conflicts of interests, centralization of decision-making powers, and high budget request for services. Although the intention behind the proposal may have been in good faith, at the end of the day, all three parties in the Arbitrum Coalition are not exclusively loyal to Arbitrum and have other interests to fulfill in order to be sustainable in their respective businesses.
Flywheel Spins A New Path Forward
As mentioned in my thread, on the spectrum between internal team and external service provider, Flywheel has carved a new path in the middle. Although we are not technically a part of the core team, our destinies are undoubtedly intertwined. When we launched our new website in August of this year, it says right on the front page that Flywheel is "Your Grassroots Source for Frax and DeFi." That messaging is incredibly intentional, we want people to know unequivocally that in a world of mercenaries, we are missionaries for Fraximalism far and wide.
Flywheel is unique in DeFi in its purpose and origin. Our existence is owed to Frax's decision not to invest in business development (specifically marketing and education) personnel internally. When TerraLuna collapsed, the need to educate and realign narratives about Frax rose to utmost importance, and from this necessity, Flywheel came about. What started as small grant for content over a short period in June 2022 has currently evolved into an entire media, education, and awareness operation. Whether it be through our content or our live presentations, hackathons or happy hours, tutorials or news updates, and so much more, we have established ourselves as the gateway for both the DeFi veterans, builders, and curious alike to learn about the Frax ecosystem.
That being said, going from asking for $18k over three months to $267.2k for a year does not happen overnight. It takes persistence and consistency, growth of content and strategy, and constantly proving yourself to the community your worth. Over 85% of our output is Frax-focused or at the very least tangential to the wider Frax ecosystem. Even when we have applied for supplemental education grants with other DAOs this year, every proposal had a Frax-focus with it. Our approach is very different than our contemporaries because of how singular focused our mission is. People know who we are, what we are about, and trust us.
As more proposals are published requesting funds for business development activities, Flywheel's grassroots single-focus client model that grows gradually over time with the needs of Frax from the bottom-up instead of plastering deliverables from the top-down serves to as a model to others and goes so far redefine Web3 marketing as we know it. There are already DAOs who are implementing a similar structure with the most recent one being The A-Team which is "the official media channel of Aladdin DAO." As time goes on, we will be able to see how successful this model is over traditional internal and external efforts.
At Flywheel, we started at the beginning of the bear market and have not taken a week off this entire time. That's where the love comes from, not from the sudden wins that seemingly happen overnight, but the hard work that is put in day after day as we build something bigger than ourselves. Quite simply, as the Frax ecosystem grows, we grow with it. The name of the game has always been positive-sum over zero-sum and long-term over short-term. As 2024 approaches and our funding is up for renewal, we will carry that philosophy forward as Flywheel homes in towards active participation in its mission forward.