Tokenizing Content Creator Economies: An Introduction to Rally Network
By Amit Ranade, Head of Rally Network
Content creators for YouTube, Tik Tok, Twitch, Instagram and more have built a massive industry. The influencer marketing sect alone is expected to be valued at $15 billion by 2022 according to Business Insider Intelligence estimate. In an earlier post, Kevin introduced a vision for how Rally is building new ways for creators to thrive with new virtual economies that they own. At the center of our plans to enable these creator owned economies is our development of Rally Network.
We’ve designed the Rally Network to accelerate economic interactions between creators and fans, while ensuring that the value that emerges from those interactions accrues to the community participants in a way that is consistent with the creator’s preferences. To go a bit deeper, I’ll introduce Rally Network through three non-competing definitions that highlight some of these aspects.
Definition 1: Rally Network is a collection of building blocks that allow Creators to define and manage their own economies
As a team with a fair bit of history in game development and an active interest in blockchain projects, we’ve seen a lot of examples of emergent behavior enabled by straightforward systems that empower communities. Recently, we’ve watched with interest as Compound officially launched a governance system built on simple rules that enabled its community to improve the system and engage with each other in new ways. Similarly, we believe that a few simple, well designed building blocks will enable creator communities to start engaging in new and innovative ways.
Creator Coins
The first, and possibly most important, building block we’ve launched is Creator Coin, a creator’s fully customizable, branded cryptocurrency that represents their unique digital brand. We have designed this system to balance two seemingly contradictory beliefs:
1) Creator economies should be driven by unique currencies built around individual creators and their communities
2) A single currency across all creators would ensure the largest possible liquidity pool for the entire network and best establish a new coin as a usable currency
To balance these competing desires and prevent a liquidity crunch caused by fragmentation across unique Creator Coins, an essential part of the design is our use of Token Bonding Curves. Specifically, a smart contract for each Creator Coin acts as an Automated Market Maker providing a counterparty to anyone interested in buying or selling a Creator Coin. This AMM’s behavior is governed by a pricing curve that establishes a functional relationship between the supply of a Creator Coin and its current price.
For example, when a fan wants to buy one of their favorite creator’s coins, their funds are transferred to the smart contract and a number of coins determined by our pricing curve are minted. And when the fan is ready to sell those coins, they are simply burned and funds are released from the smart contract according to the pricing curve. An important distinction between this Token Bonding Curve and an AMM like Uniswap is that this curve governs the entirety of the Creator Coin supply as opposed to creating a market for the subset of a token that individuals have chosen to include in the exchange pool.
While simple in design, this approach offers the substantial benefit that we can deploy unique Creator Coins for each of our creators while providing immediate and continuous liquidity at an algorithmically determined price that isn’t subject to thresholds of demand required by an exchange or order book matching. We’ll plan to go much deeper into the details of Creator Coins and Token Bonding Curves in a future blog post, but I hope this example of one of our design considerations helps illuminate how we intend to make unique Creator Coins for each Creator economy an elegant and important building block for Creators.
NFT Creator and Marketplace Tools
The next major building block that we’ll be releasing is a digital asset creator. Collectibles and Creator economies are a natural fit in the physical world and aspects of ownership, history, and scarcity enabled by popular public blockchains have created new opportunities to explore possibilities in the digital world. To help creators expand and monetize, Rally Network will provide tools to define and manage unique digital assets represented on chain as ERC 721 compatible tokens as well as marketplaces where they can be exchanged within the community.
In establishing the right tool set for digital assets, we’ve attempted to cultivate some important properties without unnaturally restricting the canvas creators will be able to enjoy. A few of these properties that I’ll call out today are meaningful scarcity, creator specific value encapsulation, and always on sale collectibles.
One aspect of NFTs that got a lot of attention in some of the early blockchain digital collectibles was the notion of verifiable scarcity. We’ve seen enough examples to know that scarcity alone is not enough to make a digital asset interesting; but even within the context of scarcity there is a substantial difference between market mechanisms creating scarcity and a simple digital representation confirming uniqueness. For this reason, digital assets created on Rally Network will require a deposit of Creator Coins ensuring each collectible possesses some intrinsic value, immediately ensuring that economic realities contribute to the value and scarcity of the collectible. An early example of this creator specific intrinsic value is available on our personalized tipping platform, Taki. We’re already seeing creators create and sell one-of-a-kind doodles and collectibles autographs and see tremendous growth opportunities as we extend and tokenize this use case around meaningfully scarce collectibles.
Additionally, a natural fit for scarce assets in creator economies is a direct link between the asset and some form of status, access, recognition, or other such value that only the creator can provide. We envision digital collectibles defined by Creators via our tools that allow creators to tokenize aspects of their relationship with their communities that are entirely unique and completely controlled by the creator. For instance, one of our early adopter Twitch streamers is working with us to define a collectible token via Rally that confers to its holder an on-stream “seat” that lives as a Twitch overlay. Whenever this user watches the streamer online, they will have a badge that the entire community will see during the livestream. Note that this type of real estate is highly sought after by users on Twitch and is an existing behavior that fans often spend hundreds or even thousands of dollars on to access. The definition of the benefit would be memorialized in metadata on the unique asset and the fulfillment would be entirely controlled by the streamer. While this sort of on-chain/off-chain connection can be problematic for many use cases, the streamer controls the definition and their economic interests are naturally aligned as fulfillment failure would erode trust and diminish the value of their own economy.
Once these digital assets are in circulation, we believe the community will be best served by marketplace dynamics that encourage robust trading activity. Although some collectibles, especially those possessing substantial sentimental value, are appropriately owned by a single fan in perpetuity, we see a lot more potential for engagement and excitement with collectibles that are freely traded within the community. One feature we’ll be including in our digital asset creator will be the ability to designate an item as always on sale. Similar to the bonding curve approach we’ve taken with Creator Coins, a simple smart contract will algorithmically govern the price of these collectibles. Any time a new fan is interested in making the collectible their own, they’ll transfer the appropriate funds to the smart contract, the previous owner will be compensated accordingly, and the collectible will automatically be delivered to its new owner. Without dealing with complex auctions and eliminating the risk of a single fan squatting on a desired collectible to the detriment of the broader community, we’ll achieve market based price discovery and encourage more movement of digital assets.
Rewards Mechanisms
Following closely behind Creator Coins and digital assets will be tools to support rewards mechanisms that reinforce positive participation in Creator economies. I won’t revisit the network effects potentially created by rewards mechanisms promoting desirable economic behaviors around new currencies. But it’s important to note that within Creator economies, appropriate rewards structures have the added benefit of promoting positive community behavior. With all of the Creators we’ve spoken to, it has been clear that economic benefit alone will not motivate them if it’s at the expense of their loyal fans. The tools that we’ll provide Creators will ensure that they can choose a rewards design aligned with their preferences around both economic growth and community engagement.
While these first few building block examples are by no means comprehensive, we do believe they’ll provide a solid foundation for interesting emergent behavior. And as we collaborate with our community, we’ll continue to evolve both new and existing building blocks to best serve the new Creator economies that emerge.
Definition 2: Rally Network is an API that abstracts away the complexities of blockchain development to make the opportunities created by this new technology accessible to creators and their fans
The specifics of the technology itself are far less interesting than the novel use cases it enables. Nothing is going to take hold here unless it is usable for both creators and fans. To date, this dimension of usability has not always been a primary concern of many blockchain projects; and we can see that several of the most impressive projects on Ethereum have achieved success by crossing the usability threshold for only a few tens of thousands of users. And, while growing, the number of blockchain developers continues to hover around 1% of total development talent.
With this in mind, we’ve taken the approach of initially surfacing Rally Network functionality through developer friendly APIs accessible via GraphQL. Capable developers interested in leveraging our building blocks need only familiarize themselves with query syntax that interacts with our APIs without diving into the complexity of blockchain development. In this way, even the most modest creators interested in enhancing their communities with the functionality enabled by Rally Network’s building blocks can easily do so.
While we’re initially limiting access to our network to a select set of developers, we’ll surface as much plug and play functionality as possible around our core building blocks on the rally.io website. In addition to helping showcase some early possibilities, rally.io provides the added benefit of immediately enabling early access for creator communities to start using Creator Coins without any software development while we prepare to take on more developer partners.
Definition 3: Rally Network is a decentralized system administered by the Rally community
Phase 1: Launch Network and Build Community
In order to move as quickly as possible, Rally Network is initially launching as a centralized service designed and administered by our employees. However, we’d like to reaffirm our intention and commitment to turn this system over to the Rally community as quickly as possible. We’ve built everything with the intention of decentralizing and our goal is to establish Rally Network in a way that we can progressively remove ourselves from it’s administration and evolution.
While our thoughts on how to navigate a path to decentralization will likely take shape over time, the first area in which we believe we can make meaningful strides is in the area of creator ownership. First and foremost, our Creator Coin design allows us to launch new currencies with sufficient seed collateral entered into our Token Bonding Curves to the benefit of the Creator so that they will always own a meaningful percentage of the total outstanding Creator Coin supply. Additionally, the Creator Coins minted with this seed collateral will be sufficient to supply Creators with an ample stock of Creator Coins that they can immediately airdrop to their most important community members. So while the service itself is centralized at this stage, the beneficial ownership of a Creator Coin will reside with Creators from day one via their control of the lion’s share of Creator Coin supply.
Phase 2: Turn Admin Control of Creator Economy over to Creators
The next stage of Creator ownership that we believe we can progress towards quickly is one in which we turn administrative control of a creator economy over to the creator. In this phase, we envision simple templates governing details of Rally Network building blocks — shape and scale of the Token Bonding Curve, restrictions on creator sales of their own token supply, taxation of digital asset sales, etc… — that creators and their communities could choose to modify. These templates would ensure changes would operate within known limits while offering Creators a large degree of self determination in how their economies function.
Phase 3: Turn Over Network to Community
And, over time, our intention is to take the same approach with the Rally Network building blocks themselves. We’d first enable community administration of these building blocks to modify them within known ranges and then eventually allow the community to define entirely new building blocks that would enable further innovation in Creator economies.
Where do we go from here?
The first few building blocks described here should enable some interesting experimentation and things should only get more exciting as we provide more tools and continue to turn more control and ownership over to the community. You’ll be able to follow all of the latest functionality added to the network by exploring the features on rally.io and I’ll follow up soon with a deep dive into the design of Creator Coins.
In the coming weeks, we will share more details about Creator Coin, including its design and functionality, as well as the first test cases.
A special thank you to Ian Lee, Jesse Walden, Chris Dixon, Nick Tomaino, and Josh Williams for prompting much of our thinking presented in the piece.
