Powering Creator Economies with NFTs
Unlocking the generational monetization potential through NFTs and DeFi
Back in 2013, Jack Conte spent countless days and nights building a replica of the Millennium Falcon set from “Star Wars” to shoot a music video in it. But this time around, he decided to add a special segment at the end of the video, where he encouraged his fans to support him directly by going to his new website, where they could pledge money for every video he creates. This was the genesis of Patreon, a new membership platform for content creators. Jack’s idea went on to empower a whole generation of creators through a different content monetization model.
The creator economy narrative has been around since the 90s, albeit in a more traditional form, that has evolved from television to what is nowadays the most popular content platform, TikTok. You can read more about the evolution of the creator economy in this great article The Rise of the Creator Economy by Julia Maltby.
What has truly propelled the creator economy interest and expansion recently is the pairing of creators with the crypto industry, namely social tokens and NFTs. A decentralized monetization system could be a source of sustainable form of revenue.
Social tokens
In essence, social tokens are the futuristic version of Patreon. They are mostly built around loyalty and special benefits or perks for their holders. These can include private communities, special-events tickets, direct creator access, merchandise, etc. They are the novel way of supporting your favourite star.
The idea behind social tokens, individual or community versions, is still of a speculative nature. If the community grows, so should the value of the token due to increased demand. This would mean that both the creator and the fan would be incentivized to help grow the community. In return, the creator will continue to produce great content and keep the community growing.
The sustainable model
But does that model really work? The goal of the community in this case is not to incentivise the creator to create more or better content, but rather to help grow the community. In a theoretical example, the creator doesn’t even have to create anything anymore, as long as they keep the community engaged and steadily growing.
I believe there is a better and more sustainable model that can drive the creator economy, utilizing two important enablers that both need to work hand-in-hand: NFTs and Creator pools.
Enabler 1: NFTs
Undeniably, NFTs are taking over the creator space. Beeple’s art piece selling at Christies’s for $69M and recent rumors of even Facebook and Ebay moving into this space are a strong signal of what’s to be expected in the next decade. NFTs are a game changer for the digital economy.
NFTs represent true digital ownership and set the foundations for a basic exchange of goods in the digital space. An NFT holder now possesses a certificate that clearly states he or she is the owner of a certain digital good, albeit this good is still publicly viewable online.
That is the crucial ingredient in the creator economy mix. For any economic model to be sustainable it has to be fed value as an input. The challenge is in transferring the value to the NFT first and then putting it to work inside the model. With an NFT, every time a transaction is made, the model receives some value generated from that exchange.
All participants are rewarded in such an event and the creator is directly giving back to the community. But for the model to work, this must be mandatory.
Enabler 2: Creator pools
The one metric that drove the narrative in last year’s DeFi summer and consequently propelled the crypto market to where it is today is TVL. In DeFi Total Value Locked represents the amount of assets that are currently being staked in a specific protocol. It does not represent the amount of outstanding loans, but rather the total amount of underlying supply secured by a specific application and/or by DeFi as a whole.
Compared to social tokens, creator pools can incentivize both the creator and the fan without introducing a new currency and adding unnecessary friction to the system. The value locked with a single creator inside their pool is an indicator of their success — not only by the size of the community, but also by the content that they are producing.
A creator pool can work similar to any liquidity pool. With a token staked, the user receives the reward every time a transaction has occurred on the NFT exchange side. At the same time, fans are incentivized to lock in more capital before anyone else, as the rewards distribution is based on an exponential curve and queue basis.
To the crypto investors, each creator now gets his own TVL.
To the non-crypto, staking is the new following. The more tokens you put into a creator pool and the better the creator performs, the more token rewards you earn. It’s intentionally simple.
The adoption
While crypto is, without a doubt, the main driver towards the creator economy of the future, mass adoption is highly dependent on the experiences we build. Being truly decentralized always comes with a trade-off on the UX side. NBA Top Shot succeeded mostly because of the simplified user experience and simple onboarding.
We have some ideas on how to optimize the steep adoption curve, one of them is also an adoption token mining concept that is part of our token model. A novel concept we will deep-dive in a future article.
The creator economy will continue to grow. We expect the current 50M global creators to double in the next three years. Clout.art will be a crucial part of the solution that will help us get there.
Read more about Clout.art and the creator’s economy in our whitepaper.
Got questions? We’re happy to answer.
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About Clout.art
Clout.art powers the creator economy of the future by turning the most valuable content, such as your most successful Instagram posts, into unique NFTs. As a microservice, a marketplace, and a staking platform for NFTs minted from social media content, Clout.art is where creators and fans come together to create, grow or exchange social capital through the $PROPS token.
