The social tokens guide
011. On community- & creator-owned economies
Hey, friends—welcome back to online/offline, a weekly newsletter about technology, culture, and the future. Last week, the legendary Katie Notopoulos featured yours truly and this newsletter in her BuzzFeed article about the Bored Ape Yacht Club founders’ identity. The reveal sparked a necessary conversation about identity in web3; my stance on pseudonymity, which you can read here, remains the same. If you have an opposing view, let’s chat. Anyway! We’re diving into social tokens this week. Crypto can be intimidating though it doesn’t have to be, so I’ve written this guide for everyone. In essence, I experimented with the technical stuff so you don’t have to <3
A lot has changed in the 18 months since I wrote my first social token guide.
Today, there’s a collection of 10,000 bored apes in a yacht club that’s worth over $3 billion. There’s also a digital-first community, Friends With Benefits ($FWB), that’s valued at $30 million ($100 million if you ask venture capitalists). The creators, contributors, and members of these projects are personally and financially invested. For these reasons and many others, they’re incentivized to collectively grow value, whatever means to the respective project. This new world isn’t far from what I envisioned ...
We’re in the nascent stage of creators as corporations. Goodbye stonks, hello tokens. Imagine communities where all members have a stake. Imagine founders who can finance their ideas from angels around the world. Imagine multi-billion dollar personal brands. As Brett Goldstein says, “social [tokens] could be the new like button.”
The vision just manifested much quicker than I anticipated thanks to a precarious traditional economy and desire to break from the old guard. We’ve seen that platforms meant to aid creator and community monetization tend to do the absolute least:
There are around 9 million streamers on Twitch and 25% of the top 10,000 highest paid Twitch streamers don’t make minimum wage.1
TikTok pays creators using the creator fund that’s only available in six countries and has a finite total of $313 million spread across three years. Meanwhile, there’s a growing number of qualifying creators on the platform. Mr. Beast, one of the most prolific online creators, gets millions of TikTok views but made around $25 a day in January.2
In the art world, artists who seek representation and work with traditional art galleries have to give a 50-60% commission of an artwork’s selling price.
Musicians ... Well, I haven’t mastered music industry economics. I think they’re purposefully designed to be inscrutable. Top recording artists from Prince to Taylor Swift have, very publicly, criticized their contracts and record labels.
These pitfalls and the fact that user-generated content continues to give platforms meteoric usage and revenue numbers should be enough to turn anyone into a crypto maxi. Unlike existing solutions, social tokens are platform-agnostic and allow individuals and communities to own their creative output, community, and economy.
What are social tokens?
There are two types of social tokens: fungible and non-fungible tokens. When I refer to social tokens, the definition is inclusive of both types.
Fungible tokens are interchangeable and divisible. They’re similar to real-world money. For example, $1 is equal to $1 and can be divided into cents—fungible tokens function similarity but exist digitally and are typically denominated by a $Ticker. I’ll refer to these as $Tokens for simplicity.
Conversely, non-fungible tokens (NFTs)3 are unique and indivisible. Think of property titles—each has a distinct ID and gives you ownership to a particular home. Property titles can’t be divided in half if you want to retain utility and value. NFTs are similar and exist digitally as visual assets.
Historically, people have only considered fungible tokens to be social tokens. This is a narrow outlook. Tokens, fungible or not, similarly create utility, economies, and value for individuals and communities.
What kind of social tokens are there?
$Tokens and NFTs come in three different flavors: personal, community, and creator.
The personal token is created to support and invest in an individual's personal and/or professional goals. These are typically launched as $Tokens and may or may not have an actual monetary value. Examples include the $VIV, $BOB, and $ALEX tokens. Founder and engineer Vivian Phung airdropped $VIV to her Twitter followers this year; $VIV holders will get access to beta apps, a Viv app, and other perks. Meanwhile, founder Bobby Thacker airdropped $BOB to friends and created an award chart that holders could redeem their tokens for. If you amass 1 million $BOB, you can name his first child.
The community token is created to bring people together based on a common interest or mission. Unlike the personal or creator tokens, most if not all members of the community are creators and/or contributors who are invested in its success. Example community tokens include Club CPG NFTs, Squiggles NFTs, and $FWB. Holders of these tokens receive community access, exclusive drops, IRL experiences, educational content, deal flow, and much more.
The creator token is a hybrid that brings together fans (a community) based on a common interest in a creator’s content. This token differs from the personal token because, with it, people are not only investing in an individual’s personal success but their output and audience as well. This kind of token hinges on a creator’s ability to galvanize their audience into a thriving community. Examples include $RAC by RAC, VeeFriends NFTs by Gary Vee, and Adam Bomb Squad NFTs by Bobby Hundreds. Token holders can support a creator while receiving exclusive perks and other community benefits.
Why are social tokens revolutionary?
One thing that 2021 showed us? You can do a lot with social tokens. When a community launches an NFT collection, for example, they can choose to price the initial sale however they want and also take a royalty on future sales in the secondary market. This money can be reinvested in the community for future projects, experiences, or to pay contributors.
In some cases, a community may opt to be a decentralized autonomous organization (DAO).4 In this instance, token holders can govern the community—voting on key decisions like purchases, investments, community code, and hiring. We’ve seen token governance in personal tokens ($ALEX let holders decide Alex Masmej’s life choices) and in community tokens (LinksDAO is deciding if they should host a SXSW event). Generally, creator tokens incentivize supporters but don’t grant voting rights; perhaps this will change with emerging creators, musicians, and artists.
Ultimately, social tokens create economies where (creative) output is appropriately valued by supply and demand, and not by impressions or views. If things are going well, the total token value increases, and if someone is getting canceled, then the value decreases.
Social tokens aren’t without risks. Centralized token issuers and marketplaces like OpenSea and Roll have both had vulnerabilities (hacks) that cost holders their prized tokens and millions of dollars. Additionally, NFTs in particular continue to face negative public sentiment even with the benefits they offer.
Why should you care? What’s the future?
Despite the haters, social tokens are making the internet fun again. My friends at Mad Realities are creating a new interactive dating show—token holders got to vote on the show name and host. Some other friends tried to buy the constitution last year; they didn’t win but created 17,000 legends who now have a story to tell.
There’s so much to be excited about: the LinksDAO golf club, a new url to irl city with Praxis, new approaches to IP with World of Women NFTs, a way to buy royalty ownership in songs with Royal, all of the creator tokens launching on Rally/Coinvise/Roll/Manifold, the 100 Thieves’ collector NFT with 700k holders, KlimaDAO creating a token backed by carbon offsets, and so much more.
Tokens will reinvent the way we think about identity, work, music, fashion, gaming, and ownership online/offline. Tokens will onboard the next billion crypto users as communities galvanize around creators and interests. Your favorite musician will have a token, the games you play will be tokenized, communities you live in will have a token—and you’ll get a piece of the action. The shift is already happening.
The social tokens series
This is part one of a series where we’ll dive deeper into the world of social tokens. You can expect more on creating economies (tokenomics), web3 and the future of work, creativity in the age of web3, deep dives on builders and communities, and more ...
Stay tuned!
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https://www.washingtonpost.com/video-games/2021/10/08/twitch-hack-leak-minimum-wage-pay-hasan/
https://twitter.com/MrBeast/status/1484616451281588227
https://ethereum.org/en/nft/
https://ethereum.org/en/dao/