Probably? Why else would they be buying a team for?
>4. To be derived from the efforts of others3
check.
edit: I took a look at their "Flightpaper", and in it they acknowledged that some parts of it might pass the Howey Test, and they recognize the possibility of regulatory oversight
>This funding model requires extensive SEC regulation oversight.
However, they're pretty light on details on whether it would actually be approved by the SEC or not. Also by the looks of it they haven't registered with the SEC right now, but they're already raising funds?
Or obviously an ETF, or obviously a mutual fund, or obviously a market maker, or obviously The Fed.
There is literally a 1-1 attempt at mimicking the current financial system under the label "DeFi".
The problem is that the vast majority of the participants don't care about this. They care about 720,687% APY as of this posting on things like this, which anyone should realize is nonsense:
Yes, ETFs and Mutual funds are both registered securities. They are regulated instruments/investments. They could not be sold, legally, if they were not registered with the SEC (it doesn't have anything to do, specifically, with being traded on stock exchange- a security can be non traded too)
The parent comment is pointing out that this looks like it meets the same definition as those other things and needs to follow the same laws, no matter how much people like it, want it, think it's better than what's it's "replacing"
> Well, sort of. Your yield isn't in dollars, it's in number of tokens.
Perhaps they should be more transparent about this, because I can end homelessness in the United States right now with $100 based on their reported APY.
The only people who are attracted to this misinformation are amateur investors, and I fear that is the whole point.
But this is my point, it takes an understanding of finance and an understanding of what’s actually happening with these smart contracts. Retail will get slaughtered.
3 really depends on the rights of the token. It’s not exactly without precedent, take the Green Bay Packers it’s the sole NFL team not owned by private billionaires, in fact it doesn’t have any owners. Nearly every 10 years they raise funds through a “public offering” of “stock” amounting to hundreds of millions of dollars. Every time they obtain a no-action letter from the SEC. Packers “stock” is not stock in the common sense of the word as it doesn’t convey ownership, again there are no owners of the team (despite people often incorrectly saying the city owns the team). But Packers stock does give holders the right to vote/elect a certain number of directors to the board. Lots of DAO tokens are structured this way, where holders are given voting rights but not ownership rights. There are numerous other examples including other sports related examples.
Perhaps the best part of the Green Bay Packers is that the reason they only publicly offer “stock” every 10 years or so, is they have to obtain permission from the NFL and the NFL’s official position is that the NFL must restrict the Packers public offerings because it is a “competitive advantage” over every other team backed by billionaires.
Nearly everything you said here is completely false.
> But Packers stock does give holders the right to vote/elect a certain number of directors to the board.
The toy stock certificates they give out to the fans that buy them have no voting rights whatsoever. Or any kind of rights at all. It's basically just some packers memorabilia.
> Nearly every 10 years they raise funds through a “public offering” of “stock” amounting to hundreds of millions of dollars.
what on earth. they do not raise "hundreds of millions of dollars".
> On each matter submitted to a vote of the shareholders of the Corporation, the holders of outstanding shares of Common Stock are entitled to one vote per share. Among other things, shareholders vote annually to elect members of the Corporation’s Board of Directors.
In terms of the amount the public offering document includes the price $250 per stock and the range 250,000-888,000 shares. These offerings historically sell out in minutes. I could pull the most recent SEC no action letter to confirm the amounts sold, but I don’t think it’s necessary at this point.
You went from calling everything I said “completely false” and going off on how there are no voting rights, to admitting you are fully aware of the Packers Public Offering Document but that my description is “overblown”.
The public offering document speaks for itself and I quoted it, so what’s overblown about the description? If you think it’s fraudulent launch your complaint with the SEC instead of arguing on HN about it and prove your intellectual superiority.
> I'm well aware of what this is and your description of it is quite overblown.
Your comments could have some credibility if you provided any information or made any point. Unfortunately you're instead saying nothing and just adding noise to an otherwise interesting discussion.
While you’re mostly right on the stock structure, you’re both (a) overstating the capital raised in the offerings by a significant amount and (b) overstating that the team “has no owner”. The team has an owner. It’s Green Bay Packers, Inc., represented by an elected president. The ownership structure is tolerated by the NFL because they’re quite old school but it will never be repeated.
If you work with the SEC on the governance of Green Bay Packers securities, it’s alarming how loose you are with facts. I suspect “work with the SEC” boils down to got coffee for your lawyer while you were in the room, because you’re saying some plainly false things that even Wikipedia, that bastion of truth, quickly proves wrong.
Every other team is owned through a business organization, but no one refers to those organizations as the owner, they refer to the private individual billionaires (ie no one says the Kraft Group is the owner of the Patriots, they refer to Robert Kraft as the owner. Or Mark Cuban is the owner of the Dallas Mavericks). No one would argue in good faith they are not the owners.
Their website [0] seems to disagree with you. They’re currently selling stocks for $300 each and have sold a total of 5,000,000 in the past, suggesting a total raised on $1.5 billion overall. Obviously that’d be in today-dollars, but the current sale has already raised $41 million in the last week or so [1], so the number seems in the right order of magnitude. Certainly having raised “hundreds of millions of dollars” sounds right though I haven’t been able to find reliable sources for the previous stock offerings to confirm.
The official stock website [2] also says the following about the voting rights.
“Q: How many votes will I receive for purchasing Common Stock?
A: You will have one vote for each share of Common Stock you purchase.”
I’m not sure what those votes actually count for, but they at least exist.
hrm. Reread the website and I think you'll find it's very much not stock in the normal sense of the word. And they're very clear that you can't make a profit from it (you can't even sell it) and it doesn't given any ownership:
>Common stock does not constitute an investment in “stock” in the common sense of the term. Purchasers should not purchase common stock with the purpose of making a profit.
> You cannot sell, assign or otherwise transfer shares of Common Stock to a third party, except that you may transfer shares to an “immediate family” member by gift or in the event of death. “Immediate family” is defined as the spouse, children, mother, father, brothers, sisters, or any lineal descendent of a shareholder.
I agree that it’s not stock in the traditional sense, but neither of the people in the chain above me seemed to think so. Just because it’s not-for-profit doesn’t mean that it can’t sell for a lot (people buy team merch for a lot more) and the vote seems to mean something even if not much.
> Shareholders don't receive any power in the organization aside from an invitation to an annual shareholder's meeting with voting rights to issues decided at the meeting. The stock also pays no dividends to shareholders.
I'm pretty sure that the Green Bay Packers are in fact a publicly-owned non-profit corporation. A share in the Packers is not the same as a share of common (or preferred) stock, but it is a share in ownership that actually matters. It's very easy to prove this: the Packers have remained in the smallest market in all of North American major professional sports for over a century. They stay there because all those "little play votes" matter.
If you're describing an equity structure, you're unpacking the definition of the word "ownership." Saying "the city owns it" or "no one owns it" is just a naming thing.
Ownership is just a bunch of rights. In any case, why not securitize a sports team?
As it relates to the Packers, like any non-profit, I’m describing a legal structure with a lack of equity. Typically I wouldn’t use the words owners/ownership and just say non-profits don’t have shareholders, but the Packers happen to be the exception that proves the rule as they are a non-profit with stock. So it does have “shareholders” but unlike the commonly accepted use of “stock” and “shareholders” there are zero ownership rights, just governance/voting rights.
If this DAO did give its members ownership rights, then obviously it would be a security and their raise would be a regulated public offering, unless it met an
exemption. That is an idea baked into my original comment, where I simply say “maybe” as to 3 and it is dependent on the rights the DAO conveys.
As to why not securitize a sports team, that would be great and a DAO would be a potential vehicle for that, but a DAO wouldn’t be needed either. From a practical point of view, the reason we don’t see billionaire owners IPOing their team and reaping the financial windfall of an IPO is because the NFL, NBA, MLB don’t allow it. The leagues maintain very tight controls on who may own teams. For example a few years back there was a owner of a major - billion dollar plus - team that made some racially charged statements to the media and the league forced the owner to sell the team. Again the NFL even controls when the Packers can raise funds by issuing stock. Nothing prevents the leagues from changing their policy, but historically the leagues don’t like giving up control.
Sounds like you know what you're talking about. What do you think of this idea of a DAO from a legal perspective? Are there any DAO models in particular you find attractive?
It’s an area of law in its infancy. A few states, Delaware and Wyoming, have laws permitting corporate and LLC records to be kept on blockchain. I think I was probably the first attorney to file Articles of Organization for an LLC in Delaware that incorporated Ethereum smart contract addresses.
More recently Wyoming passed a law creating a “DAO LLC” which is pretty novel and allows “algorithmic management” of the LLC. The only entity I am aware of that has used it is CityDAO LLC, you can look them up and review their Articles on the Wyoming Secretary of State website. I’m not overly familiar with them but understand they are experimenting with owning a parcel of land.
Hypothetically say there were a DAO that got sued, without a legal entity it is a very real legal risk all participants of the DAO could be jointly and severally liable (which could include personal liability above beyond the DAO funds). Legally the concept of a DAO LLC is giant, because it creates a legal mechanism to shield participants of a DAO from personal liability.
I have a trademark application from March that has been approved by the USPTO examining attorney and been published (~10 more days left of publication), then I will set up a Wyoming DAO LLC and assign the DAO the trademark (I think it will be the first registered trademark owed by a DAO). It’s very simple, minimal risk of liability (unlike property) and I think will provide a solid legal framework moving forward (almost like an anti-troll mechanism for IP). It’s a real problem in the space, just as an example there have been bad-faith actors filing trademark applications for Doge and Dogecoin, which if left unchecked could lead to all sorts of legal problems.
Damn this post is solid. Even if I don't really get it, I can tell you do.
My takeaway is that what makes DAO LLC unique is that it allows for "algorithmic management".
I'm familiar with LLC management, where there are owners, wondering what advantage the algorithmic aspect adds. I'll go read up on CityDAO. Congrats on the upcoming project)!
Oooh, a copyright DAO. This is the most interesting thing in this entire comment thread, worth the time-value price of admission. Can you email me about this? Email’s in the bio.
Agreed! Similarly, the best outcome for the ConstitutionDAO was likely for them to bid but not win. Can you imagine the complexity of actually owning it. High odds it would have ended up intentionally destroyed somehow.
It's definitely an enterprise of some sort, and hence probably qualifies for many kinds of checks and laws.
For good or ill, a common pattern is (1) someone just does it. (2) it attracts regulatory oversight/action/whatnot (3) regulation becomes actually functional.(3.5) the incumbent now has advantage. PayPal, Uber, etc.
What's the alternative? Ban it? Create a framework regulating something that does not exist?
All that said, crypto-ish ownership of a sports team isn't a bad idea.
Its a prisoner's dilemma, the SEC's mission of protecting investors is impossible if their only response to compliance are enforcement actions that will hurt investors
In the past, this meant that exchanges won't list the token to trade (or delist, with traders panic selling before the delisting events), as any asset notified as being a security requires a broker-dealer to trade it ONLY IF it is registered. But for the past 2 years, centralized exchanges aren't involved in the liquidity. The network has innovated a way to incentivize liquidity with a fundamentally different model of exchange called AMMs (automated market markers, the acronym tells you nothing about why it is different though, but thats the term to look up). AMMs let people pool liquidity onchain and there is practically zero consequence anymore from SEC action - with regard to globally accessible liquidity. And sure, maybe the numerous liquidity providers can be sanctioned but they don't care, it is extremely easy to mix your legitimate funds with Tornado Cash and come out the other side and make a liquidity pool anonymously with mixed funds. It is up the regulator to figure out who to sanction and in this case the mixer's use isn't criminal and the clean funds on the ensuing anonymous side are only a civil issue. Also, even if you want to argue the cat and mouse game favoring the government's omnipotence, liquidity can be burned making that liquidity permanent no matter what happens to the human. I would actually argue a significant bullish thesis is based on how many assets are intentionally burned in liquidity pool bearer shares. Its pretty much perfect right now (with room for improvement in the liquidity pool technology). Between permissionless AMMs and permissionless bridges, and 3 trillion USD already within the crypto ecosystem outside of exchanges, its just not really the same game as it was 3 years ago.
The SEC regulates the intermediaries and now those intermediaries have been disintermediated.
You're missing the part where this interfaces with the classical finance system. The whole organization that wants to buy an NBA team exists in the US legal system, and that is the point that will be regulated, the fact they get funded with USD via a bank or crypto through a pool is irrelevant.
The SEC regulates companies that publicly issue stock and the intermediaries like stock exchanges on which that stock can be traded.
The company bit of the equation has not been disintermediated. In fact, that's the whole point of this transaction: to create a publicly traded company.
> Probably? Why else would they be buying a team for?
Teams are money sinks. The reason to buy a team is political power. To the extend that the state will turn a blind eye or two (see ^2). A totally random example[1], less random examples: Juventus, AC Milan, Olympiacos[^2] and countless others.
Just pointing the obvious, I agree that this transaction should be regulated, all I'm saying is that (3) is not _necessarily real_ in this or other cases.
American sports teams are generally very profitable due to the structure - franchises, closed, no relegation or promotion, shared academy intake academy preference to the worst performing teams - basically an owner can not invest anything, the team can perform bad, and they'd just get good youngsters without getting relegated, and keep the same revenues, whereas a European team being managed badly or with little investment will fall down the pyramid, with diminishing revenues, and they'd have only their own academy to count on, without investment to buy new players.
And for your Barcelona example, it isn't a good one. It's a fan owned club, the president is elected and isn't an owner and can't really invest in it bar some special cases.
If it's a non-profit organization, acting as the intermediary between the DAO and the legal system, that takes legal ownership over the team, then it could eliminate the expectation of profit, and be free to engage in this transaction, right?
Umm no. I have the expectation of loss but am putting a small amount money to insure myself against the emotional distress of if I missed a big mooning opportunity. The default expectation is that the money is all lost.
If you invest $100 with the expectation that it will be lost with 99% probability, and that it will become $100,000 with 1% probability, you are expecting a profit of $901.
No, it would be stupid to "expect" a profit of $901 because there is no scenario in which you would gain $901. You would either have -$100 or +$100000 and never +$901 in your stated scenario.*
In your case since there is a 99% probability of -$100, my "expectation" would be -$100 and if "surprise" of $100000 happens that is "surprise", not part of the "expectation".
* I realize there is a term called "expectation value" and I hate that term with a passion because in any distribution that doesn't roughly resemble a bell curve it would be stupid to "expect" the mean value. Statistics like the mean are not a good way to establish a strategy for a game that you only get to play once.
Exactly, my point is it's stupid terminology. I use the word "mean", not "expectation". That brainwashes people actually "expecting" the mean to happen, which in this case, it never will. Treating the mean as an expectation of some sort is just not a good formulation to strategize about this game.
GGP said "you are expecting a profit of $901" -- I'm not, personally. I'm "expecting" -$100. How about we take a bet? I'll expect -$100, you expect $901. If I win you give me $100, if you win I give you $100, and if neither of us wins we split the $100K. Deal?
This is a game theory problem, NOT a statistics problem. In my case the utility of losing -$100 is zero, the utility of gaining $100K is very positive, the utility of missing out on the $100K is extremely negative.
>This is a game theory problem, NOT a statistics problem. In my case the utility of losing -$100 is zero, the utility of gaining $100K is very positive, the utility of missing out on the $100K is extremely negative.
Calculating utility, or the expected value, is entirely statistics.
Just because you think so strongly that your definition is correct does not make it fact.
"Expected value" and its derivatives is a specific term, with a specific calculation. You can't just throw around words and expect others to understand you don't mean the actual definition when you say them.
I am not arguing over a definition, I'm just saying that the definition sucks and that GGGGGP was actually expecting the "expected value" which I wouldn't do in this case.
I don't know about you but if you have a coin labeled 0 and 1 and flip it it would be mind-bogglingly stupid to expect a 0.5 out of this coin. Just like if you have a coin labeled A and C it would be stupid to expect a B to come out of it. You'd be better off picking either A or C and expecting that instead.
No statistics class I took said that a coin with sides A and C can give you a B, or that you could "expect" 0.5 from a bimodal distribution with a delta function at 0 and a delta function at 1. The mean value may be 0.5 but it's not something you would expect to actually happen; if you wanted to maximize the probability that your prediction is correct you'd be better off picking 0 or 1.
You're making an entire thread about defending your position against using a term of art the way it's used by professional and academics all over the world. Judging by every reply you're getting, everyone know what they mean when they talk about the expected value of a probability distribution. Just drop it.
It’s not a personal attack. “Expected value” is a very basic term of art introduced in stats 101.
It’s like having a huge argument about a physics problem claiming “force” isn’t mass times acceleration because nobody is “forcing” you to do anything.
Back to your 0 or 1 example. 0.5 is the meaningful value to know over any kind of large sampling because that is what matters for “expected value”. It tells me what I should expect overall if I play 1000 times.
What you want is called the “mode”. Given a single instance of an event, what is the most frequent value.
> “Expected value” is a very basic term of art introduced in stats 101.
I already know that.
My point is it's shitty terminology, even though it's somehow become a standard.
Stats 101 also does NOT tell you to "expect" the expected value to happen.
GGGGGP however seems to actually use the value to formulate a strategy, and that's where I'm pointing out that this entire formulation of using stats to approach this problem is flawed. You don't have enough chances at the game such that the mean is a meaningful number to consider.
That's also why I always refer to it as the mean even if other people call it "expected value". I hate the term with a passion and I will not yield to the wise guys who wrote the books.
Honestly I'd rather not have this discussion in English because this isn't a problem in many other languages. In many languages mean is not called "expected" anything.
Expectation of "profit" actually just means that you expect to make money from the investment, not that the money you make exceeds the money you invest.
While ongoing profit from the investment itself is nice it's not legally required. For example, stock in Uber is a regulated security, even though Uber has a history of losses and is not expected to be profitable in the near or distant future, if ever.
Similarly, loss companies were once frequently sold to savvy investors needing losses to offset their taxable earnings from other sources, and those investments were similarly regulated securities even though there was clearly no expectation of profits.
3 doesn’t apply. The only way to make money is to resell the token/coin/whatever. The holder can’t actually extract any value from the underlying asset.
If we're going to parrot outdated legislation, let's also force all automobiles to be classified as horses & carriages, so they can be taxed in accordance to the carriage act of 1794.
Exactly, a public company that skirts KYC/AML laws and securities laws.
I'm not saying I necessarily agree with those laws, I just see much of the "DAO revolution" as designed to "free the people" into investing anonymously and without accredited investor requirements, without directly trying to change the laws.
One thing I think it does that most don't talk about: allows people to register a global company/org. Right now, I think the highest level to register an org is the nation-state level, not much, if anything, exists at a global level.
That’s actually the point. You theoretically shouldn’t need a court. Everything is regulated by code, and if something goes wrong you have to own it. The code is public. You can vet it as much as you want. Proposals are voted proportional to code ownership. It looks controversial but not utterly nonsense to me.
For on chain stuff, sure. Where it interfaces with the real world, how do you make the agents carry out the decisions of the code without using the courts?
I'm by no means an expert, but my intuition is that the relationship between on chain and real world should be regulated by real world courts.
So, for instance, an on chain DAO hires a contractor, that then does insider trading on behalf of the DAO in the US: both the contractor and any real world activity in the US get targeted by US courts.
It's like fining Google in the EU: you can't touch it in the US (it's as if it's on chain), but you can prevent it from doing business on EU soil. Or what happened with Facebook in the UK: the parliament summoned Zuck, and he just didn't show up.
It's convoluted, but not far fetched imho.
You don't need to hire lawyers to create the entity and coordinate internally. I've managed a multinational company: it's absolutely crazy the amount of complexity needed to coordinate between legislations, just because states can't efficiently talk with each other. It doesn't make any sense. It's a broken protocol.
It's a fine line: within the org, on chain and no lawyers, only code and everyone must take care of code due diligence. Outside the org (ie. real world), you deal with lawyers as much as needed.
I've thought that many crypto solutions are just workarounds for not having global standardization around laws. Do you think a global governance level (with more buy-in than the UN) would help mitigate some of the challenges that a global company encounters?
In other words, do you think there would be as much of a need for DAOs if a company could register with a global authority, had globally aligned taxes, etc?
It's literally an implementation of a Kafkaesque judge that can never be reasoned with, will never explain itself beyond pointing to the rules and can never be overruled.
Why this is supposed to be a good thing is never explained.
Because it's global. I don't need to reason with anyone anywhere, I don't need to hire lawyers, I don't need to make a global enterprise fit local regulations that are often conflicting.
I'm not saying it's recommended, or even reasonable. I'm arguing that is not utter nonsense in some peculiar cases IMHO
I don't find any of these points to be convincing.
Storing data in a blockchain doesn't mean that local laws don't still apply. Even if the FBI can't prevent you sending money to a terror organisation with a smart contract, they will still arrest you for it.
Being able to reason with someone can be an advantage. With imperfect rules, having authorities involved that are allowed to have some discretion can be a huge boon.
And not having to hire lawyers? Well, you still have to hire someone who understands smart contracts, someone who writes them, and someone to negotiate them with whoever you want to close your contract with.
I believe we're not saying opposing points of view. What I'm arguing for is moving corporate law on chain, mostly regulating relationships between shareholders, and keep everything else real world. In Europe for instance it's quite absurd how much bureaucracy you have the cope with to create operating entities in different countries within the same economic space. Everything else can stay the same - penal law in particular. It's a very fine line but I believe it can make sense in some instances
A fair point—there also isn't much of a global judicial system to regulate property ownership. WIPO perhaps but doesn't seem too relevant/powerful to most and probably doesn't cover most things.
So then we have global things often being regulated by national laws, which, seems to be a conundrum I see happening more and more.
It's more like a co-op. The difference is that every participant has a voice. With the traditional public company - with few exceptions - decisions are made only by the board and the execs.
The owners aren’t providing labour. Votes are tied to shares—one person can have more than one vote. And the shares are acquired with capital. Closer to corporation than coöp.
If the DAO committed to turning the team over to its players or fans, and then fixed one vote one member, that would resemble a coöperative.
There are worker-owned co-ops and customer-owned co-ops. DAOs also are a fairly generic concept, made more specific by whatever terms and conditions are memorialized in their originating contracts.
I don't see how this is a co-op. The voters are neither workers nor customers. Their voting power is directly proportional to the size of the stake of the company's asset's/money they own. That a publicly traded corporation decides to concentrate day-to-day decision-making power rather than hold a full shareholder vote on every small matter is an organizational choice. Many co-ops have boards and execs too.
> With the traditional public company - with few exceptions - decisions are made only by the board and the execs.
In a public company, ownership and management are separated, for a good reason. You want to be able to own a company, without necessarily being involved in its management. Otherwise, you're severely limiting the number of companies people can invest in and preventing the owners from having other jobs, or you end up with a bunch of amateurs managing the company in their spare time.
The revolutionary bit is you can raise money through a DAO without paying millions to a corrupt investment bank to handle your IPO. No letting the investment bank set the opening price too low so their stable of institutional investors get a reliable "pop", etc. You don't need to spend millions on special consultants to help you prepare regulatory filings. So far, anyway. I'm a major crypto skeptic, but I definitely see the appeal of disposing of these gatekeepers and putting the public back in public markets.
With an investment bank, you can negotiate an agreed upon price. Here you're at the mercy of whatever unpredictable gas fees a cabal of invisible miners decides to charge.
I'm pro-cryptocurrencies, but I also don't really get what's so amazing about DAOs. Are there any references or explanations from people who love them?
Right but it’s like a meta company. Like, a company of anything, not just traditional businesses. Plus the whole process is totally streamlined and, outside of rug pulls, super transparent. Ownership and transfer of ownership is in front of everyone’s eyes.
It’s like what Amazon did. People could buy stuff before, but now they could buy stuff with much more ease (search, order, return etc).
I just assume that could be possible with a gofundme or kickstarter platform if they were allowed to sell ownership shares to the public. I think why it doesn't happen on those platforms has more to do with the securities laws than tech challenges.
As usual, crypto is not a technical solution but rather a regulatory arbitrage solution. The technology is old and boring. Scoffing at the law, though, well that's fun and new.
I assume none of the existing regulations or laws that involve public companies apply to DAOs? Like can you pool the money and then do nothing or go against what was agreed upon?
You assume wrong. The things regulators have authority over are rather broadly defined, and the regulators will and have rather eagerly pursue novel attempts to avoid regulation. The best that one running such things could hope for is a period of indecision.
This though seems pretty cut and dry “is a security” and all sorts of compliance will apply early.
First, the difference is that it's trust-less because people votes are backed by crypto.
Second, you're aware the "congrats, you've just invented" argument is a ridiculous fallacy that can be used against any kind of innovation. It's also has a very bad record as it's been used against the internet, smartphones, social media etc.
2. Even if it was, the league wouldn't approve a sale to...whoever/whatever this is
3. Even if they did, the cheapest team is currently valued at $1.3B and the actual sale price would be a lot more than that. The last such effort raised $40M and got outbid.
1. Currently no team is officially for sale, but in the last 5 years at least 3-4 teams were acquired, so thinking long term, there will be opportunities to buy a club
2. I think this is the biggest issue - not even that the league won't approve the transaction, but that it won't pass the legal requirements. The owner probably needs to be an individual or a corporation, and DAO is... neither of these. Who knows how it'll change in the next few years though, maybe there'll be a way to fit DAOs into the legal framework.
3. And if this DAO ever raises $1.3b, by that time the cheapest team will be worth $2b! I don't think it'll ever happen in NBA, but maybe some lower division in English football? It would be interesting to see, if some DAO owns a small club to see how the management process would look like in practice.
> the league wouldn't approve a sale to...whoever/whatever this is
Commerce finds a way. If this thing raised $10bn and passed regulatory muster, one could “sell” a team with a moderating layer for governance. Long story short, the league is unlikely to be the blocking factor per se.
You are even more optimistic than their own whitepaper:
>we anticipate the NBA will not be favorable to giving majority ownership to any faceless DAO/corporation in the near or medium term regardless of $$ offer.
If every other hurdle is miraculously jumped, the NBA will not be the sole obstructionist. This DAO is unlikely to get approval because of the regulatory questions and because they have no money.
If you were trying to derisk this project, the NBA should not be a concern.
The league is run by the team owners. They would not be getting this money, only the soon-to-be former owner would. So that $10 billion wouldn't impact their decision. (Possibly it might have a positive impact on their teams' values, but they're more likely to see this arrangement as an anomaly. DAOs would have to develop the capacity to buy a significant majority of teams in the league to overcome this hurdle.)
Also, sports team owners feel keeping detailed financial info secret gives them an advantage in negotiations with the players' unions. This is why the NFL banned public teams like the Packers. Having so many owners would make it improbable that they could keep a lid on proprietary info, which in the end will cost them money.
Meh, if it does it’ll be really boring like Goldman Sachs developing a blockchain to handle institution level transactions on a distributed ledger.
The whole thing with cryptocurrencies is just people excited about money laundering rebranded as something cool. Take that away (as no serious national government would allow such a thing) and what you have is more or less indistinguishable from Visa.
this sounds to me like the same logic cults run on. If the world doesn't end with the Maya calendar, that's only stronger reason to believe it'll end the next year.
I'm honestly not sure if the fact that every week there's some other harebrained MLM type crypto scheme going up in flames is somehow suggesting that there's some massive success around the corner
Please read The Handwavy Technobabble Nothingburger https://www.stephendiehl.com/blog/nothing-burger.html and tell me where is he wrong because obviously (?) if he is right then any "massive" success is impossible.
they seem to just keep rediscovering why current systems exist burning massive amounts of power and money along the way. I do hope something comes of it but so far it seems to be finding nearly all the local minimas.
It will be most likely newly formed companies and not existing ones, because that way the participants will understand the risk and the lack of safety net. And frankly, why invest in NBA when you can invest in biotechnology
What big technological shift wasn’t written off before it worked?
Computer, e-commerce, electric vehicles, all of these things have been written off. So? You can’t expect people to be able to see the future. They have to make decisions for the present.
Those decisions don’t damn a technology though. Crypto has plenty of attention-over-time to mature and that’s all it needs.
If it’s ever mature and everyone is writing it off and all the early adopters are leaving, that’d be a problem.
What will happen to the funds contributed to ConstitutionDAO that owners don't feel is worth paying the "gas" fees to get the refund on?
> the group said it had 17,437 donors with a median donation of $206.26... One user on the Discord said that in order to get $400 refunded, they would have to pay $168 in gas (https://www.bbc.com/news/technology-59392827)
Presumably there are people who donated $100 and it isn't worth getting the money back. Are these pots of money a good way for a scammer to get a lot of money input and then only have to refund 75% of the donated money? If they raised $40M and only $30M gets refunded, who controls the remaining $10M?
At some point it seems like it would be ripe for a scam. Even if this case has some protections, it seems like it would be easy for someone to do something unprotected in the future.
Everyone send me bitcoin and if we hit $2B in bitcoin in the account, we'll buy an NBA team and all share ownership in proportion to our investment. If we aren't able to buy a team, you can get a refund. Oh, 1% of people forgot about it and didn't claim their refund within the 2-year refund window? Well, that's $20M for me.
Their legal claim to the value stored in the eth isn't gone just because they can't get it out. If these are actually set up in a legal way these type of pots are nuclear waste. You don't want to be stuck keeping this thing alive or disbursing money from it.
The first couple of times the scammers may win, who knows.
So, a company (DAO) says it's going to use investment money (token contributions) to buy an asset (copy of the Constitution) and fails to buy the asset...and then the stock (token) goes up 30x in price?
There is no deception behind the marketing for the ConstitutionDAO. No one has made any claims of it being a profitable venture. It was explicitly marketed as a non-profit venture to democratize ownership of important cultural pieces. The PEOPLE tokens appear to be going up in value solely due to the sentimental value attached to them.
How can you be sure this isn’t wash-trading organized by the largest owners so they can attempt to profit at the expense of individual retail investors?
Seems like wash trading in this way would cannibalize your gains if you don't withdraw before too long. I actually don't think that's what's happening. I think it's the memecoin effect. The constitution DAO got a lot of media attention and that's driving speculation on their $PEOPLE token.
Yea, the other day I had the thought that many cryptocurrencies are basically just the stock without the business. So much easier to sell a stock when there's no business behind it, potentially contradicting the hype story.
Apologies on the title. It is a bit misleading in that it it is a different DAO (Krause House).
Just following the HN guideline: "please use the original title, unless it is misleading or linkbait; don't editorialize." from https://news.ycombinator.com/newsguidelines.html with a minor change to the original title to fit length restrictions.
Not sure if the NPR headline writers understood the DAO difference or just wanted to generate more interest in the story.
The NBA has a rule where a team can have no more than 25 total owners and the least an owner can hold is 1%. It was created in response to shenanigans by team owners where they would sell tiny fractions of a percent of the company to friends and family so they could claim they owned teams.
So unless one of them have at least $12M laying around, I don't see any of them being able to do this.
Who exactly are you answerable to if your boss is a DAO? Does a group of random crypto enthusiasts act as the board of directors? If so, how do I short that company?
It depends how the DAO is structured. But a conservative setup would look exactly like an existing Corp. You answer to the CEO, the CEO answers to a board, and the board answers to the shareholders.
In an early, conservative implementation, all of that could be offline except the shareholder votes, which would be automated on chain. The board would be beholden to the chain decisions via normal lawsuits in offline courts.
In a more radical setup, the board votes could also be done in software. More radical still would force arbitration onto the chain.
What will be interesting to watch in the coming decades is to see how much of the workings of a company can be done in software on-chain.
It seems uncontroversial to say you could do shareholder votes there though… and that’s the minimum required for the scheme like this.
You will definitely be able to short this stuff on a crypto exchange.
Just like a USD short account you’d have to stake some capital, probably in BTC or ETH or something like that. And you’d have to hold enough crypto to pay your recurring short fees. And in the even of a margin call you might need to put up more capital.
Find someone who will lend you their tokens (if it’s on-chain, you will need collateral) and sell them. Later you can buy same amount of tokens from the market for a lower price - if price indeed goes down.
There are but you really shouldn't. It's such a wasteland you'll get savaged before you can turn a profit. It's not grounded in fundamentals and it's exposed to industrial scale price manipulation. The only win is not to play.
The big jump occurred when Ballmer paid $2 billion for the Los Angeles Clippers in 2014. Despite being a historically terrible franchise that is the third team in the city behind a) the Lakers and b) whatever team that you were already a fan of before moving to southern California, the price was four (!) times as much as what any previous NBA team sold for.
It's unbelieveable, especially considering their values 10 years ago. Brooklyn Nets were acquired in 2010 for $200m, and then sold in 2019 for $3.3b - 16x more in 9 years!
This will obviously not work. But assuming you could get AML working for the DAO such that it doesn’t get legally nuked from orbit, for what assets would this model work better than existing systems? At first glance, its strengths appear to be of benefit to groups who are bad at keeping minutes/records, or keeping their treasurers from stealing their funds.
If anyone watches UK Football you might be thinking that a DAO manager might not be the craziest idea out there given the ridiculous turnover in managers in recent years. I mean would be an epic experiment to watch.
The timeline referred in the title is a little off. Krause house was started a couple months ago and has been active for a bit, while ConstitutionDAO was spun up and closed down in less than two weeks
Similarly the line about ConstitutionDAO investors struggling to "recoup their losses" is dishonest as they got a full refund, and the DAO token has been pumped by Chinese communities, making it a 10x profit if sold now [1].
It will probably cost over $1 billion to buy a team, seems like you should need to raise more than 0.4% of the amount before having your project written about in the media as credible.
I highly doubt it will ever materialize, but it's ok to dream big and work towards that dream! I imagine this community might educate themselves in how to run a business like a sport club, what are different responsibilities there, etc. They have funds that they can use to invite some guests from NBA to talk about the work behind the scenes. Yeah they will never actually own a club, but as long as everyone there believes that it's the journey that matters - have fun!
I was waiting for the crypto crowd to do something like this.
It's the ultimate dumb move for somebody who won the lottery (either real or figurative)
When things go well the public falls in love with the players, when things go south the owners are the first in line of the firing squad . Fans , media, talk show hosts...they get attacked by everybody, maybe only the coach has it worse but at least he can leave.
It's not dissimilar to the Ontario Teachers' Pension Plan owning the Toronto Raptors for a decade, I imagine they'd need to prove they have several years of operating budget available before purchasing but I can't see why they'd be disallowed outright.
I'm on the neutral side of the playing field. But, if they actually wanted to do this, they're missing a lot of critical steps in order for them to actually successfully do this. Granted, they even hit the price to purchase a team
Lol. If this isn't proof that we are close to the beginning of the end of a bubble the likes of which the world has never seen before, I don't know what is.
Care to explain? The idea of a bunch of people pooling their money to buy an NBA team seems pretty practical to me. Is it the media/popularity aspect that makes you think of the end of a bubble? ie if they were buying something more mundane like a small plot of real estate would that be less hype-y?
https://www.investopedia.com/terms/h/howey-test.asp
>1. An investment of money
check
>2. In a common enterprise
check
>3. With the expectation of profit
Probably? Why else would they be buying a team for?
>4. To be derived from the efforts of others3
check.
edit: I took a look at their "Flightpaper", and in it they acknowledged that some parts of it might pass the Howey Test, and they recognize the possibility of regulatory oversight
>This funding model requires extensive SEC regulation oversight.
However, they're pretty light on details on whether it would actually be approved by the SEC or not. Also by the looks of it they haven't registered with the SEC right now, but they're already raising funds?