Rug Radio is a decentralized project at the forefront of Web3’s integration into Web2 business models– it’s a complex interconnected array of decentralized technologies; it uses three separate NFTs (ERC-721s), a token-yielding mechanism, two ERC-20s, a DAO, and, recently, a PFP NFT release just for the art.
If you think this last sentence alone could send anyone in the crypto space for a whirl, try explaining it to someone who isn’t immersed in crypto.
However, Rug Radio isn’t meant to be understood in a few sentences; it’s meant to work.
Web3 isn’t meant to be a complete Web2 overhaul. Many of Web2’s most popular elements organically emerged following human behavior, and it’s more likely to change the underlying technology and improve the overall experience than to change human behavior at scale.
Pulling from Rug Radio’s mission statement on its wiki: “[Rug Radio] is a launchpad, an incubator, a brand builder, an accelerator, a creator fund and will grow to be even more with time. The media and the narrative should be owned by the people. If we own the narrative, we have more power to shape the space as a whole, as the community wants to.”
The Rug Radio team has individually built reputable social media brands prior to Rug Radio; born as a centralized extension of the team’s existing social assets, Rug Radio is one of the first, if not the first, fully functioning DAO-based media companies.
As of November 2022, Rug Radio’s Twitter assets saw nearly 20,000,000 impressions, with Founder @Farokh generating nearly 65%.
In addition to the Web3 play, Rug excites us for a few reasons:
- It’s a living, working, functional DAO.
- It builds mostly in public, regularly publishing its financial reports and holding itself accountable to its community.
- It has maintained its traction throughout an otherwise brutal NFT bear market.
Our Rug Radio guide explores the traditional Web2 challenges faced by all parties, Rug Radio’s experiments to remedy creator economy shortcomings, and how Rug Radio actually works.
The Creator Economy in Web2 vs. Web3
Web2 creators get next to nothing directly from their platforms unless they’re a top performer; they typically must go out of their way to build a second source of income through ads, sponsorships, or affiliate deals.
For example, the average annual YouTube “salary” for creators with one million subscribers is $60,000 from Google’s AdSense program– a single video with a million views typically pays up to $3,000.
Rough back-of-the-napkin math incoming– a Youtuber must produce about 200 one-million viewer videos to hit that $60,000 AdSense payout every year, which means countless hours of brand-building, content planning, creation, editing, engaging, and so on.
“Even if the platforms do pay creators, they tend to pay them very little unless you’re like The Rock or someone,” says Farokh. “The platforms get the billion-dollar valuations partially built on the creators’ work. What is a Facebook, Instagram, or Twitter without any creators or people to watch?”
Web3 stands to rewrite the implicit contracts that creators and consumers have with their platforms, democratizing the ownership and revenue of the content they create and consume.
Rug Radio isn’t setting out to build another Facebook or Instagram, but rather a decentralized layer that enables Rug Radio creators to hold full ownership of their IP and earn rewards for creating content and engaging with the Rug Radio ecosystem.
The ability to earn while interacting also extends to the consumer and platform buckets.
“Web2 isn’t bad; I like web2; it managed to bring billions of people into a network, and there will always be a place for it,” says Farokh. “Web3 simply just allows participants to be rewarded for being part of a network.”
Web2 is dominated by a linear hierarchy that accrues value for the platform first, then creators, and then consumers.
Web3 is circular– the bulk of the value stays within the Web3 environment by design rather than an oligarchy of platforms extracting value from the creator economy supply chain.
The Web3 experiment hypothesis is as follows– by using the blockchain and programming value into liquid, economically sustainable tokens, one can create monetary and social incentives for creators, consumers, and platforms to collaborate and grow the Web3 ecosystem in perpetuity.
For starters, the blockchain enables seamless, trustless, and automatic transfer of value, a role previously only possible by centralized companies and a growing back-office of staff. The “permissioned” nature of this model makes it exclusionary, where platforms have the final say in who can participate in a network.
Per Rug Radio’s Web3 direction, all consumers, creatives, and platforms turn into network participants. Creators are elevated to the most important role. Platforms receive residual value after it has passed through creators and participants.
Web3 is presently a mishmash of interconnected web3 applications; Rug Radio is connecting the dots by building the infrastructure for a provably fair flow of value proportionate to each party’s contribution to the Rug Radio ecosystem.
What is Rug Radio?
Rug Radio is a Web3 media brand underpinned by a yield-generating NFT collection of rugs and DAO (the RugDAO) governed by the native token.
It’s designed to support independent creators who create content under the Rug Radio fold. Aesthetically, the model draws comparisons to that of record labels, except for the critical fact that Rug doesn’t own or have a stake in its creators’ IP.
Rug Radio creators are given a Creator Pass NFT, which grants them access to internal tooling, sponsorships, and an ability to earn rewards in the Rug Radio ecosystem in the form of $RUG token.
Rug Radio’s community of creators and audience collectively “own” the platform through various incentive mechanisms ultimately tied to the Rug Radio DAO– DAO participants can also vote on what content is subsidized or wholly funded by Rug, how and where it’s delivered, and how profits are distributed.
How Does Rug Radio Work?
Rug Radio is visually connected to a series of 20,000 Rug Genesis NFT Rugs.
The Rug Radio Rugs (ERC 721Ms)* produce a specific amount of $RUG tokens (ERC-20) per day, ranging from 5 per standard to up to 11 for rare, for a period of 5 years.
The Rug NFTs were available to mint in January 2022 for holders of the Rug Radio Membership Pass, a separate NFT released a few weeks prior.
The Rug Radio Membership pass (a dynamic ERC 721M NFT) comes with Rug Radio ecosystem perks linked to participation, such as accessing exclusive online content or, one day, free tickets to a live event (similar to VeeCon).
**Editor’s note: An ERC721M functions similarly to the standard NFT ERC721 token standard– it’s a new token standard developed by SyndicateDAO, Rug Radio’s smart contract planner. It enables customizable mint, burn, and transfer plug-ins, and customizable metadata for on-chain identities, roles, reputations, and gas-optimized bulk mints, and distributions. Stepping away from the jargon, ERC721Ms play nicer with social networks.
The Membership Pass has a market value of around $15 to $50 depending on the market and acts as the ticket to the ecosystem; it’s essentially the “consumer-oriented” token that allows content consumers to engage with various offerings in the Rug ecosystem.
“As a dynamic NFT, it can also be used to curate better content for consumers of content,” says Farokh. “Creators can reward you for listening or engaging with their content more. You can do such specific things with the blockchain (tokens, addresses) that were never possible. We’re simply laying the groundwork now so that in five to ten years, we’ll have a rich, actionable network of the creator and consumer addresses interacting with each other.”
A total of 20,000 Rug Radio Genesis NFT Rugs are spread around roughly 8,363 owners and a floor price of about .45 ETH.
Holding a Rug Radio token, whether that be the Membership Pass or Rug, allows one to verifiably prove and be rewarded for their activity– for example, a creator could send a fan rewards like an exclusive NFT that grants free access to an upcoming tour.
In addition to providing the same benefits as the Membership Pass, the Rug Radio Rugs give holders a stake in the Rug Radio ecosystem, earning five to eleven $RUG tokens (the ERC-20 token) per day.
Then, 1,800 $RUG can be traded for 1 RugDAO (rDAO) token, the governance token of the whole ecosystem.
“We did a dual token system whereas many projects put the role of governance on a single token– for example, APE, ENS, etc.,” says Farokh. “$RUG token is your utility token, and the rDAO is strictly for governance. If people swap $RUG for rDAO, they’ll have more rDAO and a greater say in voting.”
In other words, the rDAO tokenholders have a say in how the rDAO Treasury, currently about 1,395 Ether, is spent.
“One of the biggest flaws for most DAOs is that they can’t make it work,” comments Farokh. “I believe that voluntarily swapping into a strict DAO token will lead to greater participation, education about Rug Radio, and alignment.”
RugDAO is a community DAO operating as an unincorporated not-for-profit organization; the structure is compared to a club.
The RugDAO has two components:
- The broader RugDAO is governed by the RugDAO token.
- A subDAO called the RugBANK, where the core tokenomics structure of the rug ecosystem sits. This subDAO is a subsidiary of a DAO, allowing for a different governance structure to be used within the RugBANK confines. the RugBANK has a different, tighter governance structure.
The RugDAO is split in two to enable faster decision-making for the RugBANK subsection and to ensure a higher bar for decision-making among parties capable of voting on tokenomics proposals.
The launch of the DAO was partially overseen by a Governance Council, who was voted in and tasks to create the formal governance frameworks for the RugDAO– handling things such as: the criteria for submitting a proposal to the DAO, the number of signatures needed on the treasury, and so on.
The RugDAO Governance Council
An 33-person governance council (including individuals such as Keith Grossman, Mike Kriak, John Legere, Betty from DeadFellaz, and more) was voted on and elected to create, refine, and publish Rug Radio’s seven core governance frameworks– outlining things such as core team operations (how the business of the DAO is conducted), processes to establishing partnerships, and how spending and financial risk is analyzed for the Rug Treasury.
Seven members were selected as a subset of the inaugural 330-person governance council to oversee the DAOs administration, adherence to the governance frameworks, and other responsibilities such as:
- Ensuring proposals follow community guidelines and governance frameworks
- Reviewing proposal drafts to make sure they are detailed and compliant
- Reviewing DAO expenditures
- Preparing proposal and partnership analysis reports
- Support the drafting and amplification of community ideas
The Rug Radio DAO Operational Council can be found here.
Rug proposals can be found here.
The Rug Radio core team, along with Syndicate, will help and guide the elected DAO council with creating the initial proposals and frameworks of the RugDAO– but it is explicitly not involved in the Governance Council.
Official communication from the Rug Radio team specifies that the DAO Council is more of a “funnel and a representation of the best interests of the DAO as a whole, not as a silo within the DAO.”
Upon the finalization of the governance framework, the DAO can vote on what happens to the DAO Council: dissolve, reset with a new vote for the next DAO chapter, or leave it as-is.
The Rug Radio Profile Picture: Collaboration with Cory Van Lew
Rug Radio’s roots are in the frenzy of NFT activity from 2020-2021, where Farokh built a hyper-engaged audience around the NFT conversation on on Clubhouse and Twitter Spaces.
Rug Radio’s flagship show, the GM Web3 on Rug Radio, is the largest daily discussion on web3, hosting interviews and panels with the likes of Tim Ferriss, Joseph Lubin, Sean Wotherspoon, Jack Butcher, BAYC Founders, Doodles Founders, Aave’s Stani Kulechov, and more.
When everyone was launching profile pictures, Rug Radio launched its Genesis NFTs– horizontal rugs intentionally designed to be Twitter banners rather than profile pictures.
In November 2022, at Art Basel, Farokh announced the Rug Radio PFP– artwork in collaboration with Miami-based artist Cory Van Lew.
“We’re doing a collaboration drop with Cory Van Lew, who is, in my eyes, one of the best artists in the space,” says Farokh. “He’s incredible and Web3 native– I really vibe with his art, and we became very close. The PFPs are free for all Genesis Rug holders, it’s a celebration of the space. It’s called Faces of Web3 because I believe that Rug Radio is at least one of the louder voices of Web3.
Rug Radio and Creators
Rug Radio’s relationship with creators is similar to a record label, but Rug doesn’t own or have a stake in creator IP, and it doesn’t plan to mire creators in complex legal entanglements.
Rug aims to be a platform-agnostic service that can be tapped into from any platform like Tik Tok, YouTube, Snapchat, Instagram, etc.
The first phase of the project seems to be building an early-stage replacement of a layer of creator economy intermediaries– such as Patreon, Substack, etc.– that help creators monetize their audiences and take a small(ish) percentage.
Creators act like network participants (called nodes) by entertaining and engaging the various consumers.
“Creators get a host pass and yield more $RUG tokens with a bonus every three months,” says Farokh. “The participants, for being part of the ecosystem, also get value accrued back to them because they’re yielding tokens every day through their Genesis Rug NFTs. With that, the platform grows as well, which is Rug Radio, which is the RugDAO.”
Currently, Rug Radio seems to be targeting the sponsorship and ad money niche that tends to be coordinated externally to Web2 platforms. Down the line, it may be ad revenue or even outright platform ownership.
“Let’s say a creator starts a show on Rug Radio and Rug Radio facilitates sponsors and resources for pre and post-production,” says Farokh. “The creator would keep the lion’s share of the money, and the remainder goes to the DAO, which is distributed per DAO governance. The creator can use the brand, tooling, reputation, and network Rug Radio is building– and the Rug Radio participants are organically building that.”
Rug Radio’s show schedule is typically posted on the Rug Radio Twitter every day,
“The Morning Show is getting plenty of sponsors and interest, and it’s currently the anchor of the Rug Radio Network,” says Farokh. “I’m creator 001– we’re hoping to have five, six, ten, two thousand and beyond of these shows with different creators. We’re testing the percentage of revenue to send back to the DAO to support the ecosystem and the best ways to support future creators.”
Rug Radio Rewards Guide
Rug Radio launched a “Participate-to-Govern Loyalty Rewards Program” in early 2023 to incentivize member engagement. Members are rewarded with $RUG token for engaging with tweets on Rug Radio’s official Twitter, as well as other Rug Radio creators.
Participants can earn up to 210 $RUG per month with the following breakdown:
- Like: 1 $RUG per like (maximum 2 likes daily)
- Retweet: 1 $RUG per retweet (maximum 1 retweet daily)
- Comment: 1 $RUG per comment – (maximum 1 comment daily)
- Hashtag: 1 $RUG per use -(maximum 3 uses per day, with a limit one use per hashtag daily)
$RUG can be swapped on the on-chain Rewards store.
More information about the rewards program can be found on the official website.
Final Thoughts: To Rug or Not to Rug
Rug Radio was created to be a business and should be viewed as such. The team publishes quarterly financial reports that hold the organization accountable to its projections.
Pertinent Rug Radio addresses are public (*chef’s kiss* to the blockchain):
Gone are the days (we hope) when a project can just launch a PFP with no business model, rack up fortunes for founders that don’t build anything, and slowly take the path of least resistance to obscurity to the dismay of its investors and community. Rug Radio is a glimpse into the future– of how Web3 tooling can actually be applied to solve real-world business problems.
Simultaneously, by its design, it’s a running public experiment on how a decentralized autonomous organization can and should run, especially when there are revenue streams coming in and payments outgoing.
Through the Rug DAO, Rug Radio’s community can vote on goals, budgeting, and all the pertinent issues that come with running a business.
For further information, we recommend checking out the interview with Rug Radio Founder Farokh and Head of Tokenomics Mel on the Bankless podcast Overpriced JPEGs embedded above.
“Many projects, businesses, and people will be very successful in Web3, but I think there are very few who manage to create and cultivate within their ecosystems,” says Farokh. “We want to create an environment where everybody can partake, and it can feel special. I want to create a safe place and inclusive place for people to come in and feel like they can learn and they can meet people while getting rewarded for participating in Web3 as a whole.
To learn more about Rug Radio, we recommend parsing through Rug Radio’s wiki.
The post What is Rug Radio? A Guide to the World’s First DAO Media Ecosystem appeared first on BitcoinLinux.