"The Trick With Personal Tokens is People Want Me to be Popular, Not Necessarily Succesful:" Alex Masmej
The first man to ICO himself talks to The Defiant about the rise and future of personal tokens, and how his experiment is playing out.
|Aug 15, 2020||2|
In this week’s episode I speak with Alex Masmej. Alex is part of a global cohort of young DeFi natives, who have found a way to live and thrive purely off of Etheruem experiments such as decentralized organizations, bounties and hackathons. Alex is best known for being the first person to raise money by selling tokens not linked to any project, but linked to himself, in a sort of self-IPO. Much like shareholders taking dividends, Alex token holders can have a share of the entrepreneur’s future earnings. The money raised has helped him cover living expenses as he plans to move from Paris to San Francisco and start a tech company.
He’s willing to try almost anything and see what sticks. In one of his experiments, he let ALEX holders vote on his daily habits, which is how he came to run 5km almost daily. Most recently, he announced a liquidity mining program for his token. We talk about how to better align token holders’ incentives with his own, what mainstream personal tokens may look like, and the Black Mirrorish quality of it all.
ALEX is part of a growing trend of personal tokens. They’re being used as a way to incentivize community building and for creators to exchange for products and services. Alex says personal tokens will become a tool for entrepreneurs from all over the world to raise funds and for creators in the passion economy to more easily monetize their work.
You’re a free signup, which means you get only part of the transcript below. Subscribe to never miss out on any content. Click here to pay with DAI (for 70 Dai/yr vs $100/yr).
🙌 Together with DeversiFi, a professional-grade, self-custodial exchange.
Alex Masmej: I spent zero to 18 years old in Paris, then I did three years degree in business management in Manchester in the UK. It didn’t interest me too much and so this is why after three years, I decided that the best thing I should do in my life is to be a technology entrepreneur and do venture scale startups.
I tried just after that, doing 3D printing platform, which didn't really work out. Then I connected with people and created a fellowship of young entrepreneurs and we started looking at what are the biggest technological breakthrough that will happen this decade and some with low barriers to entry, because as a young person, it's very hard to get into augmented reality or virtual reality because you have to raise billions of dollars. I needed a technology that's an open field that's still unexplored where I could influence and I chose crypto.
After briefly seeing 2017, I saw the start of the bull market, it really fascinated me but didn't do much until mid-2019, where I just started tweeting about crypto. I'm in San Francisco at the time because I was learning computer science briefly, but I dropped out very quickly and I'm not the best coder. This was mid-July, like just one year ago during blockchain week, I tweeted, “If I had unlimited funds, I would love to go to Berlin” and an unknown person called Peter Pan wires me the funds straight away and I just had talked to him once in my life. This tweet completely changed my career trajectory.
“I tweeted, ‘If I had unlimited funds, I would love to go to Berlin,’ and an unknown person called Peter Pan wires me the funds straightaway… This tweet completely changed my career trajectory.”
I meet MetaCartel. MetaCartel is like my family in the space and there's also Cooper and other people that were born of this kind of ecosystem. From there I cofounded MarketingDAO, which is a DAO for marketing Ethereum. Then I cofounded Rocket, which uses NFT as collateral for loans. More recently, I create the token ALEX.
I think the common theme of what I've done in the past year and a half in crypto, is that I am trying all of the different applications possible on Ethereum. I see four primitives NFTs, DAOs, DeFi and personal tokens and I've done all four so far. I'm really enjoying seeing all the combinations possible. I've ventured a lot and now I’m going back to my roots of I want to be a founder of a venture-scale startup. Now that I've explored a lot, it's time for me to move further with startups.
Camila Russo: Wow, what an interesting story. I just want to pause on just this crazy idea of tweeting something out and like one community member out of nowhere sending you funds. This interesting community of young entrepreneurs and developers distributed all over, coalescing with MetaCartel. Can you describe more about that movement? What are you guys working on? Is it like an organized group or do you help each other out with the specific projects? Because I love this idea of like, young Ethereans trying things out, building things, breaking things.
AM: Totally. This is true, because usually when you start into an industry, you go to the biggest companies and in crypto, that path does exist. If you start at Coinbase or ConsenSys, it's a common way of getting to the space and having a great network and things. But for the few outliers that do not fit the boxes; I'm not the best coder, I'm not sure I am employable —now I am a bit more and I'm getting job offers— but like before at the time, nobody knew me, I had no skills to work but I was just super passionate.
“I'm not the best coder, I'm not sure I am employable, now I am a bit more and I'm getting job offers, but like before at the time, like nobody knew me, like I had no skills to work and I was just super passionate.”
Peter Pan has a thesis of really betting on people. The movement that he created from a working group in MetaTransactions, which is like a new term for a technological problem that is being solved right now. He made a group of just people who wanted to fund small projects and betting on people on a philanthropic basis. MetaCartel basically invested a few thousand dollars in startups.
I was one of the early members of MetaCartel DAO, which is the DAO that does this. Now, MetaCartel is a venture fund DAO and it's really impressive. Peter Pan is just like a really impressive person, I’m super grateful for his help so early on in my short career in Ethereum. It does represent diversity in crypto, geographical diversity. MetaCartel is incorporated on Ethereum. It's not anywhere else and has people from New Zealand, Australia, Germany, the US, France. Really awesome that anyone can really join if you're passionate enough and you want to reach out.
CR: Has MetaCartel been helping you with funding as you explored different Ethereum ventures?
Support from MetaCartel
AM: They did help me for Rocket, yes, as soon as I started. The short story of Rocket is that basically, I realized that there was no under-collateralized DeFi on Ethereum. It was just over-collateralization with Maker and I did an article with you back then. It made a bit of a noise in the space and we're all figuring out ideas and now it actually is much more concrete, because there's Union Finance, Terra Finance and all these new protocols for doing loans on DeFi, but at the time there was none —crypto just goes so fast. I decided, why not take NFT, it's something that's not directly monetary and this could help create new value out of nothing and I found this pretty fascinating. As soon as I got this idea, in 24 hours, I was being wired from the DAO $2,000. That's just a huge proof of support from MetaCartel and yes, so they did help me and that was pretty nice.
CR: I'm going chronologically, you got into space through MetaCartel and then you founded Rocket, so how did Rocket develop, are you still working on that, did it work out or not?
AM: What happened with Rocket is that it was a very smooth narrative. I saw that there’s no undercollateralized loans in DeFi, then I realized that NFT is underutilized as a monetary asset. Then there's three or four people starting to help out and I'm starting to pay them small amounts of money. At the time, there were a few investors reaching out to me saying, do you want to raise a seed round, we could help you.
But I went back to my startups roots, and decided I want to build something that's extremely big and that can have the biggest impact. The intersection between DeFi and NFT is still extremely tiny. There are companies overlapping with the Rocket vision which are Centrifuge, which does fungible NFTs from the real world and then there is NIFTech which fungibilizes NFTs from the digital worlds and so I'm super bullish on those. I didn't want to further down explore Rocket and I thought there will be a bigger market elsewhere and this is what I've been exploring. I just wanted to do something bigger. But I guess, Rocket could have been a great business, but probably not something that would go on to have hyper-growth.
CR: Then you saw these other projects emerging and they should be the ones to take that?
AM: Exactly. I knew Centrifuge early on and they told me that they had this NFT vaults kind of like the CDP for MakerDAO and I'm super bullish on those two teams. They definitely took the same Rocket vision, but it's much more scalable, it's trustless and it has all the properties that we seek in crypto. Super bullish on those two companies.
CR: Then how was your road down the personal token path, did that come right after deciding to drop Rocket?
AM: Yes. Technically, I started doing a personal token as soon as I got into the space because Peter Pan, basically sent me $1,500 and he was like, I want to tokenize your debt this is going to be very fun and I will be paid straight away and you would not have to pay because we have to pay the person who buys the debt. So I created Alex Masmej Loan 2019. It was a very fun, short stunt and this personal token isn’t known at all.
But basically, the Roll team reached out, and they issue personal token as a business and told me “Wow, we're spending days convincing people to do this and you've done this by yourself. That's crazy. Do you want to do a generalized personal token?” I said yes. And this was September last year; but at the time, there was no real use case I could think of.
After Rocket, I decided that I would not spend too much time on Rocket because this is not the best way to spend my time. Then COVID-19 happens, I got cut from marketing contracts and I'm like, “okay, maybe it's time to leverage the only primitive in crypto that I overlooked so far” and that was just a week before ECC, the conference, and I was tasked to do a talk on personal tokens on the mainstage. I was like, “Wow, this is now the time or never to raise $20,000 in an announcement to the Ethereans” This is how it came, very spontaneously. The reception was really great, the feedback was really great and a month later, I did it and it worked well. The start was my $20,000 token sale called the “Initial ALEX Offering.”
CR: Can you explain the mechanics of this? You're rausing $20,000 from anyone who wants to buy your ALEX token and then you're sending them ALEX in exchange for their crypto basically, is how it works?
Initial Alex Offering
AM: Yes. This was only for 1 million ALEX tokens, there are 10 million in total. In March, I said, I'm going to sell 1 million tokens for $20,000, it will be at a premium versus a secondary market because it will carry this income claim that I'm trying to fulfill. It will be 50% of my income disbursed quarterly in the next three years. There are 30 investors in total and it's mostly people in the space, I mean, it's just people in the space, investors, founders, community members and just Twitter followers that I don't really know. This is how it happened. I sold them and so they have the ALEX and if they don't sell the ALEX, they have the claim on the ISA. I guess they're going to hold for three years.
“This is how it happened. I sold them and so they have the ALEX and if they don't sell the ALEX, they have the claim on the ISA. I guess they're going to hold for three years.”
CR: Only the people who have bought ALEX tokens from that primary sale, the 30 initial investors, they're the ones who can have the claim to your future income, not just anyone who buys ALEX on Uniswap?
AM: Yes, exactly. Correct. If you buy ALEX on Uniswap, you have access to all the experiments that I can expand on, and I've done many, but you don't have any income claim. No.
Image source: Uniswap
CR: How is that income claim? Is there a contract, how do you verify the investors?
AM: I had like a Google form to get everyone's details, name and things and so I guess, technically, I could KYC them. I know who they are as people. I have all their names, their wallet address, the amount that they pledged, on a Google spreadsheet pretty much. I just airdrop my income claim every three months, so I've done the first disbursement last week.
CR: Oh really?
AM: Yes. So, that was cool. Actually, funnily enough, I thought I would distribute my income in USDC and basically, my holders told me no, we are long ALEX. What they actually wanted is Uniswap V2 LP shares, and so I increased ALEX liquidity and I've also done a liquidity mining experiment recently, these both contributed to the spike in liquidity, which was fun because usually, personal tokens are not really liquid, they're not as famous of course as DeFi protocols. It's an interesting experiment.
“I thought I would distribute my income in USDC and basically, my holders told me no, we are long ALEX. What they actually wanted is Uniswap V2 LP shares.”
CR: They wanted Uniswap LP tokens, like shares representing liquidity in the ALEX pool?
AM: Yes. In the ALEX pool. They got shared of the ALEX-ETH pool, which is 50% of ALEX, 50% ETH. They’re basically, long ALEX and ETH, I guess at the same time.
CR: They'll get the fees generated from the pool as well?
AM: Yes. They will get the fees generated from Uniswap. And since I introduced liquidity mining, they are de facto also, going to get the ALEX rewards at the end of the month.
CR: Oh wow, so they're super long. Can you say how much you disbursed?
AM: I disbursed $1,800 and yeah, that was 15% of my income in the past few months, so people can do the calculation.
CR: Obviously, there's an elephant in the room, which is regulations. Is ALEX on security, how are you thinking about that?
[ … ]
Paid subscribers have access to the full transcript, including sections on:
Personal tokens regulatory grey area
“I briefly talked just before the token sale to two lawyers, and they told me it's a very gray area, but yes, there might be an element of security for my $20,000 token sale (…) I would say the remainings, like 90% of the supply is totally, in my opinion, not a security.”
Holders voting on Alex’s life
“I did this and it was quite successful. It made some press and I think it excited people and scared some, because it sounds a bit like Black Mirrorish scenario (…) The participation rate is 25% which is much higher than some DAOs or protocols.”
“I'm the first anecdote of that primitive, but it would be awesome if anyone in the world could raise funds very easily that way.”
Liquidity mining experiment
“Liquidity went from $20,000 to $60,000 or $65,000 and the price went really up.”
Popular vs. Successful
“One trick here is that maybe people do not necessarily want me to become successful in life, they just want me to become popular and that might not be the same outcome.”
Investing in people
“But this will really be like a stock where people invest early on in artists, athletes, entrepreneurs, politicians”
Subscribe now so you don’t miss any of The Defiant content. Subscribers reading this post: Head to posts marked with the little lock to see the full content.
Hope you’re enjoying The Defiant. If you are, spread the word!
The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money.
About the founder: I’m Camila Russo, author of The Infinite Machine, the first book on the history of Ethereum. I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.