Link to Full Proposal

Proposal

Krause House Treasury deploys up to 70 ETH in acquiring a RKL Club NFT in the upcoming Q1 2022 auction.

A separate multi-sig will be created. It will require 3/5 signatures and will comprise: jdcook, commodore, flex, eli, and lewwwk (proposal author and 4 stewards).

Funds will be transferred from the KH Treasury to the multi-sig. Multi-sig will participate in the auction. After the auction, any remaining funds will be sent back to the KH Treasury.

In the case where the auction does not support Wallet Connect (needed for a multi-sig to participate). We propose that funds are sent to Commodore to participate in the auction on behalf of KH. The same transfer conditions (paragraph above) apply to this process as well. Commodore is a trusted individual within KH and has a significant stake in KH. Both of which should eliminate concern of malicious behavior if this path needed to be taken.

The purchase of the RKL Club via this proposal is non-binding. Meaning, the multi-sig retains the option to remove itself from the auction and return all funds to the Treasury if at any point it is deemed un-wise to move forward with the purchase of an RKL Club.

Summary

We envision Krause House being a major owner (and the brand) behind a top-tier Rumble Kong Club. We envision this Club as a sub-DAO of Krause House, with its own token (liquid ownership). This will allow us to build a strong community and treasury for the Club to be used to aggressively attack Club operations and management. We envision the KH RKL Club signing top Kongs, partnership with big brand sponsorships, driving revenue, captivating a fanbase, and ultimately - winning championships. Owning and managing a digital franchise is an important iteration for Krause House while on it’s path to buying ownership stakes in IRL franchises.

While this is a lofty vision, it starts withacquiring a RKL Club NFT, which is the focus of this proposal. It is intended for future proposals to focus on launching a work stream for all the effort that will be required to establish the Club. But for now, the best path forward (as we explore the sub-DAO design space for both regulatory and effectiveness purposes) is to propose that the KH Treasury funds the acquisition of a RKL Club in the first auction (Q1 2022).

We propose that the Krause House Treasury deploys up to 70 ETH in acquiring a RKL Club NFT in the upcoming Q1 2022 auction. 70 ETH will be moved to a multi-sig where jdcook (author of proposal) and 4 stewards are owners - this multi-sig will participate in the auction. In time, a subDAO structure may be proposed and it is likely that external capital will be raised - it is intended that KH could be paid back up to 100% of the cost of the acquisition of the RKL Club NFT.

Background

Rumble Kong League (RKL) is the metaverse’s basketball league. Rumble Kong’s are programmatically generated, unique (10,000) NFTs that represent playable avatars. Each Kong has built-in stats/skills as well as visual rarities. The RKL team just raised $4.5m to continue to create the premier play-to-earn sports game. Rumble Kong’s rank #15 in trade volume on OpenSea over the past 7 days.Steph Curry and Paul George are among the NBA players that have now purchased a Kong.

RKL recently announced the launch of Clubs. Clubs will be at the center of gameplay and the play-to-earn economy within RKL. Individual Kongs will sign on-chain contracts with Clubs. Clubs will deploy teams to play in different divisions. Thus, the revenue flow within the game flows through Clubs. Clubs will be major brands, sign sponsorship deals, create merchandise, and build fanbases.

Just as IRL franchises are in our sights, digital franchises should be as well.

Value Proposition

Broadly, we have a lot to explore and learn as we pursue our goals of purchasing and managing stakes in sports franchises:

• Regulatory structures
• Fundraising
• Value transfer to/from Krause House
• Governance
• Management
• Community

An RKL Club will allow us to experiment with all. Specifically, we want to highlight how an RKL Club aligns with the vision, mission, and values of the Krause House DAO across sports operations, governance, brand & community, and treasury.

Sports Operations

An RKL Club gives us a lower-risk environment (thinking on the scale of hundreds of thousands of dollars vs tens of millions of dollars) to explore, iterate, and learn how to operate a sports franchise. RKL Clubs will need all of the following functions:

• Scouting
• Analytics
• General Management
• Coaching
• Brand / Design
• Social
• Merchandise
• Partnerships
• Sponsorships
• Events

There is quite a bit about the game that is still to be determined (see the whitepaper). We know that Clubs will sign on-chain contracts with players. Clubs will be responsible for managing rosters and fielding teams in leagues. Clubs will sign partnerships and sponsorships within the metaverse. Clubs will build brands, community, and fanbases. Clubs will seek to win championships and hang banners and trophies.

All of the functions in the list above overlap directly with operations that will need to exist in the management of an IRL team (shoutout to the group working on the Decentralized Sports Operations (DSO) Stream proposal). Obviously there will be differences - this is not an IRL team. However, an RKL Club can be a go-to option for testing hypotheses and running experiments as we build out capabilities to manage an IRL team.

Governance

How will governance flow into sports operations? Will there be a layer of base token voting? On what decisions? What will be delegated off of governance and onto specific roles (i.e. GM, or Coach)? There are a lot of open questions around the best structures to marry fractional ownership and governance of a sports franchise with the actual management of the sports franchise.

Governance is already difficult within Web3 and DAOs. By the time KH buys IRL stakes, we better have some strong governance and management primitives ready to employ - an IRL stake is not the best for experimentation given the high stakes associated. An RKL Club lets us start working in the governance design space immediately, maybe even running through multiple iterations.

Brand & Community

It is an incredible opportunity to build our brand and expand our community. As of now, RKL is the premier P2E sports game opportunity. Having a strong brand presence within RKL will help us build legitimacy as a brand and community, as well as build partnerships that extend beyond RKL and into our IRL efforts.

Building brand and community seem to be focus points for KH DAO at this point in time - an RKL Club will be one of the highest leverage activities for building brand and community within the metaverse (55.2k current members in the RKL discord).

Treasury

While the economic flywheels within RKL have yet to be released, assets within the RKL ecosystem (such as Kongs and Clubs) are a risk-on Treasury diversification strategy at the core. When combined with a broader Treasury strategy that is more conservative, this is precisely the type of opportunity where we should be willing to take on some risk - buying and operating a digital franchise is directly aligned with the mission, vision, and values of the DAO.

Execution

The end game is a grand vision. We must break it down in order to work effectively and at speed, but also ensure we stay within regulatory bounds. At the core, we see a succession of stages getting us moving towards the end vision. A hypothetical path could look like:

1. Purchase RKL Club NFT

   a. A separate multi-sig will be created. It will require 3/5 signatures and will be comprised of: jdcook, commodore, flex, eli, and lewwwk (proposal author and 4 stewards)

   b. Funds will be transferred from the KH Treasury to the multi-sig.

   c. Multi-sig will participate in the auction. After the auction, any remaining funds will be sent back to the KH Treasury.

2. Establish KH RKL Club Workstream

3. Launch sub-DAO with crowdfund

   a. Pay back KH up to its desired ownership stake

   b. Extend the ownership and community of the RKL Club

4. Create governance structures

   a. Imagine GM, Coach, Scout, etc NFTs all with management voting rights and token holders determining who is “hired” and gets to hold those NFTs (as an example)

5. Build up Club

   a. Brand

   b. Roster

   c. Management

6. Win championships

To be explicitly clear, this proposal is just for purchasing the RKL Club NFT. While we have a larger vision around a subDAO structure eventually, the path that gives us the most flexibility while also letting us move fast here is having the Krause House Treasury acquire the Club NFT in the Q1 2022 auction.

After purchasing a Club NFT, the top priority will be getting a work stream proposal passed to drive the next stages of establishing the Club. It is envisioned that this work team will take on the responsibility of researching the potential options we can take to building and governing the RKL Club, as well as executing on a decided path and getting the Club into a formal governance structure. Also, this work team may take on the responsibility of creating branding and design for the Club, instantiating Club socials, and introducing the Club to the world. The work stream proposal will dictate the final mandates for the team.

At this point in time, our belief is that a sub-DAO model will be the best approach for the Club. Some of the reasons being:

1. we can extend the ownership community beyond KH, thus extending the KH community
2. we create more flexibility when developing offers for managers and Kongs to sign with our Club
3. we can build a larger treasury without draining KH treasury funds (through crowdfund)
4. we can build governance structures for the Club independently from KH

However, we want it to be very clear that the purpose of any subsequent workstream will be to fully explore and evaluate the options (including a sub-DAO model) we have for establishing and growing the Club in a way that is: responsible; aligned with the mission, vision and values of the DAO; and is compliant with market and regulatory contexts. We are not committing to a sub-DAO model at this time, but rather indicating this is the leading vision. A leading alternative would be keeping the Club 100% within KH and figuring out governance and management structures within KH for the Club.

In time, if a subDAO structure is formed, it is likely that external capital will be raised - it is intended that KH can be paid up to 100% of the cost of the acquisition of the RKL Club NFT if we pursue this path. If we determine that it is best to keep the RKL Club 100% within KH, the cost of the NFT will never be paid back, but more value/revenue will flow back to KH.

Hype

Krause House will be the brand behind the biggest RKL Club in the game. Steph Curry and Paul George will loan their Kongs to our Club. The top sponsors will be fighting for naming rights to the KH RKL Arena. The KH RKL Club token will have the highest valuation of any Club.We will hang trophies and banners.