At the beginning of 2024, I launched the first article in this series where we introduced the idea of Community-As-A-Brand entities. In that article, I wrote about the origins behind these entities and why they are tipped to be the next-gen unicorns. More importantly, I shared about how we had designed and built ARC to be such an entity.

Since then, much has happened. We closed our mint in March to focus on building. Then we shared with the community in April that we wanted to raise a round completely from within the community. The months after were filled with many 1-1 conversations with members as I shared more about the future plans for ARC.

Those conversations also led me to write this next piece in the series. In my meetings with the team and community, I often speak about the idea of community-led growth and how that is key for ARC. It is also the reason why we always prioritise community health as an always-on OKR and in this piece, I have tried my best to outline how you go from designing community-as-a-brand entities to activating them.

At ARC, we are creating an unprecedented kind of business model - a digital-first institution borne out of a highly-aligned community. I have always emphasised that we are not an NFT project, but an entity that is leveraging crypto and blockchain technologies to further our community and business goals. In that regard, our ambition does not sit merely within Web3. We strongly believe that by implementing the principles outlined in this article consistently, we will be able to build up revenue streams far beyond any traditional Web2 counterparts or similar community-centric entities in Web3. We hope you get to understand more of that ambition after reading this piece.

With the publishing of this new chapter, we are humbled to share that thanks to the support and belief that members have placed in us, we have closed our fundraise with more than USD4.5mil raised. Beyond the amount, it is the fact that this was a round that was raised completely from within the community. It’s a genuine testament to the content I’ve covered here about our thinking behind ARC and what we have achieved thus far. They aren’t just theoretical principles about community-building but real-life executions we have implemented. As always, I hope you find this a provocative read that challenges and informs your perspectives on communities and how they can be run.

Elroy Cheo

CEO, Co-Founder, ARC

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Prologue

It was a little before COVID when we first conceived the idea of ARC. We noticed a gap in the market: despite the increasing digitalisation of our world, humans, with their innate yearning for connection, were not finding purpose-driven communities online.

While interest-based communities thrived on platforms like Facebook or Reddit, few online groups existed with a strong shared purpose. The few that did exist were often centred around particular social causes or movements e.g. #BlackLivesMatter or #ArabSpring.

One notable exception was WallStreetBets (WSB), whose members aimed to disrupt financial incumbents—a purpose-driven goal. This concept is analogous to many Web3 projects today that also rally around community goals.

At that time, I was puzzled by the scarcity of such communities that were not necessarily driven by social impact causes.

Was it possible that ARC’s value proposition was not universally relatable?

Or perhaps the problem didn’t exist in the online space, and people didn’t crave connections as they did in the real world?

And then COVID hit.

How COVID Changed Us: From Isolation to a Hunger for Connections & Community

It's clear that COVID-19 has left an indelible mark on the physical world. However, its impact on the digital world, particularly on how people interact and collaborate at scale, is profound and still unfolding. One significant development is the flourishing of digital communities.

COVID-19 created what some call the "loneliness economy." With many people forced to stay at home around the world, the need for connections became more acute. This confinement led to a surge in people seeking connections and a sense of belonging online, thereby driving the hyper-connectivity of the internet. This period also accelerated the adoption of community infrastructures and many-to-many collaboration tools (e.g. Zoom) which existed pre-COVID but were not widely used.

We term this new era Social Media 2.0. This era was primarily triggered by key behavioural shifts in Internet users which then led to certain social media features, tools, and platforms that became more valued.

(I) Internet User Shift : From Solo Stars to Networked Tribes

Unlike the first wave of social media, which often celebrated individual influencers and personalities, Social Media 2.0 emphasises group dynamics and collective achievements. Without the ability to meet people offline, Internet users doubled down on ways to fill this gap by seeking out others and congregating online.

Social Media 2.0: Platforms, Features and Tools that foster Deeper Connections and Value Creation as a Collective

Think about platforms that enable creators to directly build relationships with their fans, such as Patreon (grew 36% in a month during early days of pandemic), Clubhouse, Substack and even OnlyFans (up 615% year-on-year by end 2020). Clubhouse was a notable exception in that the social audio format (perfect for the COVID era) catalysed a new phenomenon where opinion leaders or creators could congregate with their followers / fans in their own spaces online.

We saw the rise of "networked tribes" - online communities built around shared interests, values, and goals. These groups leverage the features and functionalities honed during the pandemic – community pages (Facebook Pages, Reddit), forums, live streams, collaborative tools and interwoven social circles – to foster a powerful sense of connection. The ascent of such tools allows value creation between people and groups to flourish in this new Social Media 2.0 era.

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(II) Internet User Shift: From Singular Identity to Multiple Identities

The Internet allows people to explore and express multiple facets of their identity but it was especially during COVID, when people had a lot more time at their disposal that they actively explored new interests and passions they wouldn’t have done before.

The greater acceptance of anonymity and pseudonymity also supports this shift since it allows individuals to carve different worlds for themselves across multiple online spaces.

Social Media 2.0: Flourishing of Niche, Micro-Communities

With Social Media 2.0, you can be a small business owner who is also a fitness fanatic as well as a fan of BTS. Over 70% of youth believe that identities will become more complex in the future. This new era enables and encourages people to create multiple identities and be a part of a diverse range of communities that explore varying interests and passions.

Think about niche fashion trends like cottagecore, gorpcore, regencycore that took flight on TikTok or the growth of highly-targeted content shared in Telegram group chats.

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(III) Internet User Shift: “Let Others Do it” to “Together, We Can Make A Change”

During COVID, when people saw how governments and social structures could fail individuals, more were pushed to join forces with others to take collective action. Whether it was about celebrities coming together to celebrate healthcare workers or an NGO that rallied people to provide laptops for underprivileged students who had to study from home, people were keen to be part of something bigger than themselves.

COVID thus triggered a notable shift from broad interest-based communities to purpose-driven groups with clear goals and values.

Social Media 2.0: Large-Scale Collaboration To Drive Collective Action via Purpose-Drive Communities

For the first time in recent history, COVID became a unifier in that everyone was experiencing the hardships of a global pandemic at the same time. In that way, social media 2.0 in its global scale and sophisticated features allowed people to connect and collaborate  across countries and cultures.

Interestingly, this shift also catalysed the adoption of the Web3 ethos, where everyday people were empowered to come together to achieve larger goals (e.g. ConstitutionDAO) by tapping on the power of blockchain technology.

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Take note that most if not all of these collaboration platforms or tools that we are familiar with today did not exist or exist on scale before COVID.

We are in a new collaborative era where groups of people can come together online and grow to become purposeful, valuable, and influential.

ARC was launched and built in the context of this paradigm shift we call Social Media 2.0 in mid-2022. In addition, the bull run in 2021 in the thick of COVID helped introduce a new pool of people to crypto as well as the ethos associated with it - shared ownership for all users. This is an important tenet of how we think about ARC and our community experience which we’ll come back to later.

Community-Market Fit: The Key To Unleashing the Potential of ARC in Social Media 2.0

Many of us are familiar with ‘Product-Market Fit’ (PMF), a holy grail that Web2 tech start-ups are obsessed with. It occurs when a product is built that satisfies a very specific user need-gap and this product then finds a substantial group of customers who are buying, using, and sharing it in such a way that it drives sustainable growth.

A new term that was coined pre-pandemic but really got into full swing during COVID, is ‘Community-Market Fit’ (CMF). In CMF, it isn’t necessarily about building a product that people want to buy, but building a highly-desirable community that a certain group of people want to be a part of and want to stay a part of. It is achieved when you have created a thriving community where members find value in and feel that they aren’t able to derive the same kind of value from other products, services, or communities.

It often happens when members feel a strong sense of belonging because they are amongst other people like them who share similar values, interests, and goals. Additionally, this feeling of belonging can be elevated to become pride if initial members are curated to represent a certain kind of attitudinal/aspirational alignment e.g. “I’m a part of a community of early crypto OGs.”

At the same time, because CMF is achieved, your members become “loyal members” of the community and contribute actively over time to strengthen the experience for themselves and fellow members.

Note that in Web2, what often happens is you develop a product and expect people to be attracted to the product. In community-building in Web3, where we optimise for CMF, we look to build a highly-desirable community FIRST, before we then build products and experiences for and around this community.

Why CMF Over PMF?

In short, in an attention-driven culture, creating CMF means you can better  capture and maintain the attention of your members over time, which in essence translates into more valuable commercial viability and success.

CMF = Emotional Relationships / High Switching Costs, PMF = Functional Relationships / Low Switching Costs

By nature of building a community, you’re optimising for connections, relationships, and emotional bonding between people. The by-product is a strong emotional attachment that members have with the community and the brand as a whole, resulting in high stickiness, which becomes both a ‘community sink’ and an ‘attention sink’. Compare this to a typical Web2 tech company where product managers are optimising for a great user experience to solve functional pain points. The moment another product solves the same functional pain points but at a cheaper cost, the user switches immediately. But leaving a community is almost like leaving a group of friends or a second family – you are less likely to do so versus leaving a product that is no longer serving your needs as well as a competing product.

CMF = Active Contributor, PMF = Passive Consumer

When members are active participants in the community, they are more likely to add value by contributing content, providing feedback, offering support to fellow members and doing everything they can to help build the community and the brand. This sense of ‘we are in this together’ gives them a sense of ownership and allows the community and brand to retain the attention of its members.

(Note: Unlike PMF, CMF addresses only a subset of the community unless a "common shared experience" fully encompasses all members. This phenomenon mirrors the "1% rule," where merely 1% of participants on an online platform generate content while the remaining 99% are consumers or lurkers. Similarly, in community-first products like ARC, only a percentage of members will actively contribute. At ARC, we have a mandate to maintain the percentage of active contributors in the double digits).

CMF = Community-Led Growth, PMF = Advertising-Led Growth

We are all influenced by the people around us in the purchase decisions we make in our day-to-day lives. Word-of-mouth is paramount. We trust recommendations from our friends and family more than the recommendation from that same brand itself trying to sell its own products. With CMF, there is now the privilege of tapping on your community as your immediate user base for feedback and improvements. Once you gain the community’s support, the community backs your product and **advocates for you to their friends and family **which ensures a much higher chance for commercial success (remember, the product / experience was first created for and around the community). At ARC, we are constantly thinking about how we can create a strong CMF and maintain that in the longer-term. ARC will only succeed and thrive if members constantly feel that ARC is a highly-desirable community they want to be a part of. Similarly, for any new products that we seek to create, our fundamental priority is always whether it is a product that our community would rally behind.

First the community, then the product.

How is Community-Market Fit Achieved?

This is how we’ve working towards achieving CMF for ARC to achieve growth and scale:

(I) WHY: Defining the shared purpose and goal for the community

(II) WHO: Curate for members that relate and align with our Vision, Purpose, and Values

(III) HOW: Delivering Value to Members (includes building products that members desire)

(I) WHY: Defining The Shared Purpose

To achieve CMF, it starts with the kind of community you’d like to build and the vision and core shared purpose for that community. Many questions we typically ask for PMF are still relevant because ultimately, we are looking to build a highly-desirable community that a certain group of people want to be a part of.

Why would people want to be a part of this community?

What kind of shared experiences or emotional connections are they looking for?

How will this community deliver on that?

At ARC, I often speak about how we’re inspired by Balaji’s work: The Network State. We believe that there is huge potential and strength in the collective and what we can accomplish together. We built ARC to be such a collective where growth-minded individuals online can come together to pool their resources, networks and expertise to do things together as a single entity. This could be crowdsourcing ways to have our own physical spaces (aka The Network State model) but even beyond that, launching new brands, products, IPs, and businesses that succeed due to the strength of the community. We are building a first-of-its-kind powerhouse for collaboration and incubation.

(II) WHO: Curation for Members & Alignment on Vision, Purpose, and Values

Imagine a community not just of individuals, but a collective force, a single entity moving in unison towards a shared vision. This isn't some utopian dream; it's the core principle behind how we have designed the entire community-building framework for ARC.

A couple of years ago an ARC member, Swan Sit told me this about community-building:

“Elroy, building a community just requires these 2 things but not many are up for the challenge”:

1. Alignment of Purpose: Understanding why ARC exists, and what purpose it serves for our members is paramount, particularly in a paid community where expectations are heightened. Aligning purpose isn't a one-time endeavour; it requires ongoing effort to ensure continued resonance with evolving member needs.

At ARC, we have invested significant effort in understanding our members' motivations so we can ensure there is a natural synergy and alignment with our core purpose and values.

Curation was one crucial way we tapped on to pre-filter our members’ motivations for those that aligned with ours. Importantly, we were not just curating for a specific target segment, but target stakeholders that would be personally invested in the community and what we were looking to achieve with ARC. Unlike in achieving PMF, where target segments are seen as ‘passive consumers’ that you would market your product to, in CMF, we are actively looking for target stakeholders who will take a personal interest in the community because of a close alignment with their own personal goals, interests, and aspirations.

2. High Frequency of Engagement: In the digital realm, consistent interaction is key. Unlike traditional offline communities, digital spaces demand a heightened frequency of touch to maintain engagement. This involves "doing things that don't scale," a process integral to building a genuine community rather than merely accumulating an audience.”

Together with my small team, we would do countless one-on-one conversations with members online and offline, communicating and re-communicating what ARC is all about along with creating a strong feedback loop to continually align on our vision, purpose, and values. We believe that true potential is unlocked when this happens.

Today, members understand our ethos and recognise that we prioritise giving value to receive value, substance over hype, and making calculated long-term based decisions for the community's enduring benefit.

Now that the community at ARC has been both acquired and aligned, Swan's words still resonate strongly with me, and I am deeply grateful for her early guidance, which has brought us to where we are today.

(III) HOW: Defining and Delivering Value to Members

Free communities often centre around content consumption or discussions on various topics. In contrast, private communities, especially paid ones like ARC, are built on the premise of taking action and achieving tangible results. Therefore, in addition to alignment of purpose and consistent engagement, the community must provide both intrinsic and extrinsic value to its members.

Intrinsic Value: Beyond tangible benefits, intrinsic value fosters a sense of belonging, personal growth, mutual support, and empowerment. These intangible rewards form the heart of a vibrant community experience.

Extrinsic Value: Tangible rewards, such as opportunities for learning, collaboration, networking, and personal expression, complement intrinsic benefits, enhancing members' overall experience and satisfaction.

INTRINSIC VALUE DRIVERS:

1. Sense of Community Ownership: Earlier in this article we talked about the ethos of shared ownership and how that has been a core tenet of how we have designed ARC. Feeling a sense of ownership or investment in a community can motivate individuals to actively participate, contribute, and engage in community activities. A big reason why ARC decided to tap on NFTs to token-gate our membership was to amplify this sense of community ownership. As an NFT holder, there is a heightened sense of skin in the game and a natural incentive for members to participate and contribute because when the community grows and strengthens, their digital asset naturally appreciates.

2. Social Identity & Sense of Belonging: Being part of an online community can contribute to the formation of one's social identity. Identifying with a particular group or community can provide a sense of identity, affiliation, and pride. 82% of Gen Z are part of an online community. The reason for this strong gravitation towards communities is because of that deep yearn for connections and a sense of belonging we spoke about earlier. They want to be around people who share similar interests, values, and aspirations. For ARC, we have intentionally curated for a growth-minded community of builders and investors in Web3 to better enable that sense of belonging.

3. Self-Expression: Online communities provide a platform for individuals to express themselves authentically and share their thoughts, experiences, and creativity with others. At ARC, we made a deliberate decision to create an experience for all members to personalise their ARC Stellar NFT. We believe that this is key to helping members express themselves creatively within the community and also to create a deeper emotional bond with ARC.

4. Self-Improvement: Interacting with diverse perspectives, ideas, and experiences within a community can foster personal growth and development. At ARC, we are constantly curating growth-related opportunities and programming for our members on our token-gated app as well as via IRL events. For example, through our token-gated app, we have been able to bring in a diverse profile of speakers (e.g. Verbal, Bryan Johnson, Armani Ferrante) to have closed-door sharing sessions with our members.

5. Social Support: Online communities often serve as a source of support and encouragement during both challenging times and moments of success. As an example, connecting fellow founders in ARC with each other in a private space like our app, allows them to feel safe while they share struggles and find support with their peers.

6. Sense of Purpose and Empowerment: Engaging actively in a community can give individuals a sense of purpose and meaning. Contributing to discussions, sharing insights, or helping others within the community can create a sense of fulfilment and satisfaction, especially when they feel heard and valued as an individual.

EXTRINSIC VALUE DRIVERS:

For us at ARC, through hundreds of one-on-ones done with prospects and members over the years, beta tests, and actual feedback post-launch of the community, we were able to define the core extrinsic value streams that our members desire. (Note: Different value drivers will vary in importance depending on the member we are speaking to. But we have found that these 4 drivers help us cover the entire community as a whole.)

1. Access to Connections with the Right People: The intentional curation of the community was precisely to enable a strong collective of individuals that members find synergy with. With a high concentration of established and rising builders and investors in Web3, members find that every relationship they build is a valuable one that could be helpful in the immediate or longer-term.

2. Access to Growth Opportunities: The growth-minded persona that we designed ARC for are constantly looking for ways to take themselves to the next level. Whether it is content programming on the app that allows them to deep-dive into trending topics in Web3 or learning from the best experts in every field e.g. Macro, DeFi, protocols, AI, community-building, ARC is able to offer many of these growth opportunities via our members’ personal knowledge and resources themselves.

3. Access to Unique Lifestyle Experiences: Many of our community members already have access to various privileges via their personal resources and networks. However, the advantage of ARC as a community is that by leveraging the combined influence of the collective, we can secure exclusive partnerships that members may not be able to unlock by themselves (e.g. our Edition hotel partnership).

4. Access to Investment Opportunities: While ARC was not set up as an investment alpha group, we do believe that this is a core value driver for many people. As many members themselves are founders of their own companies or projects, fellow members often get the chance to participate in attractive pre-sales, at rates not available to the public.

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Trying to deliver on all the intrinsic and extrinsic value drivers above necessitates a lot of work that often doesn’t scale. While technology can be created to facilitate, at the core of it, it does require a high-touch, human-to-human approach.

How can we accomplish this with only a small core team serving a community like ARC?

Unlike many projects in Web3 that prioritise short-term gains or early DAOs that place more focus on tokens and governance (versus what their members perceive as value and delivering them), we always knew that we had to be hyper-focused on delivering the relevant value that members are looking for. But that is difficult to achieve if we are only thinking about it from the lens of a traditional, capitalistic business delivering value to its users in exchange for revenue.

At ARC, we’re designed to function like a community from the start. And so, right from the beginning, we curated for members that understand, relate, and align with our core ethos of giving value to receive value.

Instead of focusing on ‘how can ARC deliver value to our members?’, what if the question were ‘how can we encourage every member to provide help, support, and value to fellow members’? This is rooted in Chinese culture via the concept of ‘关系‘ (guan xi) which essentially refers to one’s closed network of mutually-beneficial relationships. This simple shift in thinking is fundamental to how we think about everything at ARC. (Note: Modern misuses of ‘guan xi’ for personal financial gains has given this term a bad name but at its core, it is comparable to how we see ‘give value to receive value’ - reciprocity)

We have designed and implemented a contributors’ recognition programme at ARC (The Keystones Programme) where different contributions, both small and large are tracked and recognised. From simple acts like helping to answer a fellow member’s question to bigger contributions like connecting ARC with a partner to offer an exclusive lifestyle experience, different points are allocated to each member. Over time, when the points hit a threshold, a Keystone is unlocked.

We have 9 different keystones to recognise varying types of impact and contributions from members (ARC Crew, Connector, Champion, Co-creator, Connoisseur). These keystones become proof-of-contribution and will be a mechanism for distributing rewards e.g. prioritised access to investment opportunities or real-world lifestyle perks.

What gets measured gets done. At ARC, we are creating community infrastructure geared up to help our members work cohesively towards our shared goals as a community (including providing shared value to members). With the Keystones Programme, we are actively creating an environment where individual members can take actions aligned with their own expertise and network strength as well as the community’s interests. And the most important thing is that they are rewarded and incentivised to keep doing this.

By understanding and delivering on these value drivers with the help of the community, we’re able to deliver a community experience so well-designed that members’ attention is retained in the longer-term, helping us to optimise for Community-Market Fit.

By doing so, we create a non-linear user funnel where it is no longer about pushing users through a funnel towards a simple purchase of the product, but a journey where members never want to ‘leave the funnel’ and continue to stay within it.

IN SUMMARY:

(I) WHY: Defined Shared Purpose +

(II) WHO: Curated Members & Alignment on Purpose +

(III) HOW: Delivering both Intrinsic and Extrinsic Value to Members

= COMMUNITY-MARKET FIT i.e. COMMUNITY-LED GROWTH

When all the components above are brought together, we create a collective of individuals who have a deep emotional attachment to the community itself as well as to fellow members.

The end state of a thriving and engaged community is one where the community becomes an extension of the core team. So even if the core team is small, by doing the above over time, it is still possible to achieve community-market fit and together with it, community-led growth.

**Ultimately, this becomes an irreplaceable moat and competitive advantage for an entity due to the impact that its community can wield towards community-led growth. **

With the foundations established for a thriving community, we can now go deeper to explain how digital assets like NFTs or fungible tokens can help achieve community-market fit and accelerate community-led growth.

How Community-Led Growth Can Be Accelerated with Web3’s Shared Ownership Ethos

In the early days when we were still conceptualising the membership mechanics of the community, the space for authentic community-building in Web3 was relatively infant but DAOs were trending with full force. In mainstream crypto, notable projects and significant valuations were being announced like A16z attributing a $100m valuation to FWB DAO.

With that hype and the rise of governance tokens made popular by DeFi protocols, some people suggested that we use fungible tokens to token-gate our community at ARC. Personally, however, I resisted this idea. I felt that fungible tokens were not a good way to design a membership due to the high fluctuating prices which could affect a member’s motivation towards contributing to the community. Imagine buying into a DAO for $10,000 during the bull, and the price of your membership drops to less than $1,000. Not forgetting the fact that historically, community-first social tokens like DAOs are often the first to fall in a bear, and they often fall the hardest.

(On a separate note, yes, I highly believe that token price along with the floor price of an NFT is one of the first indicators of community health which should be a main OKR for community-first social products. ‘Strong’ NFT projects are able to retain their floor price, even during a bear which implies that community-market fit is strong as people still believe that there is value that the project/community is providing.) Different communities tap on relevant parameters to track Community Health. Other examples of indicators include Community-Member Fit Score.

While NFTs are also affected by the ‘floor price’ conversation, we have observed in the last 2 years that community-first NFT projects are better able to maintain their floor price versus community-first token projects. In addition, NFTs have many advantages that fungible tokens lack.

NFTs = Scarcity and Exclusivity

Unlike fungible tokens, NFTs are often released within a collection which clearly connotes the idea of a community. The limited supply, when combined with strong CMF, also makes it easier to maintain a floor price by driving demand and restricting supply (holders less likely to sell). Versus a traditional private club membership, NFTs provide verifiable proof of ownership on the blockchain which demonstrates provenance, a sense of exclusivity, and pride among holders.

NFTs = Unique Sense of Identity & Emotional Attachment

As unique digital assets which are also commonly associated with the term “Profile Pictures” (PFPs), NFTs can help members feel more connected to their membership. People often try to pick a ‘PFP’ that they feel represents themselves because they’re seeking a sense of self-expression in the digital space. It’s also the reason why people who own certain NFTs end up not selling them because they have assimilated it as part of their identity.

NFTs = Brand, Culture & Vibes

Unlike fungible tokens, NFTs by nature of their visual and media-rich format, are a way to curate for how you would like your brand and community to be represented. Just by looking at the artistic style of the collection, a completely new user can conjure different vibes and cultures that they might attribute to different communities.

NFTs = Community-Building Infrastructure

Due to the non-fungible nature of NFTs, there are many ways in which we can tap on it to recognise individual holders and reward them. One of the areas in which we have been ideating on is around the thought of tracking contributions on-chain e.g. via ERC-6551. As members contribute, they might earn additional NFTs which are tied to their membership NFT. Their membership NFT is transformed into a kind of reputational tool which showcases their expertise and contributions to the community. This could then potentially become a mechanism for us to distribute rewards based on the impact of each member’s efforts over time.

In summary, we see NFTs as a critical tool to help build the core community foundation, create a strong sense of shared ownership and initial alignment in the early days of community-building.

With that said, where and how do fungible tokens come in?

Imagine we were to create 3 segments in order of how closely and strongly they are aligned with the community’s goals. We start with the founder(s), then we have the core team and community members and the last segment is users outside of the community who will have the weakest alignment with the community goals.

Now, imagine that you would like to tap on the strength of a larger collective of users beyond your community to help achieve your community goals. This is where fungible tokens can come in - to help socially coordinate and align users outside of the community with your roadmap and goals.

For ARC, we spoke about how we’re looking to build a first-of-its-kind powerhouse for collaboration and incubation. One of the problem statements we have been solving for is the idea of a core ‘influencer’ base that can help new projects gain traction and share of voice online. We envision the potential for a new kind of digital ‘workforce’ that could be created by tapping on fungible tokens to help align users outside of the community. For example, when users meet a certain kind of criteria as an influencer, they could be invited to contribute by helping to communicate the value proposition of new projects to their networks. In exchange, they are rewarded with fungible tokens for their contributions. While this is the most relevant for users outside the community to help align them towards what we need to achieve, the same rationale holds true for community members. By contributing their expertise and resources to help achieve ARC’s goals e.g. creating new revenue streams, they can also be rewarded with fungible tokens.

We know that this model may sound similar to what Web2 influencer agencies are already doing for Web2 brand clients. However, what currently happens is that these relationships are highly-transactional using fiat as the mode of exchange. Once the ‘job’ is done, the brand and influencer go their separate ways. Going back to what I covered in my first article, I spoke about how traditional employee-employer relationships in Web2 are not the same and not as powerful as contributor-based relationships. That is the same principle we are taking here. Incentivising contributors (aka influencers in this case) with fungible tokens gives them a sense of ownership and the ability to participate in the ecosystem you are building. While there is still a chance that they choose to exit by offramping, if the token mechanisms are well-designed, there are ways to retain these contributors and encourage them to be higher contributing members of the ecosystem over time.

There are different ways of thinking about how these fungible tokens can be distributed to users outside of the community. Specifically for ARC, due to the larger goals we have and the focused manner in which we need to achieve those goals, we are considering a distribution method that favours users who can best help us add value and accelerate our trajectory towards the core community’s goals.

In short, fungible tokens become a form of fuel for the engine (the community ecosystem) that propels community-led growth. It brings people together in a cohesive manner to work together towards the shared common goals of the community.

For any token economy to thrive, there must be further thinking about how else the tokens can be redirected to and/or used. The core fundamentals of demand and supply apply here. We cannot distribute value (via the fungible tokens) and reward people with them unless there is genuine value to the fungible tokens themselves.

Some innovative ways we have seen this happening of late is the idea of using the tokens to generate yield. E.g., the staking of $MEME allows you to yield tokens from other partners. This is a simple mechanism that can be re-skinned in different ways. Imagine the fungible tokens becoming a way to unlock access and value. Stake a certain portion of the fungible tokens to gain access to yield opportunities or perhaps even exclusive lifestyle experiences.

At this point, it is key to note that fungible tokens are essentially a sort of acquisition cost for the entity. It is a means to coordinate large groups of individuals towards the community’s goals and hence, the entity has to develop ways of building revenue streams to account for these acquisition costs. We will look to share more of our thoughts in the next article.

That said, it is important to re-emphasise my belief that fungible tokens should only be tapped on after your core community has been built. The Pudgy Penguins community is a great example of this. In the last 2 years, we have seen how the community has grown, how a strong sense of culture has been cultivated, and how the commercial decision to expand the IP into Web2 has driven mainstream awareness and pride amongst the NFT holders. The decision was made to focus on the foundational aspects of community-building and delivering value back to members (through floor price consistently going up) which has helped them to achieve strong community-market fit. This also leads to a stronger brand eventually which together with CMF, becomes the moat and competitive advantage that can enable a community to succeed and thrive in the long-term. In Pudgy’s case, their strong foundation allows for the bootstrapping of future products that their entire community can get behind e.g. Abstract Chain.

Final Thoughts

We started this piece by illustrating the shift from Social Media 1.0 to 2.0, a shift catalysed by COVID which prioritised groups versus individuals and empowered collective value creation in addition to value consumption. Just like in the real world, where we see both notable individuals and groups of influence, with the shift towards Social Media 2.0, we believe this will translate into the online world as well. In this new collaborative era, our vision is for ARC to be one of the most dominant digital-first groups in Asia.

To unleash the full potential of this new collaborative era, we spoke about optimising for Community-Market Fit (CMF) versus Product-Market Fit (PMF). In short, in an attention-driven culture, creating CMF means you’re better able to capture and maintain the attention of your members over time, which helps propel community-led growth - far more sustainable than advertising-led growth.

In traditional consumer journeys which optimise for PMF, every product’s go-to-market involves a new campaign where a fresh advertising budget is pumped in every time to bring in new users. With community-based journeys that are optimising for CMF on the other hand, we focus on achieving strong CMF and once that happens, community members are retained within the ecosystem and do not leave. New products are then designed to serve this community first and foremost. Once the community endorses the product, they become the engine to drive advocacy and appeal to new users, allowing community-led growth to occur.

In essence, the entity is able to expand its user base for new products and grow revenues by working with and tapping on the strength of its existing community’s influence.

To achieve CMF, we talked about 3 different components that needed to be achieved:

(I) WHY: Defined Shared Purpose +

(II) WHO: Curated Members & Alignment on Purpose +

(III) HOW: Delivering both Intrinsic and Extrinsic Value to Members

= COMMUNITY-MARKET FIT i.e. COMMUNITY-LED GROWTH

Once CMF is achieved, the entity can look deeper into how digital assets like NFTs and fungible tokens can help accelerate community-led growth and help the project achieve its community goals.

Ultimately, these tools are meant to only be a means to an end. They are important ways to solve for the ultimate social utility - social coordination. But without establishing a strong foundation with CMF and ensuring that a solid community has been built, these tools can only go so far. That is why building a strong community and achieving CMF is one of the most difficult to achieve. It involves doing a lot of high-touch work that does not scale, which is also why we have deliberately chosen to cap the ARC Stellars’ membership at a small, highly-curated number.

In our next piece, I hope to dive deeper into the details of how NFTs coupled with on-chain reputation and fungible tokens can solve for the intrinsic and extrinsic value that individuals are looking for in a community. And in so doing, establish both a business and token model that is commercially viable, sustainable and replicable on scale.

With ARC, we are excited to embark on the next phase of social coordination with our community and larger audiences outside of ARC Stellars. Our job at community-building will always be a work-in-progress as we look to constantly optimise for Community-Market Fit. I’m hopeful about what we can achieve in the coming months and years, together with the community working together as a single collective.