From Wall Street to blockchain: How can RWA tokenization change how we invest? With Kula DAO co-founder Micah Yeackley

Are you curious about fractional ownership and the tokenization of real-world assets? In this episode, Elisha Owusu Akyaw (GhCryptoGuy) interviews Micah Yeackley, co-founder of Kula DAO — a project tokenizing a diverse collection of real-world assets on the blockchain — about the prospects of the RWA sector in the Web3 space and what it means for developing markets who are regularly the source of the resources. Yeackley also highlights Kula DAO’s attempt to combine Web2 and Web3 governance to create a hybrid system of decision-making, which he explains ensures a balance between the project’s vision and community ownership. The episode also highlights other major topics like regulations and what real-world assets on the blockchain mean for retail and institutional investors. 

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Transcript

[00:00:03] Micah Yeackley

We can tokenize water sources. We can tokenize agricultural projects, real estate developments. Everybody tries to fit this into a TradFi box. What we're doing is we're pioneering a whole new way of investment. We're not out to eliminate mining. We're not out to change the mining industry entirely. But our goal is to move it much more in favor of the people that live around these assets by giving them profit sharing and by giving them a voice.

[00:00:31] Elisha Owusu Akyaw

What's up, crypto farm? Welcome to Cointelegraph's Hashing It Out. I'm your host, Elisha, and you can find me on Twitter at @ghcryptoguy. On this show, we will talk about crypto and everything Web3 with upcoming talent and leaders in the space. We will be taking you on a ride around the crypto block, answering questions, and highlighting the next big innovations in this space. Before we dive in, remember to follow us on whatever platform you’re tuning in from so you don’t miss another episode. And if you want more crypto news as it happens, check out Cointelegraph.com. It’s time to hash it out. 

What's up, fam? Welcome to Hashing It Out with your boy @ghcryptoguy and we are riding the RWA wave. The RWA wave is one of the waves in this. Um, and for those of you who don’t know what RWA you’re probably living under a rock, or you’re not really that, uh, into Web3 yet, and this is the right podcast for you. RWA stands for real-world asset. And in the last episode before this one, we spoke about RWA. And in this one, we are also speaking about RWA. But we’re looking at it from a different perspective. We’re going to be talking about a different approach to government, to product, even to how these projects work with local communities in terms of living impact and whatnot. Joining me to have a discussion is Micah Yeackley, who is co-founder of KulaDAO. Hello, Micah, and welcome.

[00:01:57] Micah Yeackley

Hello, thank you very much. I appreciate it.

[00:01:59] Elisha Owusu Akyaw

Amazing. So let me get the boring question out of the way first. Who is Micah, and how did Micah end up in Web3?

[00:02:06] Micah Yeackley

Sure. That is a very interesting question. I actually have a background, a career in the military because it, uh, I’m from the United States Army. 

But while I was in the Army, I read the Bitcoin white paper, and probably a lot like many people in this space, uh, fell in love with the idea of more than Bitcoin itself. I really fell in love with the idea of blockchain and what it has to offer the world, how it can solve so many world problems, and the idea of a trustless world. That’s what really grabbed my heart and got me really excited about this new technology.

[00:02:43] Elisha Owusu Akyaw

Sounds interesting. So what was the journey like? Um, from learning about the Bitcoin network and blockchain technology to get in, to start or be part of the founders of KulaDao?

[00:02:55] Micah Yeackley

Yeah. So, as I kind of transitioned from the military into civilian world, I dabbled in trading in cryptocurrency. Uh, was excited about the volatility and the opportunities that really come with that. I really believe that, uh, blockchain is going to be an enormous transfer of wealth for this generation. And so, actually, in the United States, I set up an investment company that focused and helped people establish portfolios of blockchain projects. But through that process, I actually met a couple other individuals, the other founders of the DAO, and we started dreaming up ways to really solve enormous problems in the world by using blockchain. And, uh, that idea really was conceived into KulaDAO.

[00:03:43] Elisha Owusu Akyaw

That takes us right into my next question. What is KulaDAO, and what’s the mission?

[00:03:49] Micah Yeackley

KulaDAO is really a new way to invest, a modern way to invest. The bottom line of KulaDAO is bringing in real-world assets and attaching them to these digital tokens. So many people are asking, why is Bitcoin valuable? Everybody that’s outside of the crypto world, they have that question: what makes Bitcoin worth 70,000 USD? Well, we are actually bringing real-world assets, and real-world value and attaching it to a digital token through tokenization. But KulaDAO is really so much more than that because while we are an investment vehicle and we’re bringing investors to real-world assets, but we’re also bringing in the DAO governance, and with that, that makes us an impact investment vehicle. So, while we are looking to make developing nations or other asset industries more investable, we’re also looking to benefit the communities that are impacted by these assets or by these regions throughout the world. So that’s really what we’re doing. We act a lot like a VC model private equity fund. But more than that, we’re an impact investment vehicle.

[00:04:56] Elisha Owusu Akyaw

Sounds interesting. And we’re going to dive deeper into what Kula is doing and how Kula’s making a difference in the space. But let’s talk about the RWA wave and how everyone is excited about RWA. What kind of real-world assets can be tokenized on the blockchain, and why is everyone interested in tokenizing real-world assets on the blockchain?

[00:05:19] Micah Yeackley

Yeah, so tokenizing real-world assets really can go across many different industries. Kula started out focusing on the mining world and tokenizing mines, rare earths, fine precious metals, etc., but then we started to realize that we can tokenize basically anything with real-world value, anything with intrinsic value. We can tokenize water sources, we can tokenize agricultural projects, real estate developments. But what’s really, I think what is making tokenization of RWA so popular is that it’s opening up the opportunity for even smaller investors. When we talk about tokenization of real-world assets, the vast majority of the time, we’re talking about fractionalized ownership. Well, Kula is different in that, I mean you go to any blockchain conference all around the world, and just about everybody is talking about RWA. But they’re talking about RWA in a way that’s related to fractionalized ownership. But that’s not what Kula is doing. We’re actually tokenizing governance around these assets. And I think that’s what really brings the value of Kula into these developing nations. And that’s why mining companies, agricultural companies, and, boy, even water companies are willing to work with us because they’re not losing ownership of their asset necessarily. We’re bringing in external incentivization by tokenizing the governance around these assets.

[00:06:47] Elisha Owusu Akyaw

So, the conversation about investment and making investment easier is one that lots of people emphasize on when talking about real-world assets. Let’s also talk about institutions. There’s a lot of literature or a lot of conversation out there that real-world assets would actually bring more institutions to the Web3 space. And we’ve already seen what institutions coming into the Web3 space would look like in terms of bringing in more value and bringing in more trust, which would then bring more retail investors. So, what do you think is the impact of real-world assets and bringing institutional investors into the Web3 space?

 [00:07:28] Micah Yeackley

Yeah, the impact of real-world assets really piggybacks on the impact of blockchain. What blockchain does is it opens up really areas of the world that might not be investable until now, because blockchain starts to create a trustless system. I’m going to go back to that. It creates trust in investors’ minds. So, when we invest into a gold mine, let’s say, or a limestone mine, for instance, all of the documentation that we have that made us invest into that project and earn equity in it, we also post all that information onto the blockchain so that investors now can see the geological surveys, the price discoveries. Every document that we have access to, so to do they. And what we're doing is we're making these projects and these countries much more investable than they ever have been in the history. So, investors are starting to see new opportunities that the blockchain brings. And with that, KulaDAO, as we invest in and really benefit the communities of these areas that really haven’t been looked at in the past. So that’s what’s really exciting. And yes, as soon as the big boys, the institutions start investing, so too do the retail investors. I mean, that’s just naturally how it goes. KulaDAO, though, is actually, as we launch, we’re giving that opportunity to get retail investors in first. We have many conversations on the table with institutions and large-scale investors, but we haven’t accepted any of that money just yet. We are funded ourselves as well as just a handful of angel investors. And so as we launch, we’re giving that opportunity really to the retail investors first. That’s the beautiful thing about KulaDAO, or one beautiful thing, is that retail investors have the same opportunity that institutions and large VCs would have.

[00:09:15] Elisha Owusu Akyaw

So, the next question was going to be, what makes it different from other projects? And you already mentioned part of that content in retail investors and institutional investors. And who gets through the door first? But when there are trends like RWA or AI, decentralized AI in the Web3 space, you tend to see lots of projects launching around that hype and around that trend. What makes Kula different from other projects in the space?

[00:09:44] Micah Yeackley

Yeah. Great question. Yeah, we talked about the difference between fractionalized ownership and really the tokenization of governance. That’s one thing that really makes Kula stand out. But when it comes to a launch, you hear of tokens launching. They’re typically launching on an idea, on a dream, and they launch in order to raise money to build their project in the future. KulaDAO is fully funded. We have a launch coming very soon, and in this process, while we were building our smart contracts, while we were building up our team that’s really located across 14 time zones. As we’re building the infrastructure of the company, we’re also signing contracts, bringing on assets, and really bolstering our treasury so that when we go to launch, we actually have assets in our treasury. We have done exactly what we said we were going to do. And as soon as we launch, we have a multitude of more MoUs and even contracts to announce as soon as as launch happens. But one of the biggest things that makes us different in this world is the ability to go to launch with assets on our books. Treasury that’s very valuable. And so, too, that makes our token more valuable. So that’s a really exciting thing about KulaDAO and our launch coming up very soon.

[00:11:03] Elisha Owusu Akyaw

Let’s break down the governance bit. There’s an approach to combine Web2 and Web3 leadership, creating a different approach to the decentralized organization autonomous organization model. What does that look like for Kula, and what is the rationale behind that hybrid system?

[00:11:24] Micah Yeackley

Yeah. So, at KulaDAO, we do things a little bit differently. You know everybody, your audience, I’m sure, understands that DAO stands for decentralized autonomous organization. However, we’ve seen these DAOs in the past quickly implode as soon as governance and control is given to the community entirely, right? What KulaDAO is doing is since we have a double DAO structure, we have a governance DAO at the top, and then each asset that we bring on board is a regional DAO, and we have a bespoke process that allows a different level of decentralization at the governance DAO versus at the regional DAO. So, the regional level is what really it’s specific around one asset, and it involves the community that lives or are impacted by that asset. They’re all part or members of that regional DAO. That’s a much more decentralized system where everybody has equal voice, and there’s a lot more ability for participation with regard to that one asset. When it comes to the Kula governance DAO, we tend to be just a little bit more centralized. We’re on the centralized side of the scale. We see that as a moving scale. And as we grow and as KulaDAO becomes older and older, that scale will slide more and more toward decentralized. But as we build this project, as we bring on investors, as we decide which investments are better than others, etc. etc, we want that sliding scale to be more on the centralized side. We think pure decentralization could be a utopia just because, as much as we want to believe that everybody has good intentions all the time, that’s just not the case. And so we have to keep an element of centralization at the governance level in order to make sure that our values set and the original concept of what we have built just continues into longevity.

 [00:13:19] Elisha Owusu Akyaw

That sounds interesting, and I’m personally looking forward to how that would play out, considering all the problems you’ve seen with like, both leadership processes when they stand alone. But yeah, let’s also then dive into another interesting thing that I can relate to, which is how local communities who have these resources are treated. So, for example, in Ghana, we have a lot of gold, and we have some places that are just known for mining gold. But the level of development in those environments is nothing to write home about compared to the urban cities that are just administrative capitals and don’t have the same amount of resources. And it’s also like true for the entire continent because a lot of the primary resources in this world that we live in come from that, the continent, but we don’t see the same level of development, and it usually leaves a bad taste in the mouth of the locals and, and just the people around these places where the resources are extracted. Is there a problem with how people think about doing business with these localities and how resources are extracted from these communities?

[00:14:36] Micah Yeackley

Yeah, unfortunately, it’s incredibly heartbreaking to watch what the extraction of these rare earths or precious metals do to the locals that live around them. Many times, the locals are drinking poisonous water from the mercury used to refine the gold. Um, they could be relocated altogether, but vast majorities of the time, you’ve got enormous rock trucks just driving through villages, um, kicking up dust everywhere you’ve got, you know, really just a life in that village that very few people around the world would put up with. And these people just don’t have the voice. They don’t have the opportunity to make a difference. And this exact example is at the heart of KulaDAO. This is the very kind of concept where KulaDAO was formed. But then we started seeing how the agricultural industry can be corrupt, even the way water rights and water ownership can be corrupt and really create wars, right? It’s these examples that show time and time again that there always seems to be somebody with the short end of the stick. And at KulaDAO, we like to say our mission is to align the interests of differing people, groups. And in the mining world, we have mining companies that want to create profit, that want access to these rare earths or whatever’s in the ground. But then you have people that are going to be exploited during the process.

[00:16:05] Micah Yeackley

Well, if we align those interests, if we create profit sharing, if we create a voice and governance now, we allow the mining company to do what they’re always going to do. But now, the people around that asset actually have benefit from it. They can make a difference. They have a voice, and they have profit sharing of, a lot of times, the literal gold mine that they’re living on top of. And so Kula comes in, aligns those interests, and gets both parties involved and excited about the project. We're not out to eliminate mining. We're not out to change the mining industry entirely, right? When you talk about doctors that are looking to cure cancer, while their goal is to cure it entirely, but if they make cancer from 100% lethal to 99% lethal, that’s a success. They’ve moved the needle just a little bit. So, if we move the needle in the mining space, in the water space, in the agriculture space, if we can move that needle just a little bit to the positive, then we’re a success. But our goal is to move it much more in favor of the people that live around these assets by giving them profit sharing and by giving them a voice.

[00:17:15] Elisha Owusu Akyaw

Sounds interesting. Let’s talk about like what that has looked like so far. Do you have examples of things that you are doing with some of the localities you’ve already partnered with, and what has the reception been from these localities?

[00:17:30] Micah Yeackley

Yes, our working example right now is a village in Lusangazi, Zambia, where we own equity in a limestone mine, and the majority of the people that live in this village also work at the mine. Many of them were walking, I believe, between 4 and 5 km to get water from a really dirty source, frankly. And along with that, working conditions in mines are always difficult. Well, we’re partnering with a company there that has changed the way they pay their employees. So, they’re paying women and men equal rates. They’re paying their employees above the normal daily rates for that type of work. And then on the back end of that, we’ve also dug a fresh well for the village. If we wanted to monetize the well, we could do it into the millions of dollars, but instead, we’ve given it for free. We’ve donated it to the village and, uh, had a team out there actually just about a year ago this time where we commissioned the well and we saw people drinking the water for the first time. And, um, all of those things that we’re trying to do to benefit the community. But then, because Zambia is such a, it has a national government, yes, but there are also tribal governments, the tribal leadership. So we’ve been able to sit down with the chief on multiple times, multiple occasions, and eat with them, drink with them, and talk about what KulaDAO is doing for the community. And it’s been such a benefit for him and his tribe that he’s donated land to KulaDAO so that we can create a farming infrastructure in his chiefdom, and this would really bring in income for his chiefdom that didn’t exist before. But he’s really excited, even at the chief level, about what KulaDAO is doing in Lusangazi in his chiefdom.

[00:19:19] Elisha Owusu Akyaw

Sounds interesting. So another interesting conversation or debate when it comes to real-world assets, and you already started talking about it when you were talking about fractional investments or fractionalization of investing in real-world assets, is the approach that projects take. So, some projects are backed by a single reward asset, and then other projects are also backed by a collection of multiple reward assets. Which is the most efficient, and where is Kula’s head at? What are you planning to do between the two options?

[00:19:58] Micah Yeackley

Well, when you talk to any savvy investor, anybody that’s investing money for a long time, they’re experienced at it. They’re always going to say diversification is key, and Kula is taking that model. While we are diversifying as far as in the mining industry, we have contracts and MoUs with limestone, with emeralds, with gold, uh, copper, cobalt and more coming down the pipeline. But we also diversify into different industries as well. And this is where we talk about having water resources on our books and agricultural land and opportunities on our books. We’re even we’re going to countries. And in fact, this month, I’m going out to speak with the country at the highest leadership about tokenizing monuments and World Heritage, Unesco World Heritage sites, even the opportunity to tokenize tourism throughout their country. There are opportunities in so many industries, and the blockchain really allows Kula to tokenize these assets, their value. And we’re inviting retail investors from all over the world to invest into this opportunity. So diversification is key, and that’s the route that we’re taking.

[00:21:13] Elisha Owusu Akyaw

The other elephant in the room is regulations and how regulators are taking this RWA wave. It’s also important because real-world assets have largely been dealt with using TradFi or traditional finance methods. What has the experience been with regulators, and what are the challenges?

[00:21:34] Micah Yeackley

Well, this has been, um, of course, a giant headache for Kula. We’ve been building this project now for three years and have been on the journey of regulation for about two of those years. We’ve been through multiple jurisdictions on multiple continents and spent a lot more money than I like to admit trying to find the right regulatory body for us. And you said it that everybody tries to fit this into a TradFi box. They try to make it look like or sound like something they’ve already seen before. But what we're doing is we're pioneering a whole new way of investment, a whole new way of managing a portfolio, and really a whole new way of governing real-world assets. And so with that, we’ve had to find a regulatory authority that’s willing to work with us, really willing to even write new laws with us. And that’s what we’ve found in Dubai. We’ve been working with VARA there very closely and are excited to announce that that’s where we are headquartered, we are located, and we will be working with them for our licenses throughout this whole project. They were very excited about our Constitution. They’ve read it over and, um, quite impressed by it. And that’s what’s allowing them, and willing, they’re willing to help us write legislation around how DAOs are regulated and really held account, right? Somebody needs to be held to account for all of this. And Kula has worked really hard to be transparent, but also we’ve worked really hard to follow all the rules. When we build this thing and launch it, we want to be around for the next 100 years. This isn’t a fly-by-night kind of project. We want to be here for the long haul, and finding the right regulatory authority was one of the keys to that.

[00:23:26] Elisha Owusu Akyaw

Interesting. Another thing about regulation in this space is are we going to see more countries say we are opening our doors, we want more projects that are building in the Web3 space, tokenizing real-world assets. We want more of them to come in. What does the future of regulations look like for this sector of the Web3 space?

[00:23:48] Micah Yeackley

Yeah, this, to me, is what’s really exciting. I mentioned just this month I’m going to a country to speak at the highest level about all of this, and this exact topic is going to be discussed ad nauseam probably. We see an incredible opportunity where some of the greatest world powers are behind in regulation. They don’t know how to. I live in one of them. The U.S. is really struggling to regulate this, and they’re really taking their time. I, you know, I think it’s due to greed. They want to get the most money they can out of it. And with that, they’re taking too long. Frankly, this technology is moving at a rapid pace, and we’re seeing the benefit of it. People are implementing it all over the world, and if countries don’t get something in place quickly, they’re going to be way too far behind. And I think some of the biggest world powers are in that spot. Well, fortunately, developing nations are open to it. I get to sit down with leaders of countries and talk about how we can implement just a few key changes in their central banking system, in their financial regulations, and all of a sudden, these countries could be, they could leapfrog Singapore, Switzerland, you know, these major financial powers and really put themselves on the map. They could open themselves up to a whole new opportunity for GDP and for financial growth if they were to implement some of these really basic financial regulations around fintech.

[00:25:18] Elisha Owusu Akyaw

So based on your explanation on what the future of regulations looks like, it does look like the developing markets are going to align with projects like Kula. Is that what has informed your interest in developing countries? It seems as if Kula is focusing heavily on developing markets. Is that the case?

[00:25:41] Micah Yeackley

Yes, that is the case, and frankly, it’s because they’re open to it. These countries are seeking investment, and the vast majority of them are willing to work on a transparent platform. They’re not trying to continue corruption. They want to seek investment. And in order to get investors from around the world, they understand that they’ve got to be more transparent. So developing nations are the ones, really, that have nothing to lose. And so they’re open to this new tech. They’re open to working with KulaDAO. And when you do something even slightly successful in a developing nation, word spreads very, very quickly. And that’s what we see happening basically in sub-Saharan Africa, where we have multiple countries that we’re in conversations with right now. And then we’ve got countries on other continents around the world, and we’re really just excited about working with them because they’re open. They’re willing to try something new because it just means more investment on the back end, and they’ve got nothing to lose. That’s what’s really exciting. And then once we start doing it in these developing nations, then other developed nations will see the opportunity, they’ll see the benefit. And we’re seeing that as we speak. Some other, uh, nations have become interested in what we’re doing, and it’s just exciting to see the word spread, how the excitement over KulaDAO and what we offer for their respective countries.

[00:27:01] Elisha Owusu Akyaw

So, what’s next for Kula in the coming months and in the coming days?

[00:27:06] Micah Yeackley

Well, we have our big, we see our finish line very close now. Our launch is coming up very soon. We are discussing with exchanges. We’re going to launch directly onto a centralized exchange. We're not going to sell on a decentralized exchange. It’s going to be purely centralized. We are in discussions with market makers, but then, in the background, we are traveling all the time, meeting with people, writing MoUs, negotiating contracts, bringing on more assets to make our Treasury more valuable, which in turn makes our token more valuable. And it’s just nonstop around here. But we see the finish line very near. Uh, launch is coming up very soon. And, um, so, of course, with that, our marketing is going to be exponential over the next 30 days or so, creating a much more robust community. Right now, we are right around 20,000 in our community, and I would love to see that exponentially grow over the next couple months. But launch is very soon. And just encourage your listeners to look into KulaDAO and look into what it would mean for them to be a part of our launch.

[00:28:16] Elisha Owusu Akyaw

So, the 2024 Bull Run, um, has started. We're probably in it already. I’m not quite sure what stage of the bull run we are in because of how different this one seems, but what are your projections for the real-world asset sector as the bull run rages on?

[00:28:34] Micah Yeackley

Yeah, I mean, you said it at the beginning of this podcast. That real-world asset is the new fad. It’s the new thing that everybody is talking about. And so, there will be some enormous gains in this industry, but this is going to be the part of crypto. The RWA, I think, is going to be the clearest and the fastest way to separate the wheat from the chaff. If an RWA project launches and it takes them even remotely a little too long to start obtaining real-world assets, or if they go to launch without real-world assets, it could be very well indicative of an imposter, right? Real-world asset projects have to have real-world assets, and KulaDAO has worked for the last three years to build up our treasury. So, while I think the RWA world is going to absolutely explode with all the excitement around it, but it’s going to very quickly show who the real projects are by audited books, by the values of treasuries, etc., etc., but what RWA is going to do more than anything else is it’s going to bridge that gap from Web2 to Web3. There are so many investors, most of which would be the older generations, the ones that have done really well in TradFi and don’t necessarily want to fix a system that isn’t broken for them. But what RWA is going to do is it’s going to bridge that gap. It’s going to make those investors, those TradFi investors, much more interested into our industry, our Web3 industry, because we’re bringing in real value. So, we're going to bring in a whole new group of investors. We’re going to bring in much higher influx of capital into the crypto industry. And it’s RWA that’s going to be leading that way. But I think more than that, only the projects that prove themselves with a valuable treasury that’s going to do that.

[00:30:29] Elisha Owusu Akyaw

Sounds good. Thank you very much for jumping on to discuss RWA and what Kula is building with me, Micah. Look forward to talking to you in the future.

[00:30:40] Micah Yeackley

Yes. Thank you so much for having me. And I appreciate this, uh, this platform very much to talk about, uh, our project. Awesome.

[00:30:47] Elisha Owusu Akyaw

All good things must come to an end. And so does our show. You’ve been listening to Hashing It Out by Cointelegraph, where we talk about crypto and everything Web3. I'm your host, Elisha, @ghcryptoguy on Twitter, and if you liked this episode, please make sure to subscribe and leave a review. Please do this, it will really help us out. I need to get out of my mom’s basement. Don’t get me fired. Subscribe. Wherever you are listening to us, leave a review and have a great day. Thank you