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What are social tokens? And why are they social, anyway?

The “token”

Social tokens can be any crypto asset, whether fungible or non-fungible. $FWB, the social token of Friends with Benefits, is fungible, while the BAYC NFTs are unique assets that also function as social tokens.

We can transfer social tokens between wallets; we can buy and exchange fungible social tokens on decentralized exchanges, and if they are NFTs, we can purchase them on marketplaces.

Social tokens can increase or decrease in monetary value. The market cap depends on the actual or the imagined value of what the token represents. In the case of social tokens, that value is related to a community or individual.

All those points sound like a classical token, and yes, social tokens can serve as objects for speculation. But all those points also enable autonomous value creation for individuals and communities. Social tokens empower people to monetize themselves without centralized middlemen like Spotify, Facebook, or Youtube. Instead, creators and consumers profit equally, and communities can sustain themselves without much help from the outside. How?

The “social”

We can divide social tokens into two main categories:

1. Creator tokens
2. Community tokens

Messari opens up a third category, “Social Platform Tokens,” which are a mixture between creator and community tokens. There might be further and more detailed distinctions, separating, for example, brand tokens or product tokens.

1) Creator tokens -> The ownership economy

Musicians, influencers, or athletes can issue their personal tokens without much effort using the services of platforms like Rally or Coinvise. But then, people need to want those coins. BitClout is a crypto social network where “everyone gets their coin.” The coins of Elon Musk and Naval currently have the highest value. So, creator coins work well for established influencers and artists. But newcomers, who want to start building a community, first need to prove that buying their tokens will be worth it.

If you want to support an unknown artist, you can buy their social token. Supporters and fans don’t simply fund creators via, for example, Patreon, but they own a share in the creator’s success and, therefore, profit when the token’s value increases.

The result is an independent economy, where creators can not only monetize themselves without being dependent on hegemonic companies and platforms but also give back to their loyal fans. When an artist becomes famous, those who were supportive from the beginning of the artist’s career can gain a lot.

This ownership economy brings a shift of economic power: It takes control from hegemonic companies and empowers creators and consumers.

Social tokens furthermore shift the relationship between creators and consumers. Influencers, musicians, or athletes must focus on their supporters and constantly provide value like exclusive content to prevent token holders from selling.

Creators are using social tokens to build a strong and loyal community. Creator tokens might even imply the right for their holders to participate in decision-making about the creator’s career. For example, video creators could let the token holders vote on the next topic they want to see a video about. This blurs the line between creator and community tokens, as community tokens are all about making decentralized decisions as a community.

2) Community tokens -> Autonomous communities

Self-organizing and self-sustaining communities use social tokens to pay community members for their work. PubDAO, for example, pays writers in $PUB.

Good content or products raise the overall value of the community, which increases the community’s token’s value, which attracts more talented people to work for the community. If everything goes well and the momentum keeps flowing, this creates an autonomous system of value creation.

A healthy balance between the monetary value of the tokens and the social value is important. Otherwise, people might want to “dump” their tokens, or they end up merely as speculative objects. Social tokens can, for example, also serve as governance tokens on platforms like Snapshot to make crucial decisions about the development of the community.

Social tokens can help online communities create a local economy and come closer to the vision of being decentralized autonomous organizations.

Conclusion

Social tokens, as creator tokens, are a great opportunity for small artists, video creators, or college athletes to get valued for their work. They are the cornerstone of the ownership economy and bring a shift of economic power. With social tokens, not hegemonic companies gain all the profit, but creators and consumers equally.Secondly, social tokens can help communities to self-organize and self-sustain by serving as the fundament for decentralized, autonomous economies.

The downside is that social tokens can be used for speculation, resulting in evaluating communities only by their potential monetary value. Social tokens also imply exclusivity and signal status. This evokes stress and FOMO. Furthermore, communities are in steady competition with other communities and need to constantly deliver. What then is left of the social factor of social tokens? What can we do to prevent that social tokens are just another step towards the capitalization of ourselves?

If you like my ideas, follow me on Twitter: @_roseight