Value Accrual by Association
Before we kick off what indubitably will be quite a spicy edition of Proof of Update, I wanted to mention another spicy item of news - yesterday we released the Odds and Ends episode featuring the crew from @hotwings_xyz, @kevinthomaschen and @jhzorro! Check it out below as we dive into movies, their work with Hot Wings Collective live events, and just the future of blockchain technology overall on either Apple Podcasts or Spotify, respectively.
Yesterday, a good friend and EightBit community member @whel8033 wrote a great article regarding what NFTs are as an investment, and it really serves as a great launch point for today’s newsletter. Oddly enough, I had this newsletter ready to fire off for a few days, so it was just perfect timing tbh. I really suggest you check this out below before continuing:
Similarly, a while back I wrote a newsletter regarding some things that I thought the PROOF team could improve going forward, aptly titled Constructive Criticism. If you missed it, you can check it out here:
I wasn’t sure how it was going to be received as everyone knows I’m a huge PROOF fanboy, and I certainly didn’t want to give the impression that I “lost the faith” so to speak. And as we all know, sometimes in the NFT world things can get a bit tribal with people feeling personally offended whenever someone criticizes “their bags.” Regardless, I felt there were some areas to improve, so I put it out anyway. Interestingly enough, it became (and still is) my most popular newsletter edition to date.
At that point, I realized that just simply being honest about things was the way to go, particularly with a community that is as mature as the PROOF community - I’ve often heard our community referred to as “the grown-ups in the NFT space,” which is quite a fitting title. From that point forward, I promised myself I would be honest about my take on things, bullish or otherwise. So today’s newsletter is going to be exactly that - my honest opinion on an issue I keep seeing people mention regarding the value accrual to our PROOF NFTs, specifically the idea of…
Value Accrual by Association
In my piece titled “Constructive Criticism,” I laid out three major concerns I had regarding the PROOF team and its vision for where the project was heading: namely communication, focus, and the DAO. While it seems some strides have been made in the area of communication, there have also been some steps taken backwards as the weekly parliament that we have all come to love is no longer a promised thing. Understandably, weekly parliaments were never the intention from the team - they just kind of happened and started to become an expectation. But I’d obviously be remiss to say that communication has improved if one of our favorite aspects of the team hit the chopping block on the priority list for them.
We also haven’t really received much more information on the DAO - something that I thought was important to launch more quickly than not (and yes, I know rushing things is never a great idea) as everything in this space is a competition for attention, including community creators. However, the real focus I want to discuss today was item #2: focus. Here is a little snippet of what I wrote regarding that in my previous piece:
I get the impression sometimes that a lot of the talk about value accrual for the community (and their NFTs) is some secondary, tangential benefit by being part of the PROOF ecosystem, and as long as PROOF grows as a brand, then people will want to buy the NFTs we have. I’m pretty comfortable in speaking for a decent amount of the community here (and you let me know if I’m wrong) in saying that that is definitely not what people are expecting in terms of returns of value. That would just be an expected bonus on top of what the real expectations are - that the team keeps the existing community in mind, and keeps them central to everything they do. Now I’m not saying that all of these expectations are fair or right, but they are the expectations out there, with all the good and bad that comes with it.
As you can see, my concern here is that the team’s main plan for value accrual for our NFTs is the idea of “Value Accrual by Association” - the idea that if PROOF becomes a major company, people will naturally want to join our community and buy our NFTs. While I have had people reach out to me voicing this concern plenty of times, I always kind of pushed back thinking that it was too antithetical to web3 of a direction to take for it to be the case for a company that extols the merits of web3 and community. But the longer time goes on, and the more I hear from the team regarding it, I get more concerned that it’s a major part of the plan for returning value back to us, the holders. For example, with the launch of PROOF’s new website yesterday, this tagline sits front and center:
Perhaps I am reading into it too much, but it seems that there has been this notable pivot from the team working to create value for the PROOF NFT holders, to the idea that they will provide the tools and resources for community members to do it themselves by building a media company of sorts.
Take the clip from BloombergTV with Kevin Rose the other day for example where he discusses PROOF as a media company, which I link below to the relevant part regarding utility of our NFTs:
Basically, Kevin said the following (emphasis mine):
“I think this is a very new idea and concept for people to wrap their head around. For the very first time, you actually have and collect something that is a core piece of ownership of a project. Oftentimes as these projects become more and more popular, value accrues back to these NFTs as collectable pieces of art.”
I certainly don’t speak for everyone, but as I mentioned above in the newsletter that I put out over a month ago, unfortunately, I don’t believe that most of the community is on board with this being the main value proposition for our Moonbirds, Oddities, and Collective Passes - specifically since Moonbirds for example was touted as a utility-heavy NFT, not just a collectible. To be honest, the idea that a large portion of the value we can expect coming back to us is simply because we hold a piece of artwork from some future media corporation is somewhat the antithesis of Web3 where the whole idea is community ownership. It very much reminds me of when Coinbase hit the scene many years ago - we all knew it would be huge, and so we wanted to invest in the company itself. But instead, they went with private fund raises, and as usual, once they IPO’d all of the early investors who were let in privately got to dump their bags on us - a web2 tale as old as time.
While I am not sure what the future will bring for all of us in the PROOF community and our NFTs, I’m still a huge fan of the project and the team. However, I do think there are still some very valid questions and concerns regarding how value will return to us as community members considering that a large portion of the PROOF team’s treasury came from the Moonbirds mint and PROOF the company largely continues to be built off of the funding that we provided.
While they have also accepted more funding from various other entities, this doesn’t necessarily translate to value for us, the holders, and in fact brings up even more questions in regards to whether or not they now need to consider driving value back to their shareholders (a dirty word in web3) before the community. Hopefully, going forward, we can get some more clarity regarding these extremely important issues. If not, there may be more bumpy roads ahead.
Pretty wild move by MagicEden. The royalty wars continue.
PROOF doubles down on the idea of “community empowerment” with their latest website redesign.
That’s all for today - I hope you have a great Tuesday!