The Secret to Turning Ponzinomics into Tokenomics is in Your Marketing

This is Part Five in an 13-part Alpha Growth series breaking down the problems every blockchain project has and needs to solve to grow and scale. New to the series? Start here.

One of the most important things to understand about crypto biz dev: marketing is everything.

Also true: it’s nothing like marketing in Web2.

Put these two blockchain biz dev truths together, and you get:

Problem five: your marketing must build a community.

Community is the only way to get past ponzi

Every blockchain project — whether you’re a layer zero, chain, ecosystem fund, dApp, DEX, game, exchange, protocol — needs to build a community. If you’re a chain or an ecosystem fund, you have to build community and help the projects in your community build their own communities.

Why is community the crucial cornerstone of crypto marketing? In the simplest terms:

• You can’t advertise crypto
• Word of mouth marketing is all you have
• Other people telling your story is all you have
• True community is the only thing that attracts people stick around vs. mercenary pump and dump

In Web2, ad spend to juice your socials is table stakes. A decade ago, sure, you could market organically on social media and grow a following. Today: nah bro. You can’t compete unless you’re putting spend behind the message.

But digital advertising today is super centralized. The three or four big tech players where most brands advertise today are crazy risk averse. Try to advertise crypto, they ban you.

Your ad not here

Yes, there are some ways to get around it. For example, you can market events if you use the right copy and structure to your social posts. But you can’t rely on ads as part of your core blockchain marketing strategy. Unless you’re a licensed financial service, you can’t put spend behind your message.

So you have to market in different ways. Here’s the playbook:

Build community. Let them do the marketing for you.

Of course, doing this sounds easy. But it’s actually difficult to do well. You must:

• Arm your community with stories and a narrative about the problem you’re trying to solve
• Spin up a story so good that the community people are amped to go tell their friends, make memes and push their socials and then tell their friends to make the memes and push their socials
• Do the work to define the narrative around the problem you’re trying to solve
• Pick the right problem to solve

To recap, it works like this:

• You pick the right problem to solve
• Create the right narrative on how to solve the problem
• Get people so excited that they help spread the word
• Token go up and to the right

And it’s great when token go up. But here’s another reason you need community:

Community is the bridge from ponzinomics to tokenomics.

Read that again. Because it’s the only thing that works.

This has been the case in crypto for years. Going back to the ICO days, new projects are always ponzis until there’s a community. Without a community and hodlers, your token will attract all the degens. They ape in. They ape out. Remember:

• Ape want banana
• Make token go up
• Pump and dump
• You get rekt

The remedy to mercenary capital is community and, eventually, deep reserves from institutional capital. Build a community, and your project will have instant liquidity and hodlers who keep your project healthy. The more people in your community who hold your token, the healthier your project is. Otherwise, you’ve got degens aping in, pump and dump and you’re rekt.

Community building makes sense. It’s the only thing that works. Yes, you can argue that there is an alternative route: setting up the infrastructure to become a security token. But very few projects do that. In the US alone, the costs associated with the security token route are in the millions of dollars. And even then, you can only serve certain US states. It’s just not a practical option amid current regulations and rules.

Building something of value in blockchain means marketing by word of mouth and cultivating a community. The real value is in the community — and its members’ belief that your project is valuable. They have to be a part of your community and really believe in what you’re building. They need to think:

• This is a problem that someone really needs to solve
• This project has the right idea about how to solve this problem
• I want to see this problem solved and this project exist in the world
• I believe in this project
• I want it to work
• I’m going to help make this work
• I’m going to get other people involved
• Let the telephone game theory of crypto biz dev flywheel kick in

This is the case for everything meaningful that’s ever been built in the entire universe. Before it even has a blueprint, it’s a belief in somebody’s mind. And that person gets other people to believe. Together, they turn it into a reality.

You can see from this line of thinking how important it is to pick the right problem and create a good story around solving the problem. It’s all connected. It’s what helps make community possible, stable and long-lasting.

The community has to be a real community

When we talk about community, we’re not talking about the degen horrors shops. You know: where it’s all yield, yield, yield, APY, APY, APY. No spreading FUD. We’re talking about a real community where people are:

• Talking about the problem you’re trying to solve
• Talking about the solution to the problem
• Getting other people involved
• Telling their friends and those friends are telling their friends

You’re building like AWS, where year after year they’re continually doing what’s in the best interest of their community. Their product gets better. Their prices go lower.

You’re not doing what Fantom is doing right now: cutting rewards, cutting funding.

If you are continuously good to your community, they will forgive you when unforeseen problems come up. Say there’s a hack. Your community will forgive you if they trust you. Opposite of what’s happening at Fantom. Trust is down. Token is tanking. If you run a cutthroat ship or have a weak community, people will just leave as soon as the next green pasture comes.

Eventually, the reality is that most successful chains will have a corporatization moment. The community will take them from ponzinomics to tokenomics. And the growth there will scale until there is institutional capital that’s created enough of a safety net and structure. This is where specialization starts to take off. And then things start to look a lot like Web2.

But even in this inevitable future for the most successful projects, community will be crucial. Here’s why: in Web3, everything is open source. If you lose touch with your audience and your customers, somebody is going to come along, fork your tech and do it better. Here’s your deploy scripts? Thanks.

That’s different from Web2. I can’t go and fork Facebook and build a better Facebook. Sorry, I meant Meta. I can’t fork Twitter and build a better Twitter in Web3.

You get it. Community is king.

Now what?

You’re ready for the next step. Which means another problem. But a good one. I’ll post that very soon. In the meantime, hit us up for how we can help your project build community and grow.

If you’re interested in learning about more growth strategies for your project, we encourage you to connect on Twitter @bryancolligan. Join our Telegram for members-only alpha on projects we’re watching and DYOR resources for creating growth, credibility and engagement for your project.