Modern Finance: Empowering SubDAOs in a Decentralized World with Gabby Dizon
In this podcast, YGG co-founder Gabby Dizon takes us through the governance of the various subDAOs supporting YGG and how it encourages and incentivizes community involvement.
The Modern Finance podcast simplifies all things decentralized finance (DeFi), yield farming, NFTs, and robo-investing, with experts and entrepreneurs building the tools for modern finance.
Modern Finance is hosted by Kevin Rose, a partner at True Ventures, a venture capital firm that invests in early-stage technology startups. Kevin also hosts PROOF, a podcast for in-depth NFT coverage where he interviews NFT artists, up-and-comers, and industry icons. Previously, as an entrepreneur, he founded the social news site Digg, the intermittent fasting app Zero, and the meditation app Oak. Kevin was also a general partner at Google Ventures, where he invested in companies like Ripple, Blue Bottle, Medium, and Nextdoor.
This episode of Modern Finance features Gabby Dizon, co-founder of Yield Guild Games (YGG).
Gabby talks about the governance structure of YGG and how it relies on the community to surface new games that can become potential investments for the DAO and eventually lendable assets. Gabby also discusses new DeFi chains that are branching from Ethereum and gaining popularity in the gaming space.
The following is an excerpt from the discussion. Listen to the full podcast here.
Kevin (17:39): You must hear about a lot of games that are in pre-release and things that developers are working on, so are there certain chains that are starting to stand out and pick up some momentum?
Gabby (18:08): Honestly, I think most of them are going to have significant gaming activity. I don’t see one chain winning. For example, Polygon is great if you want to remain tethered to the Ethereum ecosystem. Immutable X is a really good one as well; they have their own ecosystem of games that they are publishing. Solana is also picking up a ton of traction, and I think all of them will, because there are so many new games coming out, and they are going to fill up all of those blocks.
Kevin (18:43): I agree. There are just going to be so many different chains and cool projects, and you want to go to where the cool projects are, and in my opinion, as long as they function, they don’t fall over.
Gabby (19:00): And each chain has its set of trade-offs, like, “Do you want a newer developer environment but maybe don’t have as many developers, or do you want something that is tethered to the Ethereum ecosystem? Do you want security, speed, or decentralization?” It’s all trade-offs in my head, and you just have to make the correct trade-offs for the game you want to build.
Kevin (19:21): That makes sense. How are people participating in governance? You mentioned having the YGG governance token will allow you to vote on certain issues. So, what has happened to date, and what do you imagine will happen in the future?
Gabby (19:35): So we have this concept of subDAOs, and subDAOs are DAOs that are under Yield Guild that are organized around a certain game or region.
So we have one subDAO around our estate in League of Kingdoms called YGG LOK. So we bought a 286-land estate in the game League of Kingdoms, which is a strategy game like Clash of Clans. And we put it in its own wallet and issued a token that is basically considered fractional ownership of that estate, and we let the active players buy into it, and they own a portion of that estate, and now they are participating in governance, solving issues such as, “What do we do with the yield generated?”
The game itself generates yield in the form of DAI, so they passed the first proposal to turn the DAI into cDAI (Compound DAI) so the yield was generating more yield, which was pretty cool.
And when Yield Guild did its token sale, the subDAO passed a proposal to buy YGG tokens, so the subDAO owns YGG tokens, and they coordinate things like when are they going to raid and who will they attack, so it is very interesting in that the day-to-day coordination of what is basically a World of Warcraft guild but with real-world assets earning real-world yield.
So we are focusing on the subDAO governance first, and then at the top level, we are building the product and infrastructure to support all these sub-guilds, so I think we will be slower to decentralize as we build out our vision, but we want the economic benefits of being in the guild decentralized, early on.
Kevin (21:22): It is always tricky, isn’t it? I talked to some people working on different projects, and I am not a big fan of design by committee, so how do you decide how much of this to pass on to the community and how much do you do internally? It sounds like you are leaning more towards leadership-driven internally with some community at the edges, is that right?
Gabby (21:56): I wouldn’t say at the edges, but how the games are played is definitely in the hands of the community. So day to day, how we coordinate on playing this game together is 100% in the hands of the community, and we have actually surfaced some really interesting games because the community was interested in it.
But on the vision and product level of the guild itself, it is still closely held by the founders and team. But with the subDAO, activities like playing the game, which earns revenue, that is very community-driven. Even the managers running these games are from the community, but the product infrastructure and investment decisions coming from the guild are still held by the founders and the team as of this time.
Kevin (22:49): That makes sense. This is so cool. I wonder how someone gets involved? There are just so many things that you are doing and so many pieces. Do you kind of have to look at the list of games that you support and jump into Discord and find the right room? Is that how people get started?
Gabby (23:04): Absolutely. When you join the Discord, there are 30 games that people are involved in at some level. There are always new games coming in, with AMAs. There is a karaoke room where people sing and hang out, there are contests where players can earn NFTs in different games. So there is a lot going on, and Yield Guild itself is not a guild. It is a guild of guilds, or a federation of guilds, so when you go in there you can find your tribe, what is the specific game that you're interested in, or maybe you are interested in playing games with people that speak the same language as you or people from the same country with similar interest.
We also have an esports team for NFT games starting with Axie Infinity, so we maintain a roster of esports players, and then there is an active tournament's scene, so you have to find what interests you specifically and join that team, and when there are enough people around it, we form a subDAO with its own assets and governance. And it’s like your World of Warcraft guild that has its own bank account and lives outside any game that you can get into.
You can check out the full podcast on Spotify.