Community engagement and whitelist. The LTO way.
In this article, we will cover the big advantages that an ICO has regarding network effects, why so far projects have failed to capitalize on this, and how LTO Network is trying to step it up.
An ICO helps bootstrap network effects: your community is a hundred times better than VC help
Funding is not just about the money. Or at least it should not be. In a normal world, angels and VCs connect you to potential B2B clients, help you with media exposure, and support you throughout the years. In the crypto world, VCs have a much smaller role to play due to hyper-quick liquidity. However, their role is being taken up by community members. This pivot is a positive one, and not just for the sake of proper token distribution (whereby the influence of a single holder is minimized).
What projects need to realize is that ICO community investors essentially fulfil the role of VCs. Communities consist of government officials, developers, business owners, enterprise employees, (social) media influencers, etc. It’s an incredible source of everything you need! But of course, there are a few pitfalls to keep in mind.
Things to keep in mind
- Community help with adoption and business development is less effective if you are 1 year away from your mainnet. Simply relying on hype is wrong. Hype works up until the point someone tries to use your product. If there is no product, then the lead is gone. [note: LTO Network is launching mainnet with crowd sale, and multiple products are already in use]
- Most of your community members will probably be speculators. And that’s okay. Everyone has their role since your token is released on an open market. Your goal as a project is to make sure you acquire as many community members that are enthusiastic about your fundamentals as possible. They will stay with you for a long time, while speculators might not.
- Point #2 has implications on the marketing strategy of your project. Of course, for an exchange, it is essential to focus on prices. However, if you are building a product for B2B, then you will probably want to talk about use cases. If you are a hardcore dev project, then you will have to focus on code more than anything else. Projects quite often do just hype.
How community rewards were done so far
There have been multiple attempts at encouraging the community to fulfil different roles. Developer rewards for building worked reasonably well, but in terms of helping with exposure — that did not go well at all. Projects used the following logic: share/like post -> get tokens. And that’s it.
See the problem here? First of all, it’s manual work most of the time, which is largely unscalable. If it wasn’t manual work, however, it was clearly abused by bots. Moreover, the rewards were not continuous; they were too small to get the community interested, and airdrops ended up just being spam. This is not how you incentivize the community to help you grow.
So what is the best way to do it? Or rather, how could we try to improve it?
Bonding curve of engagement: accounting for both economic (token) and social (activity) factors
Proof of Engagement is a concept that helps engage new users. The concept uses token bonding curves (see the image above) and community incentives to create an organic community of long-term holders.
This system takes into account a few major factors at a time: your social stats (number of followers, number of posts per day/week) + your help with engagement (number of likes and shares)+ the number of tokens you are holding + the time you are holding them. More information about bonding curves can be found here and here.
It’s quite simple though: you help with exposure and earn rewards. This can include sharing, liking, writing content, and doing more custom tasks that can earn bigger rewards. The monthly rewards increase with:
- Time users hold their initially invested tokens.
- Time users hold their earned engagement tokens.
- The total amount of tokens held by registered users.
- Current user community level.
- Monthly earned points.
This is not a shilling machine — it’s a way to bootstrap community engagement and create an actual circle of collaborators working together on the same goal. It’s what ICOs were intended to be in the first place.
In fact, such a system can allow projects to evolve into DAOs (Decentralized Autonomous Organizations, which are not controlled by a single entity)— it’s even called DAO Maker (credits for the pun and copyright infringements can go to Chris).
This is what governance should look like: taking into account economic aspects (token voting) and merging it with social engagement. The system accounts for different levels of community members, depending on their involvement. You can grow from being a late follower to an ambassador!
The result of such a system is that higher level members will be more knowledgeable, more loyal, but will also be holding a higher amount of tokens. Higher ranked users will earn more benefits and responsibility, but also have a higher stake. They are disincentivized to cause problems, but incentivized to make use of user influence and reputation to help the project, hence growing token value.
It’s already working — and we’re really excited to have you try it!
When whitelist, Sir?
Well, that’s essentially our whitelist. However, it is not a de facto whitelist, as the project and ICO are available to everybody, and to participate in the sale on January 14 you will simply need to go through a KYC procedure on the platform itself. Edit: please read the clarification statement in the comments.
You can register, connect your social media accounts, and share articles and news. And just like that, you can start earning points!
We are finalizing the size of the rewards and will announce them later—spoiler alert: they will be quite sizeable. We want these rewards to be real incentives after all. Moreover, the model in place prevents spammy behavior and takes social staking into account. What matters is the number of points you obtain and your rank within the community.
We will follow up shortly with the number of points each action gives you, which levels the system contains, how to achieve these levels, and more. And don’t worry, the system and the token bridge prevent the inflow of large unexpected ‘free’ token supply. So we have that covered, too!