Issue #7: Rug Radio
Decentralized media for the people, by the people
tl;dr
Well…obviously its been a crazy week and the FTX/SBF aftermath will probably take a couple of months to settle. But, events like this remind Bry and I about our mission - our goal is to fight through the noise, the hype, the news and the ponzis to find the projects that are leveraging blockchain tech to actually create communities, products and companies.
And if there is anything that is true after this past week’s events, its that there is a serious lack of trust in the world, especially in the media. From fake news, to conspiracy theories, to paid influencers, to corporate control of information, the general public around the world is hungry for real content that is honest and reliable.
Rug Radio is aiming to decentralize media production to offer content that people want and to properly enable and reward content creators. This is a very impressive NFT project that employs a core team, a DAO and sound tokenomics. I’m going to dive into the nitty gritty of the project as well as talk about how a solid tokenomics mechanism creates a flywheel of network effects.
alpha: read this issue to the end for a surprise
Why Rug Radio?
Our initial interest in the project can be summed up into one word: Farokh.
If you aren’t familiar with Farokh, he has been a constant in the world of social media, especially within tech, crypto and NFT communities. He is a high energy social media master who sometimes reminds me of the web3 version of a classic radio host. He has historically been a fairly polarizing figure and is also almost always in the mix when it comes to the web3 rumor mill. But most importantly, he is legitimately at the center of just about everything that happens in web3. All press is good press right?
If you’re interested in his background, his LinkedIn bio gives a pretty good snapshot of his history
Rug Radio is Farokh’s passion project. He has moved from a pure content creator to the “CEO” of a project that truly is embodying the ethos of crypto and web3.
Rug Radio exists to help people build their brand and give them underlying infrastructure for content creation.
Who else is Rug Radio?
Rug Radio has a core team of nine (two of which are the artists) that are currently acting as the leadership team. Some of the roles are goofy (like “Chief Janitor Officer”) but the team is heading up operations, business development, product, community and marketing.
The core team is meant to work concurrently with the larger Rug Radio community via RugDAO. We will dive more into this later, but if you have worked in or around a DAO, you know that building a DAO is a very complicated process and getting the structure right is paramount.
Quick Numbers
The Collections
Within Rug Radio there are 3 different types of NFTs. They all primarily serve as access passes instead of digital collectibles as we have written about before. The Membership Pass and the Genesis NFTs are available for purchase on your favorite marketplace, while the Host Pass is strictly for content creators**.** Let’s do a quick rundown on each:
Membership Passes:
Membership Passes were launched Dec. 22, 2021 in a free mint. This collection of 19,997 identical tokens give holders access to the Rug Radio community and exclusive member content via the Discord. This is also opens to door to become a contributor or creator. Those who minted the Membership Passes were given access to mint the Genesis NFTs.
Genesis NFTs:
The Genesis NFTs minted on Jan 11 2022 for 0.111 ETH each. The art is literal rugs (a play on the Rug Radio brand) featuring references to famous NFT collections such as Art Blocks, Doodles and Ether Rocks.
The main benefit of the Genesis NFTs is that you automatically earn the $RUG token just for holding the NFT. This $RUG token is distributed at different rates according the the rarity of the NFT (more on the tokenomics later).
Owning a Genesis NFT is a great way to have exposure to the upside of Rug Radio without being a content creator, contributor or active community member.
Host Pass:
Host Passes are a collection that are not available for sale or purchase. These are strictly for content creators, podcast hosts, and guests on the shows. They denote the frequency of shows you are running, whether it be Daily, Weekly, or Casually. In order to become a host there is a simple application process that is started by filling out this form.
The art of the NFTs is not the main focus of the project, but we would be remiss not to mention that it is very high quality design which was made by Jeremiah Welch (twitter: @massiflux) and Jess Wiseman (twitter: @jesslwiseman).
Content is king.
“If you’re not putting relevant content in relevant places, you don’t exist.” - Gary Vee
Media companies exist to create content. And content creation has become a center piece of our culture, with the average content creator making $44,000/year and the highest earners making into the millions.
Although fairly young, Rug Radio already enables a ton of content in different forms that is primarily focused on the web3/crypto/NFT space.
But, what sets Rug Radio apart is that different to traditional media models, all content creators own the IP rights to their content. Although Rug Radio provides the platform and some assistance, the decentralized model allows the hosts to completely own their content and brand
Live Shows
Within the Rug Radio ecosystem there are 18 lives shows per week. These consist mostly of Twitter Spaces and podcasts and have a broad range of topics and hosts including NFTs, macroeconomics, .diversity and inclusion in web3, music and web3 law with new shows/hosts onboarded regularly. The schedule can be found here.
Rug News
What they call “news” is essentially the Rug Radio blog. Here there are a heap of articles that touch on crypto and NFT basics, news from around web3 and tips on how to build your online presence as a creator.
In October alone, they published 25 articles which is a seriously impressive rate. The posts are extremely accessible and easy to read, but still have useful and smart content.
Newsletter
With a new addition to the core team, there will now be email content that will consist of a weekly newsletter and a RugDAO announcement publication. The exact format and content is still being hashed out and will be heavily informed by a community survey that was completed.
The RugDAO: The Key to Decentralization
Facilitating content creation is one thing, but creating a decentralized media company is a whole different animal.
The RugDAO is how Rug Radio keeps everything decentralized. If you are unfamiliar with DAOs (decentralized autonomous organizations), the model was invented as a contradiction to traditional corporate structure. By decentralizing power, it allows the organization to focus on ensuring that everyone can prosper rather than just pad the pockets of a small number of large shareholders.
In this case, the RugDAO is the governance engine that will help Rug Radio to operate fairly and according to the needs and wants of the people within the ecosystem. The DAO functionality has been designed and built with the help of Syndicate, a company that has emerged as an industry expert in utilizing web3 tech for collective investment and decision making.
The DAO is still in its early stages. As I mentioned before, creating an effective DAO is an extremely difficult task and one that has been accomplished only on a few occasions (check out NounsDAO and Index Coop for highly functioning examples).
In order to kick start the DAO, there was a public election process to choose a governance council on Feb 12, 2022. This council helped to form the official frameworks including how many votes are needed to pass proposals, what the wallet signature process should be like, and other parameters.
You can see all of the active and past governance proposals on the RugDAO Snapshot page and voting rights for these proposals are granted by owning one or more of the $RDAO token. To give you a quick idea of the types of proposals that are voted on, the two most recent proposals that passed included:
Prop House - Rug DAO Frictionless Grant Program: anyone with an ETH wallet to apply for grant funds in order to boost their content creation
Rug DAO Operational Council: created an Operational Council to help guide the DAO over the next 3 months
Rug Bank: The Economic Engine for RugDAO
If a DAO is to be a true “organization” it is going to need money to complete operations.
The Rug Bank acts as the central bank for the Rug Radio ecosystem and manages the DAO’s assets as well as the tokenomics associated with the ecosystem. The Rug Bank holds:
Rug Radio Treasury Holdings: ETH, USDC, and WETH holdings
1,000 Genesis NFTs
10% Production Token: this is a special Genesis NFT which produces 10% of the daily $RUG allocation
$RUG tokens that have been minted but are not held by individuals
Rug Radio Treasury holdings according to Dune.
If you look at these numbers and are thinking that this is a pretty heavy treasury, you’d be right. Compared to many NFT projects and DAOs, this is a very healthy balance sheet.
The Tokens: $RUG and $RDAO
Within the Rug Bank sits the mechanism that seperates a DAO from a normal web2 organization - tokenomics.
Often times tokenomics are complicated and confusing schemes that are often times synonymous with confusing ponzi schemes; however, when used properly, token based mechanisms have the power to create really efficient ecosystems. Rug Radio’s tokenomics, although fitting of the ‘confusing’ cliche, are extremely sound and have massive potential. I’m going to break them down as simply as I can.
$RUG
$RUG is the native token to the Rug Radio ecosystem that is distributed to Genesis NFT holders and Rug Radio Content Creators. This is meant as a way to reward long time holders of NFTs and frequent creators within the ecosystem.
$RUG is a pure utility token which means it’s specifically designed to be used within the Rug Radio ecosystem.
By claiming that it is specifically used within the ecosystem, the core team is ensuring that there is no intent for the tokens to offer any type of financial return. This is, more than anything, a disclosure to avoid getting classified as an unregistered security from the SEC. However, it is technically possible to exchange $RUG for WETH via Uniswap as it is an ERC-20 token. Rug Radio does not condone this activity nor does it provide liquidity to the swap pool.
Genesis NFTs produce $RUG tokens daily. Depending on their rarity, they produce 5, 7 or 11 tokens a day. Content Creators are also issued $RUG depending on the amount of content they create, however the exact rate is not publicly listed. If you are a content creator and a Genesis NFT holder, you are able to double up on your $RUG generation.
There are 2 main reasons to want to collect $RUG:
Once you earn 1,800 $RUG, you can trade it in for 1 $RDAO giving you the ability to vote on governance proposals
In the future $RUG will be able to be traded for merch, experiences, or allow list spots for NFT project
$RDAO
$RDAO is the governance token for RugDAO. Holding this token allows a user to vote on any of the proposals that come through the governance forum. Today there have been just over 3,300 $RDAO tokens issued, which is only about 2% of the total 170,000 that will inevitably be minted
As mentioned above, $RDAO is earned by exchanging 1,800 $RUG. This works by someone sending 1,800 $RUG tokens to the Rug Bank via the dashboard on Syndicate. Once the Bank receives the $RUG, a smart contract is triggered and the appropriate number of $RDAO is minted and sent to the person’s wallet.
Looking at the entire system
The Rug Radio ecosystem relies on its creators to consistently produce content. In order to incentivize the content creators, there must be $RUG tokens available within the Rug Bank at all times to reward them. For simplicity, let’s call the pool of $RUG tokens within the Bank the “$RUG Account.”
In order to maintain a liquid balance, the $RUG Account is funded a couple of different ways.
The 1,000 Genesis NFTs and the 10% Product Token receive their daily allocation of $RUG
$RUG holders that exchange their $RUG for $RDAO tokens
Why have a token system?
With such complicated mechanics, you might wonder how this is beneficial. Well, the beauty of schemes like this really show why crypto and blockchain have a bright future.
This model, which is very similar to those of Bitcoin and Ethereum, forces community members to prove that they are invested - with their time or money - in the Rug Radio ecosystem.
For example, if you have purchased a Genesis NFT, you are financially committed to the success of Rug Radio. You want the brand image to improve and the price of the NFT to increase. You are financially invested and would not be logical to wish any type of ill will.
Another example is if you are a content creator. You are investing your time and talents into content that has your name and brand under the Rug Radio umbrella. You are invested in making sure Rug Radio becomes a reputable media outlet known for good content, because your brand and reputation are now associated and is rewarding you for the content you create.
This automatically creates a positive feedback loop. By requiring some type of investment and offering an appropriate rewards program, the team has created a stable network that will improve (and create value) as it continues to grow. Content creators and NFT holders are rewarded with $RUG that is used to ensure they have a say in how the RugDAO funds are allocated.
The ability to vote on proposals within the DAO is gated by required investments, meaning that anyone who has a say in what happens has already proven that they have something to lose. Even if someone with voting power wanted to vote for a proposal that was not in the best interest of the DAO, it is most likely that the rest of the DAO would vote against it. This creates what many refer to as trustless system, because an individual does not need to trust every person that is voting.
This is very similar to the governance models that we see in successful blockchains (Bitcoin and Ethereum) where contributors are required to invest time and/or money into the success of the ecosystem. There is some sort of investment, whether it be time (proof of work) or money (proof of stake), that incentivizes good behavior and creates impressive and stable network effects that up until now seem to be standing the test of time.
Investing in the long term
Big Brands
Ever heard of Nike? How about Uniswap? Well Rug Radio is working with both of them.
Nike came on to the Rug Radio show with Farokh to announce their launch of .SWOOSH, their new platform for collecting and eventually co-designing virtual goods. On the surface, getting access to an announcement may not seem like a big deal, but collaborating with a brand like Nike shows that the team is able to create relationships with global powerhouses and execute on major stages.
The same day of the Nike announcement, Rug Radio also announced a month long partnership with Uniswap. The exact details are a bit under wraps, but it looks there will be many guests from Uniswap on the GM NFTs show plus maybe some other exciting surprises. Again, this is a huge brand that Rug Radio has landed, and proves that they are starting to make major moves behind the scenes.
Loyalty Rewards (Coming Soon)
Rug Radio is working on implementing a new loyalty rewards program. The team has been building this out for the past couple of months with help from Studio Artemsia and they are currently in Phase 2 of testing.
The basic idea is that the more you interact with the Rug community, the more rewards you will earn. They are starting with tracking Twitter engagement with the Rug Radio accounts and will move on to rewarding Discord activity.
What is really interesting about this system is that it essentially makes everyone that interacts with them a micro-influencer that can get rewarded, even if it is minor, for their support and engagement. It’s a really interesting model, and it will be interesting to watch how it plays out.
BILDR
And the last point that I want to highlight, is that the core team is making very sophisticated business decisions.
One of their current projects is to build out a multi-sided platform that makes is extremely easy for creators to produce, organize and distribute their content. To build this platform the team enlisted the talents of a small company called Bildr that typically creates web3, SaaS, and chrome extensions.
The really interesting part is that Rug Radio invested $150,000 into Bildr via a SAFE investment.
This means that Rug Radio will have the right to purchase stock in a future equity round of Bildr with the details dependent on the terms of the SAFE agreement. This means that Rug Radio has made a decent sized investment in a company that they believe will give them some sort of return in the coming years. This is not something that I have ever seen within NFTs.
If you are interested in learning the different possible scenarios and how investments like this work, check out this thorough video from YCombinator.
Who would buy into Rug Radio?
This is probably the most complete and the most complex project we have looked at to date. There are many different types of people that may want to buy in and participate in this ecosystem:
Interested in being a content creator and becoming sponsored by Rug Radio
Believe in the decentralization of media - you can truly get in near the ground floor and have a voice in the future of the organization
Believe that that project, team and DAO are going to execute and the price of your NFT will go up
Interested in being a part of the development of governance structures within a fully functioning DAO
You want a really cheap entry into a robust project. The Membership Pass is very affordable and allows you to gain entry into the community and dip your toe in to see if its right for you.
Unrefined Opinions
Bry:
There’s no perfect formula for launching a successful project in the NFT space but Rug Radio is very close. What we’re looking at in the review is the V1 version of the brand and while it does justify consumption of content, an investment into a membership or genesis pass would go into the qualification of what the brand can grow into.
The reality is we’ve only scratched the surface. Farokh and team have proven to be very adaptable and able to successfully launch new features and network with great people.
There’s been a little drama as of late with regards to influencers getting priority access to certain NFTs in exchange for promotion which kills the organic growth feeling of some projects and Farokh is one of the names mentioned there. As long as that gets cleaned up the future is bright.
The brand has so much room to expand when you compare it to other media brands out there and what Rug Radio is today. As a content creator I’m accumulating my tokens and I’m excited to be able to vote in the future and have a say in the potential trajectory of where things go for the platform.
Bitcoin and Ethereum were the first mind-viruses for me in crypto. Rug Radio is another mind virus in the NFT space as I naturally tune into their shows more and more and continue to learn.
n00ble:
The team has taken web3 tech and actually addressed a global pain point. This is what technology and product creators are supposed to do. We hear frequent questions like “What is the benefit of web3? What’s a real use case?” Rug Radio is the perfect example.
This is a company. They have made some key hires that are utilizing analytics, business partnerships, and focusing on short term and long term revenue streams. I wouldn’t say that Rug Radio is a guarantee, but it certainly has a lot of the pieces to turn into a full fledged company that will bring actual value to the holders of their NFTs.
My one critique here is that for a company that is all about content creation, it is pretty hard to figure out how everything works. As I mentioned, this is a super robust project and I spent a lot of time digging through several sources and asking questions in the Discord for things I was unclear about. It would be beneficial to have one singular source of truth for onboarding and understanding the entire ecosystem, because not everyone will do the digging that I did.
With that said, I am super excited by Rug Radio. Right now their audience is mostly web3 native and niche, but as they can continue to grow and expand, they are going to be absolutely unstoppable. Excited to watch this one.
-n00ble
BONUS GIVEAWAY!
Bry and I have been talking and we recognize it’s not a great time to be buying NFTs. So, we have decided to give away 2 Rug Radio Membership passes to 2 of our subscribers to thank you all for reading. To be eligible for this giveaway, just give this issue a like and a comment at the bottom of this page. The winner will be drawn in 5 days from this issue going live. Be sure to like and comment right here on substack and you will be able to get into Rug Radio early. LFG and give away some NFTs.
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The amount of detail that went into this is insane, keep it up guys!
Such a thorough write up! Thanks for the incredible info!!