FWB: A DAO for Creative Workers

Author: Andrew Ryce

Translation: baiyu, The SeeDAO

When Miami DJ Sister System played early 90s Coil in a eerily perfect orange room, one of my friends began introducing me to the people on either side. I tried to understand words like "DAO," "Web3," "blockchain," and "seed" that they were throwing around. I met internet celebrities, ran into old friends I hadn't seen in a while, but they were all uninterested in cryptocurrency.

Later, when Yves Tumor walked to the booth, Diplo suddenly appeared wearing a NASCAR sweatshirt emblazoned with the Bitcoin logo. He swayed in front of the stage a couple of times and then left, with no surprise DJ set.

This was a cryptocurrency party held during the Bitcoin conference in Miami in early June, where I attended as a member of the decentralized autonomous organization Friends With Benefits. How do you get into a cryptocurrency party? To attend, you need to know the right people or hold a certain amount of FWB tokens. Image source: FWB official website FWB is a social token, meaning it is a cryptocurrency that can be bought, sold, and held like shopping.

It is located on the Ethereum blockchain, a versatile system that allows people to send cryptocurrencies to each other and manage complex transactions like smart contracts. (For example, NFTs are bought and sold on the Ethereum blockchain.) Friends With Benefits is a decentralized autonomous organization built on tokens and a Discord server.

You can only access the server by holding a certain amount of currency and investing in the community. Here, you can meet like-minded people, network with peers, find new collaborators, collect recommendations for restaurants and travel, and participate in projects—these are all things Friends With Benefits can provide.

Basically, anyone interested in culture or currently interested in cryptocurrency can be found here. The community includes electronic music fans, artists, and countless individuals from tech, culinary, or other creative industries. In just a year, FWB has gathered about 1,500 members, hosted offline meetups in Europe and North America, created its own ticketing system, and is preparing to launch a complete editorial platform centered around cultural intersections that members are interested in.

They talk about democracy, journalism innovation, equal pay for DJs, and a commitment to purifying private messages. Even if all of this sounds like a daydream, if effectively harnessed, this technology could indeed have a revolutionary impact on the music industry.

A DAO is any type of community that exists on the blockchain, following its own laws, terms, and operating methods. These groups are completely independent of any centralized financial system or existing infrastructure, and the only rules they adhere to are those written in their own code. The term is broad; a DAO can be almost anything, from a business to a place to hang out with friends.

The DAO model has existed for a few years, but it also has its problems. One of the earliest examples is The DAO, which became infamous after about a third of its funds were stolen by someone exploiting a vulnerability in the code (often referred to as a "hack").

Others have categorized these groups, which encourage growth and valuation by increasing membership, under slogans like "Invite your friends to earn more money!" There are many such examples.

However, a DAO based on a professional community and a genuine production plan, written with bulletproof code to prevent scammers and bad actors, has incredible potential not only to create value on the blockchain but also in other areas, especially in culture. Raihan Anwar says, "I often joke about DAOs, saying they are like a wealthy simulation of the United Nations." He is a perfumer and a versatile tech internet celebrity who works in the high-end coffee world, helping FWB with social media and outreach. "You have complete governance, communication boards, and people who are truly serving the DAO.

For us, the business is built around people. For example, I focus on building community and maintaining good communication with people. The community is our greatest asset."

Another way to think about a DAO is essentially like a decentralized cooperative, especially for social DAOs like Friends With Benefits. Everyone is involved, and a stable DAO will have a strong board and its own governance rules.

This self-awareness ideology is part of the Web3 structure, compared to the familiar version often referred to as Web2. Web3 is a larger blockchain world that presents a new vision for the internet. Web3 maintains decentralization and autonomy based on the existence of government regulation and international law, free from the monopolization of profit-driven tech companies.

Patti Hauseman, FWB's membership director, explained to me, "Web3 has many benefits. I think its biggest advantage is that artists can have full control over all their financial activities. They don't have to rely on Spotify or other decentralized service providers. The blockchain and ledger accounting systems provide a new way of selling, which is a new source of income when streaming revenue is suffering."

But right now, this is just a concept, and there is still a long way to go for musicians to not rely on traditional income. Even facing this situation, intuitively, I feel that cryptocurrency technology faces countless ethical dilemmas. Other cryptocurrencies with humorous names have had many ups and downs and scandals in their development, so what makes FWB different from these coins?

I believe that those involved in FWB are more focused on creating a community and building a platform that is more transparent and future-oriented than Web2 and banks, providing opportunities for people on that platform. But are they serious? Trevor McFedries Friends With Benefits was initially the brainchild of Trevor McFedries. McFedries was once a music executive, perhaps best known for his involvement in creating the CGI influencer Lil Miquela, a virtual internet celebrity who has sparked controversy and ridicule for her sometimes contentious remarks about marginalized groups.

McFedries is a smart and creative businessman who turned Miquela into a company worth over $100 million through his robotics and AI technology company Brud. For him, Web3 is clearly the next step in innovation.

McFedries said people are stuck on Patreon, Substack… they have to keep working hard. He also said, "I think if we show them a way to create value through community, they will be more interested in the space we want to build. I also think there should be more creative people in the crypto space. I want to connect these dots and give people a sense of belonging in the community."

Events are an important part of this: FWB hosted its second IRL party at the Ethereum community conference in Paris in July. This time, the event was more firmly integrated into FWB's blockchain world—if you didn't hold currency in advance, you could simply buy some.

Even outside the club, you could show it to the people at the door, thanks to a new application innovated by DAO members within a week. (If you don't want to join the community, you can simply sell it or exchange it back after the event.) French DJ Maelstrom became the star of the party. When I spoke with him, he was doing a residency in France for Louis' latest live show. He said he accepted the FWB gig because he was interested in getting paid on the blockchain, which is a secure transaction, and if he chooses to hold the DJ's income, its value could multiply the initial earnings. Of course, it might not, and that's part of the game. But for him, it's not just about making money.

He said, "I'm more interested in its cultural aspects; smart contracts and community are promising. After the party, I learned more about DAOs, and I realized that many musicians I respect and admire are also involved. They are developing new pathways and templates within the blockchain to find more ways to make a living from music."

He continued, "The most exciting thing is that it frees you from the algorithms of Instagram and Facebook. Algorithms dictate what you need to do to succeed, while DAOs do the opposite; the community decides how it will work and builds the tools to make it happen. This is not a top-down approach, but a culture built from the ground up. This potentially transformative new method of valuing music is spreading like wildfire across many areas of the music industry. Influential figures like Mat Dryhurst have been advocating for DAOs. Other groups and organizations are also getting involved, such as Leaving Records launching their own DAO, and the emerging Refraction event is becoming a second version of a DAO—a music festival existing on the blockchain.

Participants are excited because they see it as a fairer way to publish or sell artwork, giving artists more ownership and control over the sales process.

Austin Robey, a labor rights expert gradually entering the DAO world, says the crypto space can evolve in many ways, with the greatest potential lying in creating platforms controlled by the community. It can be said that without ownership, it is almost impossible to accumulate wealth, and artists have never owned the platforms.

If you look at Spotify's market value and the value of Patreon, which is in the billions—one has to ask, what would the value of these platforms be without artists? More and more people are getting involved in DAOs and communities, which is a huge business opportunity.

In the music field, DAOs and cryptocurrencies have achieved collective ownership of platforms on an impressive scale, as well as new forms of human organization and resource allocation.

"Ideally, we would see a new norm—a new recognition of cultural producers. Musicians create valuable art and are recognized for it, thereby gaining ownership of the platforms they rely on. And with ownership comes control over the platform. It gathers resources and collective work to achieve a common mission."

While these ideas sound great in theory, those who have worked in decentralized finance for years still vividly remember the collapse of DAOs in 2016, one of the most unsettling events in recent cryptocurrency history. At that time, a DAO created by a group of programmers raised $150 million in crowdfunding within a month, which was highly promising at the time.

It was a stateless organization existing outside of regulation, but ultimately became a victim of its own extreme libertarian values. When a thief comes along and strips you bare in front of you, there is no one to protect you.

The hacking of DAOs was catastrophic; for example, $50 million worth of DAO tokens were stolen by a hacker exploiting a vulnerability in the DAO's smart contract, leading to Ethereum's "hard fork" and a deep split in the community.

One side insisted on the original currency (traditional Ethereum or ETC), while the other rushed into the new version of Ethereum to effectively reverse the theft by restoring the blockchain to its state before the theft. The new version of Ethereum (ETH) has become the dominant currency, although the "hard fork" and other forks that further disrupted after The DAO collapse remain controversial.

The catastrophic effects of DAO vulnerabilities still linger. It's like people in a financial crisis panic-selling stocks, leading to a market crash. Of course, since then, people have learned from their mistakes, and the Ethereum blockchain has become more stable and secure over the years, with many large companies starting to enter the space.

As of this writing, financial giants like JPMorgan, Visa, and Mastercard have chosen to invest in the Ethereum blockchain system or start selling Ethereum-backed currencies to enhance the reliability of the system. The popularity of DAOs is rising again, and this time it feels much safer for most people. One of the most compelling cultural figures I met is Alexander Zhang, a Los Angeles native living in New York. I have a feeling he has the talent to persuade everyone to believe that DAOs are the future.

He works full-time for FWB, and in some ways, Zhang acts like a genius hired to help the DAO elevate its professionalism and innovation. Like many others who jumped on the DAO bandwagon, he started as a curious novice exploring DAOs.

He told me, "I used to hate cryptocurrency and the people promoting it; I always looked at it from a tech perspective. I bought Bitcoin early on but never wanted to take the time to think about or accept it, but I was always drawn to creative people. It became clear during the pandemic that everyone lost trust in authoritative organizations and power structures and began seeking a new world.

This provided an opportunity for everyone working towards the same goal, so let's help make this idea possible because what it represents is significant and unparalleled… ownership, decentralization, independence—these are all concepts I previously thought were impossible, but now they seem likely to take root in the next decade or so."

From Hauseman to Zhang, most people involved have a similar trajectory: from curiosity about crypto technology to enthusiasm for FWB, which only took a few days. The reasons people are fascinated are easy to understand (players give me some tokens to explore the community, and then I can return the tokens without needing to exchange currency or cash out).

Most topics you can think of have discussion channels, and people are usually willing to explain rather than mock outsiders. Everyone there seems to want to build something great in the real world, not just learn how to make money.

In today's social media platforms, filled with sarcasm and polarization like Twitter and Instagram, FWB claims to be a very popular place. So far, while it has exceeded the bounds of legal regulations, FWB still has a strict code of conduct—against harassment, racism, and other forms of abuse.

"I was shocked," Zhang told me. "It feels like the internet has become fun again, like you used to go online every day after dinner, and all your friends were online. This space feels more like a friend's wedding or a friend's birthday party, rather than a casual internet 'cesspool,' where you might argue with someone anonymously named DogecoinBoi420 without knowing who is behind the mask."

But the difficulties are also evident; being part of such a community comes at a cost. You could humorously view it as a Soho House for internet nerds, and there has been ongoing debate about the feasibility and accessibility of these communities, where members discuss based on exclusivity and financial assets.

However, since I started following FWB, I've noticed more and more people working to improve accessibility and diversity, led by Hauseman, who proposed three initiatives to alleviate the economic barriers to community entry.

She explained, "We started a scholarship program, which is a fully funded initiative for artists and creators without resources. We hope this program will also teach them how to use Web3 more broadly, like how to create NFTs or participate in groups, and publish your music or videos or other projects on the blockchain."

There will also be a "donor program," which allows other users to buy, sell, or collect tokens to increase new users; at the same time, it allows "learners" aged 17-24 to enter the Web3 world without any funding or investment.

In addition to the Discord server and its real-world events, FWB also publishes weekly summaries highlighting recent discussions and developments in the fields of Web3, cryptocurrency, and blockchain.

FWB is about to have its entire editorial platform, operated by journalist Ariel LeBeau. She said they will pay contributors "competitive rates" with a novel combination of cryptocurrency and dollars, so just like the DJs at FWB events, they can choose to invest in the community or cash out directly, with no strings attached. LeBeau said, "The idea of DAO autonomy really excites me. It serves those who truly contribute their ideas, creativity, and art, rather than being dictated by companies or advertisers at the top, which is not a service model driven by any ulterior motives or sustainable bundling."

The true scope of DAOs and the popularization of blockchain become clear in such enterprises. It can be an editorial platform supported by a community where everyone holds shares, or an event organizer where the entire community has a say and shares any profits, rather than everything flowing to a venue, organizer, or performer.

In the right circumstances, DAOs represent a radical transparency, as everything that happens on the blockchain is visible to everyone involved, from royalty payments to DJ fees to writer fees, and the smart contracts used to create formations are all through minting and transferring NFT ownership.

You can extend this idea to record labels or clubs, as the value of the entire community no longer needs traditional financial resources or investments because everyone has ownership, and everyone contributes. Some members of FWB have proposed ideas for monthly fees for regular gatherings or membership fees at the city chapter level to localize benefits and resources. As Zhang describes it: everything is like a future version of Rotary.

All of this sounds just utopian. Given the limitless potential, what limits our imagination? The difference between imagination and reality is that the Web3 world still has a long way to go to establish a new collectivism.

Currently, it remains just a concept with great potential. Stunning DAOs like Friends With Benefits are a double-edged sword because they come with no guarantees. DAOs set their own rules and only adhere to their own rules, but they are also very likely to be exploited or experience theft.

"The problem is that a horizontal organization is inevitably constrained by immutable rules," says Canadian financial journalist Ethan Lou, who is about to publish a book on scandals and conflicts in the cryptocurrency world. "There will always be someone who can think of a way to exploit these rules. But since the collapse of The DAO in 2016, the technology has improved a lot. For example, some major companies in the crypto world are changing their corporate structures and fully transitioning to DAO forms."

I asked Lou if he thinks DAOs are a positive force in the world. On one hand, there are groups trying to create community-based platforms; on the other hand, there are libertarian companies trying to evade government regulation and taxes. "It depends on how you define 'positive,'" he told me. "Is it just to evade regulation? Many people think that's a good thing. But every action has an equal and opposite reaction."

Austin Robey told me, "I see a lot of experiments starting to take shape, especially around how crypto technology can create a fairer new system for artists. But as the patterns begin to develop and emerge, we also need to start considering the rights of workers. What does it mean to be a worker in a DAO? What rights and responsibilities do they have, and what protections are in place?"

Another issue plaguing the cryptocurrency world is the energy consumption required to update the blockchain through transactions. Whether it's from Bitcoin mining to artists selling NFTs to the community, this is a contentious topic, with cryptocurrency supporters and critics often at odds.

Zhang says, "In the Ethereum circle, environmental issues are usually the most concerning. We are working hard to optimize proof of work, proof of stake, and energy consumption. What allows me to sleep better at night is seeing the improvement in this consumption ratio.

If you look at all the energy consumption in the world, you'll see that Ethereum's energy consumption is just a small part of it. All different behaviors consume energy; that's a fact. So how much of that can Ethereum account for? Right now, at this stage, it's just a little bit."

When Zhang observed in July, energy usage was quite substantial, but in recent months, it has skyrocketed nearly tenfold. His comments downplay the harsh reality that Ethereum is the second-largest cryptocurrency framework in the world, and while it requires less energy than Bitcoin, consumption data shows that Ethereum's annual electricity cost is equivalent to that of the entire Algeria, with a carbon footprint comparable to Tunisia. If it's possible to set these concerns aside—or at least hope that the promised solutions will yield results—then what "Friends With Benefits" and other DAOs are striving to achieve feels like a breath of fresh air in an increasingly toxic internet environment. If executed responsibly, these ideas could build entirely new communities and new ways for art to thrive.

It could create a whole new, parallel value system in the art world, as we have already seen through the proliferation of NFTs in music and decentralized art. There is also the potential for collapse; people may feel deceived, and less informed users may be exploited. Ultimately, it all comes down to the integrity of the community, goodwill, and the ability to vote and set rules that will prevent exploitation.

Anwar says, "I've worked in online communities for a long time, and crypto technology provides a sense of direction and purpose. In other online communities, you see some people rambling aimlessly or being keyboard warriors online. But what if we could make everyone better, more rational, and more helpful through benefits? It's like the most positive thing you can do. That's our guiding principle."

In the past few months of exploring the world of cryptocurrency and DAOs, I've learned more than I could have imagined, establishing a new understanding of the potential of these technologies. I sometimes find myself confused about certain questions: what is real? What is mere empty rhetoric? Will ideals ever be realized? Can a monetized group of internet nerds founded by millionaires save the world?

Some people see this as the financialization of everything from art to identity and take an opposing stance. Others defend the idea, claiming it's a way to make capitalism operate in a fairer and more beneficial manner. The debate can go on endlessly, with both sides having strong points. But it is undeniable that DAOs are just beginning to emerge and are not going away.

People are trying new things, and for many of them, their starting point is correct, as the continuously improving technology is bringing these idealistic goals closer to realization than the shaky early days of prototype DAOs five years ago.

Robey says, "DAOs can take many forms, and their ultimate shape is in the process of being shaped. DAOs are hard to categorize. Everything is happening in real-time. I move between several different online democratic communities every day. For me, the prospect of achieving smoother and more flexible work is very exciting, with community self-governance generating value and digesting it internally."

Like anything in the rapidly changing crypto world—away from regulation and centralization in a wild west of sorts, accompanied by the well-known volatility of the market—any of these DAOs could go bankrupt in a second, or they might not.

Regardless, we will see an explosion of interest in this field, which could change the way music and art operate in their daily lifecycle. So whether you are a savvy investor, someone interested in cryptocurrency, or an ordinary bystander, you need to look at DAOs with a keen eye.