Late last year, I won a web3 writing contest. More accurately, I was a member of a web3 writing team and we won a web3 writing contest together. Shout-out to T2 and the talented members of the Web3 Writer’s Union!
It felt like it was a sign from the universe that teamwork, consistency, and well-written content would be rewarded in this realm of new technologies.
My share was $250 in USDC tokens, the biggest payout I’d yet received for my writing in the web3 space. A few days later, I clicked on a bad link, and the entire prize drained from my wallet in a heartbeat.
Turns out that in a realm of new technologies, it can be easy come and easy go.
A few days after that, I qualified for an airdrop. Something I’d posted to social media had earned me over a million of some new token called $DEGEN. Overnight, I'd become a $DEGEN millionaire!
Now I'm no degenerate and I don’t usually participate in airdrops, but these tokens were worth about $27, which is not bad for a tweet, or post, or meme, or whatever I'd created to earn that money. It felt good being paid for even 144 characters of my writing, and it felt as if the universe were offering me a little consolation prize for my recent loss.
My first instinct was to cash out the $27 before these $DEGEN things crashed to zero. But before I could pull the trigger, the tokens had already doubled in value. This was found money anyway, so it would be no great loss if it all disappeared. I let it ride.
The value of $DEGEN doubled again.
And then again.
In about a week, I had my entire $250 back. The universe had made me whole.
At this point, my instincts screamed at me to cash out the $250 and call it a breakeven. Achievement unlocked: I’d successfully 10X’ed a token! The greater achievement, as always, would be quitting while you’re still ahead. Right?
But this wasn’t a $27 investment I’d made or a $250 loss I'd been compensated for. This was the universe teaching me a lesson. How would I ever learn that lesson unless I continued to let the $DEGENs ride?
The value of $DEGEN doubled again and again. Now the universe was just laughing at me, valuing the fruits of some random tweet at more than an entire month of essays I'd written on T2. (T2, by the way, is a great publishing platform where I'll probably be reposting this essay in the future.)
I’ve been in the web3 space since 2021. I’ve watched numerous scams and rug-pulls unfold, always from a safe distance. As a rule, I use cryptocurrencies only as transactional necessities and governance tokens. I would never invest in them. Never, ever, ever! Just like I would never invest in Chuck E. Cheese’s tokens.
In the Chuck E. Cheese’s economy, you convert your fiat currency into tokens at the door. You convert your tokens into games on the floor. You convert your games into tickets at the machines. You convert your tickets into stickers and lollipops at the counter.
You enter Chuck E. Cheese's with hard cash and leave with ephemeral swag. The system is designed to distract you from the fact that you’re losing value at each step. It’s fun because you’re under ten and being staked by your parents.
In theory, if you could lock up 90% of the total Chuck E. Cheese’s token supply, the value of each token would go up. Desperate parents would offer a premium to score enough tokens for little Johnny’s birthday party. Buy low, sell high.
As a Chuck E. Cheese’s token speculator, you might end up with a hefty profit. But you would only succeed by creating a manipulated market and forcing everybody else to pay more for fewer tokens. Children wouldn't be able to play as many games, and some children would no longer be able to afford to play at all.
Your profit would come from decreasing the amount of fun in the world. Such is the nature of capitalism.
A recent Chainanalysis report shows that 54% of Ethereum-based tokens that hit DEXs in 2023 displayed patterns that may be suggestive of pump-and-dump schemes. More often than not, a new token is a likely scam. My instincts tell me to avoid those odds by refusing to play that game entirely.
Except that now, thanks to my new deal with the universe, I found myself hodling $DEGEN.
None of this explains the $230 pixelated top hat, but stay with me…
The $DEGEN token is controlled by a DAO, a decentralized autonomous organization. Members of the Degen DAO make decisions on strategy for the increasingly valuable token, its expanding treasury, its increasingly vibrant community, and the various projects that the community builds and supports.
Upward pressure on the $DEGEN token reflects growth in the community and in communal enthusiasm that the DAO will build something enduring and valuable atop the Farcaster ecosystem. The token is not presented as a tool for wealth creation, but for community building and value creation. Despite my ingrained instincts against cryptocurrencies, this message resonated with me.
Most tokens, 54% of them by some counts, are built on nothing more than hype and air. At best, they are harmless. At worst, they get pumped and dumped, generating profits for a small group of insiders while wrecking the fools who buy in and hold on for too long. Like a Chuck E. Cheese’s ball pit that some kids pee into while other kids get peed on.
Other tokens are tied to genuine projects or communities. But even these may falter, despite the best efforts of their well-intended founders. The most notorious tokens look legit but fail because their less-than-scrupulous founders intended them to be “rugs” from the start.
When a project is early, it can be impossible to tell whether it’s destined to be a success, a failure, or a rug-pull. The Degen DAO may yet prove to be any of these things.
My instincts generally warn me away from risk, but this wasn’t my choice. Not at the start. I’d posted something, a bit of money had fallen from the sky, and I was suddenly ten years old again at Chuck E. Cheese’s. Just this once, I chose to play the game out for a chance at those stickers and lollipops.
And since I was letting it ride anyway, why not give it a little push?
The Degen DAO is controlled by the holders of Degen NFTs. If $DEGEN is a Chuck E. Cheese’s token, and if the Degen DAO is the Chuck E. Cheese’s Corporation, then the NFTs are its stock certificates.
Certainly, if Chuck E. Cheese’s paid out in stock certificates, you’d see many more adults riding on the tiny electric ponies.
A collection of 777 Degen Haberdashers was minting for 0.1 ETH (about $230 in Ethereum) apiece. It was a JPEG. It was a JPEG that looked like a pixelated hat. It was a pixelated hat priced at $230.
My instinct was to say no, no way, never, ever, ever would I pay $230 for a pixelated hat JPEG. I wouldn’t even pay $230 for a real hat to keep my ears warm in the winter. I wouldn’t even pay $230 for a masterful oil painting of a top hat to hang on my wall.
This was $230 for a governance role and equity position in the DAO. It was only made to look like a top hat to advance the culture of the DAO. The thought of wearing a top hat in 2024 is silly and fun, and the best fun is shared with others.
Best of all, I didn’t have to pay for the Haberdasher with “real” money since I had all that $DEGEN in my wallet. I could convert some into a pixelated top hat and still have plenty of $DEGEN left over. Since I’d committed to holding the $DEGEN already, wouldn’t it be prudent to diversify my portfolio by holding both $DEGEN and the pixelated JPEG image of a top hat?
The universe told me to go for it.
The universe demanded that I buy a $230 pixelated top hat.
Was I supposed to say no to the universe?
By luck of the draw, I got a gold hat with goggles on it.
I have to admit, I like the aesthetic of hats so much more than the cartoon animal craze of 2021. The Haberdasher doesn’t demand to be your new identity. All the Haberdasher wants is to be incorporated into your avatar through photoshopping. It invites creativity and is limitlessly adaptable.
The Degen Haberdasher collection sold out in a day or two. The NFTs are currently trading for seven to eight times their original mint price.
This may be the top of a bubble or the bottom of a steady upward run. It’s too early to tell yet where the value will settle in the long term. Their value is tied to the fortunes of the Degen DAO. My instincts in this realm have proven to be worth less than spit. The $230 pixelated hats have become $1500 pixelated hats, at least for the moment.
My remaining $DEGEN has doubled in value yet again since I bought the hat. My stake is worth even more than before. In fact, my stake has increased in value by over a hundred-fold in the weeks since I almost cashed out for $27.
The Haberdasher and the $DEGEN could still crash to zero tomorrow, but I for it with a social media post, and it’s given me plenty of value in learning experiences.
What have I learned?
I learned my limits.
I entered the web3 space to be a writer, not a gambler. I’m here for the technology and innovation, not to watch the numbers go up. I don’t have the instincts or the nerves to be a gambler. I don’t have the desire for it, even if I were good at picking winners and losers, which I most definitely am not.
I learned that the universe has a sense of humor.
Sometimes, the universe rewards action. Sometimes, the universe rewards inaction. If I’d been more risk-averse, I’d have $27 in my pocket. If I’d been less risk-averse, I may have bought two or three hats, flipped the extras, and plowed the profits back into $DEGEN. I’m sure somebody else must have thought to do that, and congratulations to them!
Maybe the lesson is that when life airdrops you some Chuck E. Cheese’s tokens, a free ball on the pinball machine, or a stack of $DEGEN tokens, you shouldn’t overthink it. Play the games and enjoy yourself. If you’re very lucky, maybe you can win yourself a lollipop, or a sticker, or even a golden hat.
I learned the value of being in the right place at the right time.
I’m still processing this lesson. I received a thing. I didn’t sell it. It increased 100x in value with no talent or effort on my part. I’ve had a lightning-strike moment. I learned to enjoy it while it was happening because next time the lesson might turn out to be, “Quit while you’re ahead.”
The investment gurus who brag about that one time when they 100x’ed an investment aren’t geniuses. They got lucky. They rolled the dice enough times that one of the rolls was bound to come up 100x snake-eyes. Part of their reward was a dopamine hit and the resources necessary to roll the dice again.
I learned the value of communities.
I still don't trust cryptocurrencies and I certainly don't trust dopamine hits. What I do trust are communities. What impressed me from the start was how muted the support for the $DEGEN token seemed to be, compared to overwhelming support and enthusiasm for the Degen DAO and its community.
"To the Moon" is a degen slogan for a rise in value toward a shiny object in the sky, implausibly far away. But all the Moon's light is borrowed from the Sun. Without that light, the Moon is just a dead rock floating through space. Likewise, the $DEGEN token reflects all of its light from the DAO without pretending to be a star on its own. This is a lesson I will need to apply more to book publishing.
I can’t otherwise justify the hat purchase as being book-related, but it does give me a seat at the table and a voice in the room. When the DAO governance is fully in place, I think I’ll be able to craft proposals. I could propose that the DAO should publish a book or two, and maybe that idea will build support and consensus.
Anyway, if you need me, I'll be at that one Chuck E. Cheese's where all the electric ponies are spitting out stock certificates. I'll be the one wearing the goggles and solid-gold top hat.
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