Social Tokens: What are they?

*NB None of the views expressed here are representative of New Finance Ventures or Mike Kelly. No mention of any app or protocol is an endorsement.

In our first podcast our guest Alex Dunsdon mentioned ‘social tokens’ as an area he was interested in & excited about.

So, what the hell are they, and why are they interesting?

The idea of social tokens in crypto isn’t something new, but it has been gaining more attention as new creators are coming into the space and experimenting with what is possible.

Social tokens are a way for people to represent themselves or something to do with themselves in a tokenized way. The line between a social token and an NFT can be fairly blurred. I don’t see a huge distinction at all in many cases.

This may sound a little dystopian, and in some cases, I think it is, but stay with me as there are many instances where I think it is really exciting.

A social token doesn’t immediately mean it is some way of financialising & distributing ownership of your life (terrifying to me).

It can be a way for creators to engage and reward fans. Some examples of industries or use cases where they could be really interesting:

• Musicians & Artists
• Brands & Communities (whether large or indie)
• Young entrepreneurs who need funding (aka Alex Masmej)

I will actually start in reverse order here, with perhaps the most well-known social token experiment. Bear in mind, all the use cases overlap and can operate across pretty much every industry. I have just selected a few examples to shed some light on the ideas!

Young entrepreneurs

Alex Masmej set up the first social token. In April 2020 he began the $ALEX experiment and essentially sold ‘shares’ of himself. Though these would not be classified as equities, he would be quick to point out, he managed to raise $20,000 to help get him from Paris out to Silicon Valley and continue his journey as a tech entrepreneur. Initial holders of $ALEX were entitled to 15% of his income for the next 3 years, capped at $100,000. There were also other privileges attached to holding the token such as: meeting certain thresholds of $ALEX gave you 1/1 interactions, (hold 20,000 $ALEX), intros to his network (30,000 $ALEX) & retweets. He also included an interesting experiment for voting on certain life decisions of his, such as whether to go to the gym or change his diet. Though this didn’t really amount to much, it is a great example of people testing the structural boundaries of social tokens.

Certainly a fascinating experiment but perhaps more importantly it got him to SV! Now Alex has founded an NFT company, Showtime, and raised $7.6m in April of this year to continue building out the NFT social network. Seems like a pretty great result for the $ALEX experiment. :)

A social token is what made this dream possible.

Looking past Alex, we can see the immediate implications, people may be able to raise money and create opportunities for themselves that weren’t previously available via grants, crowdfunding, scholarships or any other traditional route.

Musicians, Artists, Athletes

A large benefit of social tokens is to creators building audiences or who already have established audiences.

Musicians, artists & athletes are some of the clear potential winners here. Social tokens can be like loyalty points on steroids and with a chance to interact directly with your audience. You are able to tailor benefits in ways previously unheard of.

Platforms like Rally & Roll allow creators to make their own tokens and remove a lot of the friction that has previously been there. Launching a token can take a lot of work, from programming benefits to providing liquidity so people can actually buy & sell it, these aren’t simple things.

Rally, Roll, and others such as Privi and Fyooz are starting to provide platforms to make the whole process easy and onboard a whole new wave of creators looking to build closer relationships with their audiences.

One of the OG’s in this space is Marguerite deCourcelle, aka Coin Artist. She decided to NFT herself in Sept 2020. Why? In her owns words:

By tokenizing “coin_artist” into an NFT, I am essentially tokenizing my brand.

She expands on this greatly in the article linked in the quote above!

Tokenizing gives Coin Artist at chance to engage directly with her audience. Perhaps more importantly it gives them the chance to directly engage with her in a way that is unique and can strengthen her brand while making her fans feel like they are truly a part of her journey and her success. There are plenty of other benefits: owners would have access to a private discord, they would get different roles dependng on the amount of $COIN they hold and in-game perks for Neon District- such as early access to updates. The option for direct partnership between creators, brands, gaming platforms and more becomes a lot easier. It is a big sky all of a sudden.

Another concrete example is RAC who launched their token $RAC with the platform Zora in October 2020. You couldn’t buy $RAC, it was distributed to fans for their earlier support based on an array of different sources, such as: if you were a Patreon supporter, twitch subscriber, you bought his earlier $TAPE launch or had previously bought merch.

Holding $RAC brings you a range of benefits, it gets you access to a private Discord channel with the artist, exclusive access to early merch drops on Zora, discounts on merch, ad space on his Twitch stream & more.

Other athletes and creators are also exploring these routes. Spencer Dinwiddie tried to tokenize part of his NBA contract, although it wasn’t a success at the time. There are multiple college athletes on Rally with their own tokens. The game has changed now college athletes are allowed to profit off their names, images and likeness. Professionals have already been exploring the space but this ruling from the NCAA has opened up a whole new cohort of participants.

Gary Vee is perhaps the ultimate success here. He launched Vee Friends in early 2021 and sold out immediately. They are an NFT-collection-meets-social-token. Holders of Vee Friends get access to a variety of different benefits depending on what you hold. They are a collection of 10,255 tokens, which all grant you access to Vee Con (a yearly conference in Las Vegas). Other tokens bestow benefits like gifts from Gary Vee himself, group meetings with Gary, and the most valuable being 1–1 virtual &in-person sessions with the man himself. One of the great benefits here is that you are then able to sell on thes tokens if you are done with them, granted their value may go up or down on the secondary market, but this is different from paying for a one-time-only experience with no chance of recovering any of the costs (or even making money).

Brands/communities

Brands and communities are either already hopping on this wave or will be next.

In the crypto-native space, you already have multiple token-gated communities that bring the holders utility. Private discord channels use Collab.Land to verify users wallets as holders of a certain token (or threshold of token) to grant the user access.

Friends With Benefits is perhaps the most well-known of these. It describes itself as ‘A digital cornerstone between technology and culture communities’. To get access to the community you need to have 75 FWB tokens ( $5625 or $75 a token at the time of publishing). This grants you access to their private discord channel where you have access to a group of likeminded crypto enthusiasts, who may also happen to be partners at a16z or involved with some of the more successful protocols in the space or some of the great thinkings and connectors. There are exclsive parties and events, content and newsletters that members can access, usually for an additional charge and community members and contributers are paid in the FWB token.

Ribbon Finance is another example. Early members and contrbuters were part of an airdrop that included a token which gives them access to a private discord, lovingly called the Ribbonati. Disclaimer I am a member. Ribbon offers structured products on Ethereum, so you may be thinking what is a community about here!? But it is a place for likeminded people heavily involved and interested in the DeFi and finance space to hang out. People can exchange ideas freely and without havnig to deal with the sheer volume of messages in general Discord chats. You are a member of a club. It is a private place to go hang out, share alpha, theories, ask questions and share knowledge- and probably most importantly post memes.

All these things above can be used as social signalling tools by the holders as well as community building tools for the creators. You can show you were an early supporter, or buy in later and demonstrate your commtment and interest to a cause. By doing this you are granted benefts, some already disclosed and others that may be added in the future.

I was recently interviewed about NFTs on a podcast by two entrepreneurs. They also own a successful chain of burger restaurants in the middle-east called Burger28 (stay with me here…). When I was asked about exciting innovations in the space I mentioned social tokens. My thinking is for brands like them, you can have loyalty points on steroids. Imagine being able to airdrop all their early customers a $B28 token based on the usage. You could then introduce tiers, if you hold a certain amount you get access to discounts, cheaper rates for catered events. Perhaps if you are a super user you can even get custom items that aren’t on the menu, or early access to new/trial items. There are a ton of possibilties here for brands of all sizes. Platforms mentioned earlier like Roll & Rally are making it easier, cheaper and more time-effective to start experimenting with these types of projects.

The other benefit here is added liquidity. Imagine being able to buy and sell social tokens in one project or creator for another, maybe because you are keen to meet a threshold to get access to a special event or a 1/1 meeting. All of a sudden these ecosystems become interoperable. Composability is one of the most exciting things in the crypto space, and this is no different. I could sell my ‘British Airways airtokens’ for more tokens in my favourite artist, perhaps because I know she has a concert coming up and I can get early access by holding enough of her tokens. Or I am able to transfer them into the tokens of an early painter/artist I am a huge fan of and I am keen to support. Buying their token may be a way for me to get a comissioned piece, or equally just as social signalling that I think they are talented and I want to be an early supporter.

Proceed with caution

There are concerns here too, the financialisation of everything is scary. I do worry that this can execerbate issues of mental health in young kids, and everyone for that matter. It would be far too easy to give everyone a token and have peope start placing their self-worth in the value of it, a la Bitcout (not even tagging that disaster).

For Community fans out there (the tv show), I likened it to the MeowmeowBeenz episode, hilarious please go watch it, where your social status and circles you can move it depended on the votes of others at the College to award you a beenz rating.

Do we end up in a world where everyone knows the price of everything but the value of nothing!?

Not everything or everyone needs a token, I think it lends itself to creators and brands with active communities. Even with this, you are taking on a lot of responsibilty when doing this. Communities can be demanding, they may want constant updates and innovation. If the price dumps, they will be coming to you to ask you to do something about it, even though you may have very little influence or control on this, especially with the short-term market moves. I think it would be a disservice to jump over the mental burden this can place on creators and their teams. If you truly care about your community it can be a heavy load to carry. This may not apply to large brands where the team is more removed from the identity, but an equally important consideration is your reputation. Whilst these are exciting opportunities they take a large leve of commitment to see them through and then a lot of ongoing maintenance.

This is an introduction into the idea of a social token and what it can represent. They represent an exciting future for creator engagement with their audiences, a way to reward both early adopters and late joiners in different ways. Both brands and creators alike can capitalise on existing communities they have and build bigger and more engaged ones themn ever before. Social tokens represent a new way to forge stronger and more direct relatioships with consumers and fans with a two-way engagement that has rarely been possible at scale previously.