Punches, Kicks and DAOs: A Gen Z Dream
Introduction
Combat sports and crypto, a match made in heaven for any man under the age of 30. And that’s exactly the go-to-market strategy that Karate Combat has taken. One I believe will not only put their professional fighting league on a path to exponential growth, but also become a shining light for crypto use cases, specifically DAO’s.
With the growth in viewership seen by the UFC, other competitors such as Pride, Glory Kickboxing, and the PFL have all been able to attract viewership and have grown their respective businesses, taking their piece of MMA marketshare. In 2018 a new kid on the block emerges, Karate Combat. The league was born to give stand up martial arts fighters a platform to display their talents and since its inception the rules have changed to make the fights the most exciting in all of MMA. Personally I am a big fan of Jiu-Jitsu but I can understand when casual fans aren’t able to appreciate the technical nature of what’s happening when 2 big men are rolling around on the mat trying to twist each others ankle. In Karate Combat there is no ground game, besides 5 seconds of ground and pound once your opponent has been knocked to the ground. Fighters are also penalized on the score card for retreating from their opponent. Put this all together and you have a combat sports league where 75% of fights end in knockout and the fights happen quickly.
Exciting and fast fights is something that everyone can enjoy, even the long time MMA fans that love to see two grapplers go at it. But Karate Combat isn’t targeting those fans, they are specifically targeting the next generation of fight fans, Gen Z. Gen Z fans are the type to watch a fight on Youtube or catch the highlights the next day on TikTok, they love quick action, and they also like to gamble. 83% of Gen Z says betting makes them more likely to watch sports.
So how does crypto have anything to do with fighting? Let me explain.
The founders of Karate Combat are in the process of turning the league into a fully functioning DAO (Decentralized Autonomous Organization). They have sold all of the league’s assets to a foundation that will be issuing the $KARATE token which will govern the league.
The History of DAOs
Before we get into the Karate Combat DAO, let’s take a brief walk down DAO memory lane to understand how we got here.
The first DAO was formed in 2016. Now they are everywhere. A DAO is simply an organization that uses blockchain to operate without the need for centralized leadership. If you hold a governance token, you get to vote on proposals that determine the future of the organization.
The most common DAO’s are crypto protocol DAO’s. For instance, Maker DAO is a community of MKR token holders that govern the Maker Protocol, the smart contracts that power DAI (a US dollar stable coin). The DAO is mostly voting on upgrades to the protocol, simple but useful. The other popular DAO use-case are investment DAO’s. Investors can pool their funds together and vote on investments to be made in a democratic fashion, all made possible by the blockchain.
In recent years, crypto-enthusiasts have been pushing the boundaries of what is possible with a DAO and sometimes have come up short. In 2021, Sotheby’s was auctioning off the original Constitution of the United States of America for an estimated price of $20 million. Pretty out of reach for your everyday Joe. Then along came a group of people that set up Constitution DAO. Their sole purpose was to pool enough capital between a huge group of DAO members and buy the Constitution outright. To many’s surprise the DAO was able to come up with $40 million in the span of weeks. Unfortunately they came up short when the final auction price of the Constitution rose to $43 million and was bought by Citadel’s Ken Griffin. A valiant effort that has now inspired other DAO use cases to emerge.
Links DAO is a global golf community on a mission to own the nicest golf courses in the world. Holding their governance token will give you membership to the courses and decision making power over how the course is run. Personally, I would vote to buy a links style course because god knows I love hitting it in the water. But it hasn’t been without hardships for LinksDAO in its 13 month lifespan. Running a DAO is hard, and just because you are a golfer and a DAO member, doesn’t mean you understand how to run a golf course. The Links DAO is still searching for their first course, and while the road there is sure to be bumpy, I have faith they will make it happen.
Karate Combat DAO Emerges
Karate Combat DAO is taking things a step further, the DAO won’t be only managing one golf course, it will be managing an entire professional sports league. Slowly but surely the DAO will take on more and more responsibilities. The DAO will vote on its suppliers (legal teams, marketing partners etc.) but it will also vote on which fighters get contracts and which fighters must face each other. Holding $KARATE tokens takes the average viewer from a fan to a stakeholder.
Karate Combat has also decided to implement what they are calling “Up Only Gaming” to gamify the viewing experience for their fans. You can stake your $KARATE tokens on your favourite fighter and if they win you get bonus tokens and so does the winning fighter. If your fighter loses you get back your tokens. This is a recipe for customer retention if I have ever seen one. Not only that, but fighters are now incentivized to grow the biggest fan base they can so they can also earn their bonus tokens.
Let’s Put it All Together
Crypto investors are known to be very enthusiastic about their favourite projects. MMA fans are some of the most passionate sports fans in the world. Bringing these two worlds together and offering this segment the ability to feel like they are apart of something and have a say in its future will likely breed the next generation of diamond hand token holders. The $KARATE token will launch in Q2 2023 and the DAO will be given its first test, and I for one am looking forward to seeing how this will all play out.
Karate Combat has shown great success in recent years and as of 2022 is already operating above breakeven. They have amassed over 4 million followers on social media and grown their TikTok following by over 1000% this year alone. They have attracted MMA legends like George St-Pierre, Stephen Thompson, and Lyoto Machida to be ambassadors of the league. Tokenizing the league via a DAO will likely take this league to the next level. Watch out Dana White and UFC, there’s a new kid in town.
Disclaimer: I am one of General Partners at Contango Digital Assets and I have invested in Karate Combat through the firm and personally.
