Social Tokens

Description

Jan Baeriswyl:

"Even if token categories often overlap (a side effect of tokens being programmable money), it seems clear that social tokens are distinct from governance tokens in important ways. The notion of intrinsic community value and the status conferred with social tokens are key differentiators from governance and other utility tokens. However the community creates its value, social tokens allow it to more effectively capture and distribute the fruits of its collaboration to its members.

The early experiments so far have only just scratched the surface of the potential of social tokens that will unravel in the coming decade. As new use-cases and best practices emerge and more diverse communities choose to issue a token, the different ways ICV can manifest will become increasingly clear. Leading communities will offer exclusive access to information, relationships, and capital to their members.

Over time, social tokens could become the norm for digital status signaling, showing off membership to prestigious groups in a digital-native way, for example, members or alumni of leading companies or universities. Finally, social tokens could also become a coordination mechanism for political action: Tokens that represent a credible commitment to political or social causes could allow strangers to trust each other without knowing anything else about each other, for example when meeting as pseudonymous virtual avatars in the metaverse. "

(https://outlierventures.io/research/understanding-social-tokens/)

Typology

Jan Baeriswyl:

"Social tokens have been created by both individuals and by communities, and we can therefore distinguish between Personal tokens and Community tokens.

Personal/Creator tokens

Personal tokens are created by and centered around individuals (usually, individuals with a public profile like entrepreneurs or artists – that’s why they are also called “creator tokens”). Most personal tokens we’ve seen so far can be redeemed against services provided by their creators. one of the first personal tokens at the beginning of 2019: BOI can be redeemed for Matthew’s time as a designer.

Individuals could have different reasons for launching a personal token:

• financed the start of a career and a move to San Francisco.
• wanted to incentivise engagement and connect with fans.
• built a platform and direct distribution channel.

A range of different mechanisms have been experimented with, some of which produce tokens with a clear financial aspect like ‘token-redeemable-labour’ or ‘income share agreements’, while other tokens look more like loyalty points or club memberships. How these tokens are then “redeemed” for services or grant access is entirely up to the creators themselves. In practice, this is often done ad-hoc, e.g. over email or Discord. The current iteration of personal tokens is enabled by blockchain technology, but this doesn’t mean there haven’t been attempts before that: Meet , who wanted to tokenize himself even before Bitcoin.

A more specific kind of personal tokens could be described as “clout tokens”, which aim to measure the social reputation of influencers through market mechanisms. An example is , which issues tokens on behalf of Twitter influencers, who can claim their profile including the founder rewards allocated to each token (allowing influencers to “monetize” as their token appreciates). takes a similar approach, except that revenues are generated primarily through interest paid on the capital (Ether) locked in the smart contract, as required to invest in “clout tokens” on the platform."

(https://outlierventures.io/research/understanding-social-tokens/)

Community tokens

"Community tokens are centered around communities rather than individuals and are often used for memberships that regulate access and participation within the respective community. This token-gated access is the main use case for most of today’s community tokens.

In practice, current implementations of community tokens often involve a communication platform like Discord, Slack, or Telegram that is regulated by a token. This means that only people with the right tokens can enter the platform: Either a certain amount of fungible tokens or access NFT. One of the first projects that pioneered token-gated access is the community, a group chat limited to a maximum of 650 members, gated by its own community token.

Token-gating is often achieved through tools like . Similarly, and are used to gate access to exclusive digital content. This core functionality of token-gated access can also be facilitated by NFTs instead of fungible tokens with the same tools.

Access NFTs can create an experience very similar to the access key cards or company badges we are used to from the physical world.

In addition, community tokens can be an effective tool to set incentives for desired behaviour within a community, for example incentivizing contributions and disincentivizing freeloading. A token can also meaningfully enhance community cohesion and identity. A great example is , a community token for an Ethereum-related subreddit. Members are continuously rewarded with Donut tokens, according to how active they are in the community."

(https://outlierventures.io/research/understanding-social-tokens/)

Characteristics

Jan Baeriswyl:

"Social tokens are able to set stronger incentives than conventional “points” (from loyalty badges to Reddit karma) for three main reasons:

• Tokens can’t be taken back again and are portable outside of the platform and therefore “truly owned”.
• In successful cases, tokens end up being used for decision-making and therefore as a means of control over valuable resources.
• As a result, they sometimes develop a market value themselves and, if liquid enough, allow early contributors to exit with an upside comparable to early startup employees at IPO. The shared ownership from the beginning glues token-based communities together.

These advantages of social tokens hold no matter whether the focal point is an individual creator or a broader community. In fact, most social tokens might start around an individual creator and over time develop into a community token, as argued in For example, the FWB community first catalyzed around Cooper Turley, who leads crypto strategy at Audius."

(https://outlierventures.io/research/understanding-social-tokens/)