Now that the joke is real, it’s time to get real about $JOKE.
Throughout the first iterations of the jokerace, we’ve auctioned weekly NFTs of the winning jokes as governance tokens for jokedao. “It’s Nouns but slightly funnier and significantly slower!” we chuckled. But we chuckled wrong. We imagined that the handsome image of a Helvetica silver-medal joke, paired with the promise of governing jokedao’s treasury of $JOKE and future $ETH from sales, sprinkled with the fact that we give 20% to charity and that the rest will go to develop v2, and topped off with the sweet proposition that we’re only minting one governance token per week, was a sufficient mechanism for our community to gain power over the platform and for jokedao to become financially self-sustaining.
It wasn’t.
So as of today, we’re no longer retelling an old joke with new redelivery. We’re developing our own, original NFT jokenomics.
Below, we’ll explain what that means in three major parts:
The easiest way to understand jokedao in its current form is as both a game (the jokerace) and a game engine—specifically a governance game engine, jokedao.io. jokedao NFTs and $JOKE tokens are governance tokens used in running of these pieces.
jokedao NFTs are the tokens to govern the *game* by joining the jokedao governance council, which controls the jokerace.
$JOKE is the token governing the core team, community, and project as a whole, jokedao, which is building what we’re now calling “Joker Contests”—the governance game engine—and may well create other products and games with their own tokens in the future.
As the governance token of the jokerace, jokedao NFTs will:
give holders access to join the jokedao governance group, giving close access to the core team
determine rules of the jokerace
set policy for the sales of NFTs in the jokedao treasury
be able to buy and sell NFTs in the treasury
govern the treasury of eth generated by NFT sales
create proposals regarding the core team that $JOKE holders can vote on
veto delegations made by $JOKE holders
(These rights are of course fully optional, and NFT holders may elect not to participate in governance at all.)
$JOKE is the token governing the core team, community, and project as a whole, jokedao, for the purposes of:
Our goal is to give $JOKE as many uses as possible not only as an in-game currency but as a stake in determining the direction of the platform as a whole.
Each of these governance tokens informs and checks the power of the other while also keeping the power of the core team aligned with the values and goals of the community. In many ways, the system mirrors that of classic republics, except that here the dominant power is given to workers:
Finally, $JOKE holders will be able to veto the treasury decisions made by the governance council regarding eth, and NFT holders will be able to veto the treasury decisions made by $JOKE holders regarding $JOKE.
Above all, this ensures against any sort of attack that would risk parties paying themselves out, so that neither token can possibly be used or purchased with any expectation for any kind of financial returns. But just as crucially, we anticipate this becoming an entire new form of DAO governance to solve for the central issues all DAOs face—that the rich have outsized control over governance.
As suggested above, jokedao NFT holders will increasingly have options to modify the weekly rules of the jokerace as well. For the moment, these could comprise four variables—rank (what place wins), promiscuity (whether votes for non-winners are counted against rewards), finish line (when the jokerace ends depending on the number of votes deployed), and theme (the subject of the jokerace).
Finally, pricing.
For the moment, we will continue selling NFTs as we have for the past weeks, on a manual bonding curve, but here too NFT holders will have power to change how we offer them. For now, prices will continue to rise 30% if the previous week’s NFT is sold and fall 30% if the previous week’s is unsold (in which case it is sent to the treasury). NFT holders have the right to change pricing rules as well as to put any NFT in the treasury on the market at any time they like.
Let’s break down each piece.
joke NFTs are governance tokens for the jokerace. They serve as membership tokens to join the jokerace governance council, which governs the actual jokerace itself.
To be clear, we know that many or even most of the jokedao NFT collectors may not want to participate in—nevertheless govern—yet another DAO. We know many may collect the NFTs for certain other reasons (the aesthetics, of course). That’s fine: participation is entirely optional.
We should also note that rights #1-#2 take effect immediately, that rights #3-#6 can be realized at any time at the discretion of NFT holders, and that right #7 is projected longterm: this will be gradually relinquished by the core team when it deems it safe to do so, ie when the project as a whole is financially self-sustaining and can run autonomously while encompassing a far more diverse membership of dozens of individuals.
For the moment, joke NFTs retain their function as an ongoing crowdfunding mechanism for jokedao. 20% of sales go to the winner who submitted the joke, 20% go to the charity of their choice, and 60% go to supporting jokedao’s development. If you want to support jokedao as a project right now, collecting a weekly NFT is the best way to do so.
$JOKE, meanwhile, is the token for jokedao, the community that is building Joker Contests, a governance game engine that can be used for contests, curation, bounties, endorsements, giveaways, user-generated roadmaps, governance, and more. $JOKE serves not only as an in-game currency for jokerace but as a governance token over the entire DAO that is developing emergent, composable, on-chain governance to create and manage DAOs. And it serves five key functions:
#1 is already a right of the $JOKE tokens, #2 can be realized whenever a joke NFT holder creates a contest to put a proposal to $JOKE holders, and #3-#5 will become rights as the core team gradually cedes over its governance of the entire platform to the community. Rules will need to be determined as to what constitutes a “fair” contest that $JOKE holders have been adequately notified of for their votes to count, and a decision will need to be made as to whether actions should be carried out automatically on-chain.
With the $JOKE token, we want to try something that would have frankly been impossible in web2: to make a platform, Joker Contests, that accrues little-to-no value of its own, precisely because the $JOKE token holds social (if not financial) value in its place. While Joker Contests will be entirely open-source, free to use, and readily forkable, the token will represent users’ ability to shape development of Joker Contests and jokedao as a whole for their own needs, including by submitting and voting on features, as well as giving grants to other projects to join the $JOKE community. In a sense, the better analog for Joker Contests is not a web2 platform but a creator who produces work requested by fans (indeed, this is one of the major use cases of Joker).
It’s true: jokedao aims to revolutionize DAO governance, and it aims to do so by the oldest trick in the Roman playbook—bicameral legislation. Ultimately, while jokedao NFTs are nominally the governance tokens of the jokerace and $JOKE is the governance token of jokedao itself, each can keep the other in check in case of malicious attacks.
Let’s explain by way of a historical detour.
In the Roman republic, legislative power was largely divided between two rough parties: 1) various comitia representing different interest groups of the Roman population from all classes, and 2) the Senate, largely representing patrician interest in foreign affairs. So on the one side, a series of decentralized subgroups formed emergently by popular consensus to represent their own interests; on the other, a centralized group of powerful individuals representing the interests of the state as a whole to presumably fatten their coffers.
And that brings us to jokedao.
jokedao is fairly unique among DAOs in that it operates with two tokens rather than one—neither of which has any meaningful correlation to the other. Superficially, it might call to mind play-to-earn protocols like Axie and Stepn that have both an in-game currency and a governance token, but the reality is closer to protocols like Uniswap, Dapper, Ankr, and Gitcoin that have both a tokenized protocol on one side and a labs/holdings group to build on top of it on the other.
jokedao is two projects in one, each tokenized and intertwined: a platform for emergent on-chain governance (Joker Contests), and a product (the jokerace) that utilizes that platform and serves as its proof-of-concept.
Nevertheless, on an even simpler level, the $JOKE token is an in-game utility token with a fixed supply; the jokedao NFTs are inflationary governance tokens for the game itself. In other words, jokedao is bicameral, a DAO of two houses alike in dignity: the game players and the game designers, both of which have in common the goal of experimenting and, yes, having fun.
Like the comitia, the house of $JOKE can and should emergently spin off new teams to represent their own interests; and like the Roman Senate, the house of jokedao should be concerned with the overall financial and social success of the game. You might sense two issues here, however. First, the wealthiest token-holders (the NFT collectors) have outsized influence compared to the actual supporters of the protocol who are unable or disincentivized to participate with the same as the rich. And second, the tokens govern treasuries (of $JOKE and eth respectively) that could incentivize malicious actors to buy up power in order to perform a governance attack to drain the coffers.
These problems should sound familiar. They’re the problems nearly all DAOs face right now.
Yet jokedao’s bicameral structure also offers three solutions to this problem.
First and most importantly, and most simply, each house can veto each other’s decisions regarding delegation and the treasury to avoid a malicious attack. It would be intensely difficult to take over both houses: it would require vast eth spent on jokedao NFTs over the course of weeks purely for the sake of recovering it later, as well as vast money spent to buy up $JOKE once the treasury is no longer predominantly controlled by the core team. By the time that happens, it will have a diversified base of holders that should make a 51% attack impossible.
Second, our longterm hope is that teams will form partybids to buy joke NFTs, so that teams can not only play the jokerace but collect its NFTs together. So while the house of NFTs is ostensibly a more centralized group of expensive NFT collectors compared to the house of $JOKE, teams rather than individuals should be able to buy up the tokens to prevent it from becoming a Senate-like group for wealthy interests. In place of a centralized Senate of really rich people, we should have space for political parties to campaign as activist investors.
Finally, the council could at any point decide *not* to sell jokedao NFTs in given contests and instead give them away. There’s good reason for the holders to decide to offer NFTs to a diverse array of valuable community members who might not be able to afford to join otherwise. ($JOKE holders could veto this decision if there were any suspicion of NFT holders using the treasury in any way to enrich themselves).
***
Ultimately this bicameral structure is intended to solve for the three challenges that all DAOs face in giving disproportionate power to the richest token-holders.
First, the inequality problem—that power in DAOs accrues to the rich to reward their own interests.
Significantly, jokedao should incentivize teams to come together in playing the game and then purchase governance tokens. But even if teams don’t purchase governance tokens, jokenomics are designed to give greater power to players—contributors—than to buyers. Since $JOKE rewards will accrue to strategic players who collectively support each other rather than to individuals (who simply can’t purchase the treasury from the open market nor win the game merely by having more tokens), teams should ultimately have as much or greater $JOKE to use in representing their own interests by accepting or rejecting proposals of jokedao governors.
Second, the value problem, that the rich can’t even reward their own interests since their own presence in expensive NFT projects paradoxically kills the projects’ value.
That is: rich owners of NFTs are the least incentivized to build out the underlying project and give it value since they’re already rich, while the builders who could give value to NFT projects by developing them are immediately disincentivized to do so once high prices make the NFTs prohibitively expensive.
Here again, the bicameral structure separates interests to solve the problem. $JOKE holders—the players—rely on a token with gamified incentives to develop teams, share the project, and decide on its direction, so value will accrue to those who participate and build. NFT holders—the governors—can focus on the jokerace itself and validating or vetoing the votes of $JOKE holders.
And finally, the problem of 51% attacks. Again, by enabling two very different groups of token-holders with different ways of acquiring power to check each other’s decision, such attack should be impossible: jokedao is, in that sense, much safer from attack than almost any other DAO, including the one that inspired it (Nouns).
To be clear, this bicameral structure is not a complete salve to inequality in a marketized system where some will pay for power. Instead, it embraces the problem itself that DAOs make it possible to purchase power. By creating one house for those with financial power to sustain the project and one house for the actual builders and players to grow the project with their contributions, jokedao ensures that the powerful governors are always beholden to the actual contributors who give value to the system in the first place.
This is an entirely new model for DAOs.
To date, the rules for the jokerace have followed what we call the “Classic Joke” model: players must vote for the #2 joke to win and will be rewarded proportionately to the percent of votes they use for that joke.
As we explained in our opening manifesto, we hope one day to build a v2 that can incorporate a number of other variables into winning as well—including opportunities for downvoting, leveraged voting through a GPT-3 joker called Moloch, and most significantly, time-decay so that *earlier* voters are rewarded far more than later ones.
Let’s emphasize that last point. It’s true that not all game dynamics have quite been explored or exploited in these early days—in particular, teams will face a challenge of working together to pool votes or compete across a more distributed share of jokes to command a higher proportion of winning votes and thus rewards. But savvy players have understandably exploited one dynamic, waiting until the end of the game to split votes on a surer #2, with little reason to vote early except to signal-boost an NFT in the rare event they stand to share in the rewards of its sale.
So let’s cut to the punchline. It’s time to make the jokerace even more convoluted than ever by playing with four variables that will determine the weekly rules and be announced the day before the race.
So far second place has always won—so that whales can’t dump votes on winning propositions to propel them to the top without risking their own loss. But other losers could win too. The #3? The #4? What about last place?
Jokedao NFT holders will now be able to choose which place wins each week, as long as it’s never #1.
Many jokerace voters vote for multiple jokes in order to hedge their bets and ensure a win at the cost of deploying all votes—they play the jokerace as if it were prisoner's dilemma as defi, with $JOKE rewards as apy. The jokerace to date has been, let’s say, promiscuous.
But two other options are possible besides the promiscuous race.
In “cheating” races, players will be penalized for cheating on a winning joke: any votes they put towards other jokes can be counted *against* their votes for the winner.
And in “monogamous” races, players will lose *all* votes if they vote for more than one joke. They effectively forfeit their right to play if they don’t stay monogamous.
While these dynamics are harder to calculate with our current tools (a spreadsheet), we’ll try to offer these as options for jokedao NFT holders to choose as well on certain weeks.
So far jokeraces have had accelerating activity, as participants have waited to see where votes were landing in order to improve their own odds of voting on a winning answer. Competitions have gotten more and more exciting as they progressed, but often at the expense of a somewhat dead 20-30 minutes at the start.
Most obviously, vote decay—which might eventually take the form of “linear” or “exponential”—means that players are incentivized to participate earlier in the game when their vote matters more. But it can also change the dynamics of the game as well: you might be rewarded for taking a stance for *your* favorite option early on, not only by receiving a greater share of votes (and rewards), but by signaling to others to follow quickly to support you if they want to win as well. The game theory becomes far more complicated in weighing whether to vote early (greater risk and return) or later (lower risk and return)—and more exactly, how to divide up votes across the game.
Needless to say, this unlocks design opportunities for DAO governance generally as well: will you be rewarded for taking a stance early for what you believe, or for building consensus with the rest of the group in a way that lets projects move forward meaningfully?
We’ve had various communities—especially NFT communities—ask to be “roasted” in a jokerace; others have simply requested that the jokes might improve with focus around topical targets. Jokedao NFT holders will now be able to vote on “themes” each week for the jokes. Imagine a roast of a community, who might be airdropped one-time voting tokens to participate as well—this becomes easy with weekly themes.
None of these attributes are mutually exclusive, and in fact they can complement each other in strange ways.
For example, given a “cheating” race for #4 with exponential vote decay, teams will face a major challenge in deciding whether to deploy points early (to ensure a large proportion of winning votes) or to wait (since points towards the wrong joke will count against them).
At that point, some teams may want to “sacrifice” members to the #1 joke with promises of corrupt, off-chain compensation later from the winners; others may just divide their $JOKE between multiple wallets to try to break the rules.
And still other teams may take an activist position in jokedao and offer bounties for data analysts to track likely collusion through etherscan—one address sending $JOKE to another to both play the game—and tax their competitors’ future winnings due to bad behavior that defies jokedao’s official rules. Other analysts may insist on bribes from players to conceal their obvious sybil attacks.
As always, jokedao aims to embrace web3’s limits as features of the game in order to incentivize better incentive systems and the fun of positive-sum collusion. It’s an experiment in emergent, on-chain governance as well as emergent, on-chain ungovernance, where the difference between a decentralized legal order and collusive criminality is likely a matter of degree rather than kind—that is, a question of who wins.
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Every week, the winning joke of the jokerace is minted as an NFT that we announce for sale on Monday afternoons; to date, we have been selling on opensea. The best way to track is to follow our collection here, as they’re first-come-first-sold, though you can also watch our twitter on Mondays as well.
$JOKE can be acquired on uniswap using these token contract addresses:
eth: 0xa973c558265ad458031fa3067071646836df7713
polygon: 0x59e36d05e47bf17eb5753aa1f04b2164f1606a45
NFT holders can govern at http://guild.xyz/jokedao.
With special inspiration from Jad Esber and Scott Kominers’ “Framework for Reputation-Based Systems”