The Constitutional Bounceback: How I made a 20x Return on a Donation

Crypto is a domain you get paid to learn about.

Hello amigos,

Just a quick post today, because my entire writing Sunday was very hectic spent deep in DeFi research – but I’ll share something fun that happened yesterday.

Remember ConstitutionDAO that I wrote about in the last two posts? Remember how last week I was sad because we lost the auction to buy the old document?

Well, the story took an unexpected turn. It turns out that my donation to the DAO is perhaps the most profitable “investment” I’ve ever made in terms of percentage gains (!).

Here’s what happened: everyone who contributed to the ConstitutionDAO was rewarded $PEOPLE tokens. The original point of these tokens was simply to distribute decision making power to all the contributors; one token, one vote in important questions such as “Which museum should we lend the Constitution to?” and so on.

When the auction was lost, the $PEOPLE tokens were basically worthless, and all the contributors could log into the DAO’s website to swap their tokens to get back their original ETH donation (I tried to do this myself, but the gas fee (transaction cost) of the Ethereum network was so high, so I decided to wait and do it later. That turned out to be a lucky accident on my part).

Here is where it gets whacky: many people didn’t want to trade in their $PEOPLE tokens. Instead, the tokens got listed on an exchange, and people started trading them on an open market. Within a few days, a narrative had formed on crypto Twitter: “We the $PEOPLE must stand together and hold on to our tokens, for they are proof that we contributed to the first large-scale, self-organized crypto charity in history”.

Soon enough, the price of the $PEOPLE tokens took off, and at its peak one token was worth about 40x (!!!) of what the token holders originally had “paid” for them via their donation.

Here is a chart of the $PEOPLE price over the last few days (link to a live version here):

This means that my humble donation of $200 to buy the Constitution had turned into an asset that was worth over $8.000 at the peak 🤯

I didn’t notice any of this until yesterday when it had come back down from the top a little bit, so I “only” netted a casual 20x return.

Giving money away to a good cause and ending up receiving 20x in return is patently absurd. I don’t think I ever done a 20x ROI on any (financial) investment in my life before, and when it happens, it happens based on something that wasn’t even intended to be an investment, but a gift!

I don’t write about this to brag (I simply got lucky on this one, and I’ve made plenty of stupid decisions to cancel out this payoff), but to make a simple yet profound point: the crypto space pays you to learn about it. Literally. If you just dabble and play around with enough weird crypto projects, you almost can’t help but hit on a coin that takes off, or a project which airdrops you some tokens, or learn about some DeFi product with great yield. The DAO payoff is not a one-off, this happens to people in this space all the time. Crypto land is truly weird and wonderful like that.

If you believe that crypto is here to stay (hint: it is), the best time to start learning about it was 10 years ago – and the second best time is today. Don’t invest money you can’t afford to lose, but do spend some money on your tuition fees at Crypto University. It will pay you back, either in knowledge, money, or both.

Good luck!

-Jacob

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Full disclaimer: Do your own research. Not financial advice bla bla bla.