Meet James Waugh: The DAOenomic Kiwi
With the recent launch of MetaCartel Ventures, DAOs continue to push the envelope on what distributed communities are capable of. Now that we’ve started to learn more about some of the individuals behind these efforts, we hope it becomes clear that MetaCartel consists of those passionate about finding killer applications.
In this week’s interview, we sat down with James Waugh, founder of Axia Labs and author of The Next Flippening: More DAOs than Tokens — Evan Van Ness’s most clicked article the week it was published.
As some of the youngest members in MetaCartel, James and I shared a similar path when it came to the discovery and eventual positioning of professional services within the blockchain landscape. In this article we discussed:
- Virtual Cosmetic Marketplaces
- Views from inside The DAO
- Starting Axia Labs
- Changes in Clientele
- How blockchain products make money
- New DAOs
- Different Types of DAOs
- Rev-Gen Implications
- NZ DAO Circuit
- ETHDenver MetaCartel Blitzkrieg
James is like a long-lost brother and I ultimately owe it to him (and Alex) for piquing my interest in MetaCartel in the first place.
Let’s go!
What was your first exposure to cryptocurrencies?
Back in 2013, I was trading CSGO skins pretty frequently. I was using Paypal for most transactions but once I started noticing how much I was losing in service fees, I started accepting Bitcoin as an alternative payment method. I was interested in it from an investment standpoint up until around 2015 when things really started to cool off.
What did the process of selling skins look like back then?
At the time, I was pretty focused on Steam games that used a currency called keys. Back then, keys were sold at a flat rate of $2 but the only cosmetics with real volume were Team Fortress 2 hats and CSGO skins. I was originally using Reddit and a few other forums to arbitrage different skins in a peer to peer fashion.
I remember when OPSkins went live as the first marketplace where you could list skins for fiat dollars. As one of the first couple users, it was super cool how they used bots to escrow skins for the transaction — adding a layer of trust that was previously non-existent.
This plays pretty well into the notion of NFTs and marketplaces like OpenSea. Can you explain the value there?
Across all games, there are tons of digital items. You’re not *supposed* to trade them but there’s ways to get around that (i.e. selling RuneScape to Chinese gold farmers). The problem is these transactions have to happen behind closed doors, drastically increasing the chances for theft.
On the other hand, while Steam was technically an “open marketplace” it was still permissioned, meaning assets were siloed to Steam-supported games. With NFT’s, we can really start exploring the interoperability of assets beyond the base layer.
In the future, it’s likely that we’ll be able to overlap assets across different games, effectively using items and characters in one game on the next. We should be allowed to easily trade items directly in-game, effectively eliminating the chance of theft.
Similarly, we’re seeing games like Gods Unchained which were actually making players more money (through earning raffle tickets) than minimum wage in Argentina when the game was hot.
As it stands today, very little game revenue goes back to the players and I think web 3 technology provides the framework to change that.
Was this what led to your interest in Ethereum?
Partially. It was the end of 2015 into early 2016 when I fell down the Ethereum rabbit hole. I was talking to a fellow skin trader and he had mentioned that we could put the skins on Ethereum inside of OPSkins. This would effectively skip two of the steps of the transaction flow as skins could tokenized, reviewed and traded through that.
It was also around this time that Maker and Augur made some noise. I started looking at the wider scope of Ethereum assets sitting on top of the protocol — Similar to how RuneScape gold could be spent on things like Party Hats (one of the rarest and most expensive items in the game).
At this point I was still at university studying comp science when I realized, damn this is too many computers! I took a step back and transitioned my major to philosophy, arts, poly-sci type classes which landed me in the library 5–6 days a week.
In 2016, nothing in crypto was popping off that heavily. I remember The DAO made ETH pump to $20 but it was merely a hobby and not something I ever viewed as a career at that particular stage of my life.
What was your involvement with The DAO?
I was actually checking DaoHub (the original DAO platform) pretty frequently. People were posting ideas and it used a scale oriented system to rate the quality of those ideas. This was all informal of course as no proposals actually got passed.
I remember there were two proposals that were ever made to The DAO. The first was one of the founders of Slock It seeking funding for some IoT play and another from Andreas Antonopoulos to do some freelance research.
There wasn’t any UI in place to vote so it was safe to say those proposals never really went anywhere.
At that time, ETH price was doing really well. The entire space was pointed towards the DAO and unfortunately when the hack happened, all conversations turned from “What can we do with this?” to “How do we fix it?”
I recall there being mention of a soft fork, followed by a conclusion that a hard fork was the only way to effectively resolve the hack. There was a ton of contention coming from people saying “code is law” and once the fork was set, DAO tokens quickly started to lose their peg on secondary exchanges (they were priced at 100DAO/ETH but were starting to trade below that). Interestingly, the hard fork changed the code so people could withdraw ETH at the pegged rate, meaning there were some arbitrage opportunities for a very small window.
In hindsight, The DAO was doomed from the second the hack happened. There was never a formal audit and from that moment on, all the traction and support that had built up was lost virtually overnight.
So where did you land after that?
Well for the next year or so I remember the sort of industry limbo. A lot of people were scared of new token sales/DAOs and for a few months I was just puzzling around and keeping up with new projects that were gaining some attention.
I remember back in early 2017 there was a crypto conference here in New Zealand, which was the first time I had ever attended this type of event. I quickly recognized ok wow I actually know a ton about this industry and am keeping up with the keynote speakers on the finer details.
I was still studying at the time so I knew I had to finish Uni before doing anything serious but it was around this time that I started to recognize there was some serious potential to help people understand the space.
It sounds like this is where Axia Labs came into the picture?
Pretty much. Once I graduated I spent a few months travelling around Europe. When I got back home, I quickly found myself working with a tokensale project before founding the company which was called Blueblock, now Axia Labs (way cooler name right?! 😂). At that stage, I pulled a few of my friends from highschool out of university to help me develop what Axia Labs was actually going to be.
We spent the next few months establishing a method and a focus for fielding inbound requests. At that point, things were starting to get pretty crazy with the ICO boom and I always wanted to make sure to stay as pure as possible. There was quite a lot of scheming and referral deals going on which always felt shady to me.
One thing I’ve always prided myself on with Axia is that we only work with projects we’re genuinely passionate about and with founders and teams that have good intentions.
What did you learn during that time?
First and foremost I learned how to run a business. Basic things around how business works in the real world and how to engage with clients (hint: it’s completely random). More than that, I feel like the biggest value to me was learning how to interact and articulate communication from clients of all shapes and sizes.
Seeing as we’ve never really done marketing and commissions structures, we’ve been experimenting with what the best way to structure and grow our business is along with figuring out how we can work with the projects we feel are bringing the most value to the industry at large.
Let’s talk about the change in clientele in the past two years. What have you noticed?
For starters, we’ve seen a lot of the ICO/make a quick buck type people start to drown out. We never really worked with those types of clients in the first place but the quality of our inbound requests have definitely increased.
In the past six months, we’ve honestly found ourselves looking pretty prime. We’ve had the pleasure of working with a number of well known token projects inside the space, purposefully focusing on being a service provider inside of the DeFi & Governance space.
From the enterprise point of view, we’ve actually been turning those contracts down to focus on where the industry really is. I personally see 100x more value out of pushing hard on DeFi and governance projects/products rather than building out some enterprise level thing that doesn’t really advance the ecosystem at large.
Taking that a step further, I’ve seen a shift away from “How do I raise $20M?” to “How do I build a compelling product?” When you pair this with some of the new token models we’re seeing, it’s pretty obvious things are moving in the right direction. From my point of view, blockchain businesses are starting to look as follows:
- If you’re taking fees — Sell Equity
- If you’re not taking fees — Drive value to a token
This seems pretty obvious but for a long time there we lost sight of this. We saw token projects trying to sell equity once their shitcoin went to zero and that was just absurd. Moving forward I’m hoping we can all learn from those mistakes to build a compelling business model from the start.
So how do blockchains products make money?
I’m really liking the “Compound-esque” structure. There’s no native token (yet) and the company raises on equity to acquire customers that they can they figure out how to monetize. What we’re starting to see is that decentralized interfaces don’t erase the bottom, they erases UI hurdles. With this in mind, we can start seeing different layers being able to monetize their service in different ways.
Depending on what the business is, you can look at more traditional models as you get further up the stack. One of the fascinating things about most projects being open source is that if you try and charge a high fee, someone is just going to fork you. This forces companies to be extremely calculated at charging a *fair value* for a valuable product or service.
How have these ideas lead to the formation of these new DAOs?
More recently, I’ve been focusing all my efforts on MetaCartel and general ‘DAOenomics’. This was something that I was originally vastly intrigued with by The DAO and it’s incredibly refreshing to be able to focus back on those concepts and how we can innovate within various guilds.
These new DAOs (MetaCartel, Moloch, etc.) offer new ways for us to experiment. When I met the MetaCartel guys at ETHBerlin, I was immediately captivated by how far down the rabbit hole they were about some of the industry’s most pressing issues surrounding UI/UX, onboarding, etc.
This set off a lightbulb that this is THE thing that The DAO was originally looking to do. These ideas were really encompassed by my “More DAOs Than Tokens” article and I’ve been building on them full time since.
In fact, the iterative process of figuring out what MetaCartel is good for is what makes it so similar to The DAO. If the DAO didn’t break, there would have been tens of billions of dollars going to research. It woulda been like Oprah — you get a million dollars, you get a million dollars.
Unfortunately, it never got to there but the big thing to highlight is DAOs like MetaCartel are purposeful — We’re funding projects that actually deserve it.
What makes MetaCartel different from DAOs like Maker?
With MetaCartel, people are building and collaborating that aren’t on a payroll and don’t have a financial incentive through a native token. We’ve seen a huge amount of progression with building, shipping, community, you name it and no one was aligned on anything other than ideology. We all collectively came together and threw money into a pool hoping it would be deleted by encouraging innovation. This allowed us to focus more on purpose instead of trying to pump some token.
I think this is only possible now because earlier DAOs like Maker were so niche-focused. With MetaCartel, we have a focus on “Ethereum applications’ but that bucket is much much wider than some of the focuses of the earlier DAOs.
I know a lot of people are excited about the notion of Rev-Gen DAOs. Does this change things?
I mean you can easily envision a future where we all get really interested in MetaCartel Ventures and then all of the work for grant-giving falls to the wayside.
What’s far more likely is that rev-gen DAOs will earn positive returns with the ultimate goal is to funnel it back into grant-giving.
While I think it’s perfectly acceptable for there to be specific capitalistic rev-gen DAOs, I hope that if MCV makes 10x, we can put a couple of those x’s back into funding innovation through grants.
When we look at rev-gen DAOs, we also see the permissioned aspect starting to play a pretty crucial role. You basically need to pass some form of a personality test to get in and when we parlay that with RageQuit and GuildKick, we start to see venture structures unlike anything we’ve ever seen before.
These DAOs are all self-selecting which does have some cons, but for the most part I would argue the downsides are worth the benefits we’re seeing. The current need to match up personalities is definitely not the end state, but it’s a great way to make sure we’re doing this right from the beginning.
Let’s talk about the NZ DAO event Circuit. What was that like?
Stated plainly, it was freaking awesome. We recently hosted an event series across New Zealand, I was able to visit pretty much all of NZ’s major cities and go as deep into the topics of DAOs and DeFI as I possibly could. I was able to have an incredibly talented individual in Mark Pascall opening the talks for me, giving the audience a lot of context and generally making sure the turnout was fantastic.
The biggest takeaway was that people were genuinely intrigued. I had so many people come up to me and say “wow I’ve never heard of these ideas before. I didn’t even know they existed!”. To me, that’s incredibly motivating as it shows we’re working on things that can get people excited. There’s potential.
I’m hugely indebted to NZ. I’ve been lucky enough to bring some of these concepts home to help put on events, work with local companies and even regulators. At the end of the day, I want to do everything I can to make NZ as blockchain-friendly as possible.
Speaking of community, what’s this ETHDenver Blitzkrieg you’ve been organizing?
Well if you know what’s good for you, let’s just say you’ll want to be at ETHDenver this year. We’re expecting a huge MetaCartel turnout which means everything from a MetaCartel specific house (or houses) to swag and hacker survival kits.
We’re likely going to be the biggest community there that isn’t on payroll and I think that’s pretty powerful. Some of us may be hacking, but others will just be sourcing talent and new projects to give grants to.
The beauty of MetaCartel is there are truly so many different verticals but at the end of the day, we’re all passionate about making Ethereum the best ecosystem possible.
The ground 0 nature of this is what makes it so contagious. We don’t have a legal obligation to make money like VCs and are literally just looking to help cool people do cool shit. If that doesn’t get you amped up then just wait until you see it happening in person.
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To those still with us, I hope you enjoyed this interview as much as I did. When I first heard James talk at the MetaCartel event during SF Blockchain Week, I was fascinated by his talent of being able to present a compelling narrative on DAOs without the use of any slides.
His ability to build a profitable business from the ground up with no prior knowledge or experience speaks volumes to me about the opportunities this industry provides. Stated plainly, the industry needs more people like James and I’m glad to call him my friend and my MetaCartel brother.
If you’re interested in connecting more with James, follow him on Twitter or by reaching out to Axia Labs.
In the meantime, be sure to be on the lookout for more member spotlights hitting the public soon!
Until then, this is MetaCartel’s scribe Coopahtroopa signing off.
