As praises from celebrity investors and movie deals rained on the subreddit/memestock trading floor WallStreetBets, its two contingents of its moderators went to war, each accusing the other of profiteering off the community’s newfound fame. Now, those beaten in the squabble intend to start a competing community which will act like a “decentralized hedge fund.”
The bitter he said-he said started last month when a group of primarily-newer moderators (most visible among them, zjz, who joined last year) accused the veteran mods (who include only1parkjisung, who joined as a moderator around 2014) of coming back from dormancy to “cash in” on WallStreetBets’ sudden newsworthiness. Zjz wrote on February 5th that wsb had been “taken hostage” by the old mods who referred to themselves as the “board of directors”:
We’ve been taken hostage by the top mods. They left for years and came back when they smelled money. They’ve been busy creating private email addresses to funnel all the press correspondence away for their own gain, talking shit about all of the active mods, and scrambling to get paid from some movie deal.
Zjz and fellow detractors were stripped of moderator status (the reasons itself are a source of dispute). Soon the ouster was reversed by Reddit’s admins, who restored the new mods—including zjz—and sent the old guard packing.
“We had not left the group at all,” one former WallStreetBets moderator, positionsorban, told Gizmodo via Reddit chat. Positionsorban said that while the now-ousted group “did let zjz and his bots take over more and more of the day to day moderating,” they still “discussed wsb related issues daily,” posted, and awarded flair. Some, they said, “did things behind the scenes like organize AMAs with people like Benn Eifert and Mark Cuban.”
Modwars aside, the defectors’ project “WallStreetBets 2.0,” is being pitched—with memes, naturally—as a blockchain-based DAO (decentralized autonomous organization), to allow WSB 2.0 users to pool tokens and split the profits of a collective bet. They write:
It’s time to build a new version of WSB. A decentralized version powered by smart contracts, where no one – not the mods, not Reddit – owns the platform. A place where you are financially incentivized to share your ideas and your memes. A place where you don’t need to trust anyone because you can view the public, audited, and immutable code. A place where millions of individuals can pool their money together to have more power and influence in the market than the largest hedge funds [...] it’s time to stop betting against the house and become the new house
“Smart contracts” refer to self-executing contracts that are permanently traceable, with terms written in code and distributed across a blockchain network. They don’t say what the specifics of this contract might be, but we’re imaging users would vote on stock with DAO-issued tokens and decide when to exit their position, rather than relying on, for example, rocket ship emojis to sustain investor perseverance. Only1parkjisung told Gizmodo that they’re still working out details like potential fundraising, but say that at least half a dozen people, mostly “og mods,” are involved.
The idea isn’t new; in 2016, the original DAO raised over $160 million, but just days later, a hacker stole $50 million of DAO tokens (ether). As Stephan Tual, the COO of Slock.it which created the DAO pointed out to Wired at the time, it’s almost impossible to sell purloined DAO tokens on the cryptocurrency market, since all contracts are permanently recorded. But cryptocurrency exchanges delisted the DAO token nonetheless. To this day there are only a handful of companies in the space, and it seems clear there are more than few kinks to iron out.
The WSB 2.0 site refers to a tweet from former Coinbase CTO Balaji Srinivasan explaining how the concept would safeguard people from “bag holding” and further point to the ramblings of Mark Cuban, embedded in a YouTube video:
Just imagine if Wall Street Bets...instead of being just a forum was a blockchain-based forum where everybody put up one Ethereum, and everybody...took a half of it, you over-collateralized, and everybody contributed, and you looked to see how many participants you had on WallStreetBets blockchain. And then everybody voted on what stock to invest in. Everybody got a token to pick which one they invest in. And then...everyone agreed how often they would review that investment. Is it by the minute? Is it by the hour? By the day? And then you can put a council together where people can assign their voting because some people don’t want to deal with it every minute of every day. Now all of the sudden, that WallStreetBets forum is organized with blockchain-based governance, decentralized governance where the users get to vote? Oof.
“Without knowing the details, which they clearly haven’t filled in for us yet, it’s hard to tell whether their plan is likely to turn out well or not,” Andrew Miller, an associate director of the Initiative for CryptoCurrencies and Contracts (IC3), told Gizmodo via email. “But, could it be feasible? Sure!”
The premise isn’t actually that complicated, he claims. “The basic mechanism of a smart-contract based DAO is straightforward - the smart contract will define rules for how to vote on buy/sell decisions, how to collect funding contributions from participants, how to divide up control and voting rights among the founders and early adopters.’ But Miller added that a new team would be more likely to stumble over regulatory risks and buggy software—and that there’s no direct way to link smart contracts to the stock market yet.
WSB 2.0 would also need to overcome the hurdle of migrating the 9 million or so subreddit users from Reddit (a massive, popular, largely functional website) to their new, untested one—something several grievance-based projects have attempted with varying levels of success.
It might not help their case that the exiled mods have devoted part of their launch page to relitigating drama with their rivals (i.e. that another mod was monetizing WSB through t-shirt sales.) That said, they do provide evidence to support their claim that zjz misrepresented their intentions for what to do with any Hollywood money: the site includes both the cropped version of a Discord chat apparently used by zjz, as well as a more complete version indicating the money was earmarked for charity from the get-go. The charity assertion is also backed by text message screenshots obtained New York Times journalist Nathaniel Popper.
“Unfortunately, we have no comment at this time,” current WallStreetBets mods wrote to Gizmodo via DM. “We have a duty to the readers of r/wallstreetbets to to keep the subreddit clean and stable, and that means moving past the grievances of our countless detractors.”
We’ll leave the screenwriters to figure out the protagonists, I suppose.