Before we begin, we want to clarify that there’s no pure definition of what a social token is. Frankly, we’re not satisfied with any of the definitions that we’ve come across because most of them limit what can be created with a social token. In other words, there’s always an outlier use case that doesn’t fit the definition.
Therefore, what follows are our observations of what is happening with social tokens and the economic possibilities this technology will bring. Throughout this manifesto, we will provide countless case studies of current social tokens, as well as metaphors that make it easier to understand how social tokens operate. This is not a technical guide on how to implement social tokens, but rather an ideological guide on how we view the social tokens in effect.
Defining Social Tokens
At this point, it’s hard to define something that hasn’t been explored for very long. Here are a few definitions that you may come across during a quick Google search:
- Social tokens are a type of cryptocurrency that a brand, community, or influencer can use to monetize themselves beyond the typical means.
- Social tokens, true products of Web 3.0, directly connect the creators and consumers of content.
- A social token is a type of cryptocurrency used to monetize a brand. They can be personal or community tokens. The value of a social token revolves around the brand issuing it, and are used by holders as a way to feel belonging to a certain group.
- Social tokens are a form of digital ownership, secured by blockchain, which allows for creators, influencers, and/or brands to monetize experiences or services; this ownership then becomes an asset that can be resold and may increase in value.
But, honestly, these attempts at wrangling a wild horse are all failures.
None of the definitions include social tokens that revolve around a common cause or mission, which have nothing to do with a brand or individual. Like $MOONEY which is used by MoonDAO to help fund and govern their community mission of colonizing the moon. Or $VITA which is used by VitaDAO to build a collective that is interested in advancing longevity research.
Instead of limiting what a social token is through a definition, it’s better to think in expansive terms of what social tokens can provide.
Social tokens can and will be used to bring a blockchain-based economy to various groups of people interested in a brand, a person, a cause, or a mission.
For the sake of understanding, we’ll make one major distinction between the two types of communities that bring social tokens into action.
There are Creator Coins and Community Coins. Social tokens that form around an individual we’ll refer to as Creator Coins. Social tokens that form around a group interest we’ll refer to as Community Coins.
Both Creator Coins and Community Coins exist under the umbrella of social tokens. However, it helps to make this division as it generally relates to how the social token operates and is used within these mini-economies.
Creator Coin vs. Community Coin
Creator Coins have a figurehead creator. That creator is the reason people follow and engage in that community. Therefore, the success of that community and the usage of the creator coin is entirely tied to the figurehead creator (or their brand). It’s a relationship we should all be familiar with on social media: the creator and the follower. In this instance, the social token is mostly used transactionally to redeem things and experiences that the creator is offering. The social token is used in a one-way transaction.
An example of a Creator Coin would be $ALEX, which was created by Alex Masmej. Alex is an entrepreneur and serial founder who launched the social token to raise funds to move from France to the U.S. with the promise of an income-sharing agreement. In exchange for purchasing $ALEX tokens, owners of $ALEX would receive a portion of Alex’s future earnings for three years. Over time, $ALEX holders were also given access to private newsletters and a Telegram group, among other offerings. Because the $ALEX token revolves around an individual and what that individual decides to offer his community, it is therefore a Creator Coin.
Community Coins, on the other hand, are headless. What I mean is that there is not a single creator that the community has formed around. Rather, there’s a broad interest, hobby, idea, or mission that brings people together. Therefore, it’s the collective effort and contributions of its members which make it a community. In this instance, the social token is used to participate in what the community offers and get closer to other community members whether through events, meetups, products, etc. Therefore, the social token is exchanged multi-directionally between members for what they contribute and offer to the community.
An example of a Community Coin would be $FWB. Friends With Benefits ($FWB) is a worldwide group of cultural creators, thinkers, and builders who convene digitally and in real-life to collaboratively shape Web3’s future. You must own and then spend a certain number of $FWB tokens to join their Discord and participate in events. The difference between $FWB and $ALEX is that you’ll purchase $FWB tokens to access a group, not to support one singular person. Furthermore, $FWB tokens that are transacted are held in a community treasury which is used to fund events, projects, and other experiences that fulfill the community’s mission.
Social Tokens in Plain Terms
The easiest way to wrap your head around social tokens is to think of them as Chuck E. Cheese tokens. Chuck E. Cheese tokens allow you to interact with the experiences that are designed for your enjoyment. Those experiences, of course, are just arcade games. But a similar example would be buying tickets at a carnival or fair, which gives you various ways to redeem experiences such as rides, games, and food.
Chuck E. Cheese specifically designs and offers games for people to spend their tokens on. One cannot exist without the other. Some games cost more tokens than others. And the tokens only work within the confines of a Chuck E. Cheese, just as social tokens only work within the confines of that given community. You cannot redeem your Chuck E. Cheese tokens at Dave & Buster’s, just as you cannot redeem your $FWB social tokens in the $ALEX community.
Although, the main difference between a Chuck E. Cheese token and a social token is that you can liquidate social tokens when you’ve grown tired of using them. You can’t sell Chuck E. Cheese tokens back to Chuck E. Cheese when it’s time to go home. But because social tokens are tied into the greater cryptocurrency ecosystem (via the blockchain), you have the opportunity to sell your social tokens on the open market via an exchange or (in some cases) back to the creator. So if you wanted to transition the $FWB social tokens you’ve amassed into $ALEX social tokens, then you can do so. There may not be an exact exchange pairing for $FWB into $ALEX, but you can always use an intermediary token such as $ETH to make this conversion happen.
Ultimately, the basic function of a social token is that it gives creator’s the ability to create an economy that is entirely their own and specifically for their community. The social tokens provide a means to lock experiences to serious community members. The economy surrounding this social token is not necessarily for any members to achieve economic benefits. In other words, it’s not about speculating on the value of that social token and getting rich. Naturally, members may make money by participating because a social token’s economy is adjacent to the cryptocurrency market and thus the value of real dollars. However, that’s not why a social token exists.
Rather, the social token is a key that allows members access to the “Chuck E. Cheese” that the creator has designed. It’s entirely up to the creator to decide what experiences these social tokens will be used for within their own “Chuck E. Cheese”. Later in this article, we’ll look at the many types of gated experiences that creators are offering via their social tokens.
Before we get to the use cases, though, let’s drill down on the benefits that social tokens bring to creators and communities.
The Main Benefit of a Social Token
There are three things that creators have always had to consider, outside of actually putting their talent to work. Those three considerations are distribution, production, and monetization. How is your work delivered? How is your work constructed? And how does your work make money? Great strides have been made in the last couple of decades in providing technology to creators to go more independent and rely less on centralized authorities for distribution, production, and monetization. Examples of this creator-focused technology include:
TV networks, radio stations, and galleries once held all of the power in creative distribution. Whether you were a comedian, actor, musician, or artist you had to pitch and impress these gatekeepers in order to distribute your craft. Then platforms like YouTube, Spotify, and social media eliminated these walls, allowing any creative individual to circumvent the gatekeepers and build an audience on their own. Thus, technology provided the means to (mostly) control one’s distribution. It’s not perfect, but it’s far better than it was.
On the production side of things for creators, we’ve come a long way in providing tools that diminish the level of expertise and the size of a team needed to produce creative work. The iPhone put a movie-quality camera in everyone’s pocket. Software like Adobe Premiere or Descript has turned editing video and audio recordings into something you can do from your average laptop computer. The entire industry of software and apps for creatives has eliminated the barriers to producing work that is polished and professional, making it far easier for a creator to go independent.
Monetization (or commercialization) for creators relies a lot on ad networks set in place on YouTube, Spotify, and social media. Some creators take this a step further and use Patreon or tip jars to receive support directly from their fans. And in some cases, a creator might be able to set up a Shopify store or a Stripe portal to offer their products. Regardless of how creators monetize their work today, they mostly rely on intermediaries to make it happen.
Monetization is the primary benefit that social tokens provide to creators of all kinds.
Social tokens allow creators to create an independent economy that operates entirely on its own. Fans and followers directly purchase tokens that can only be used within that creator’s ecosystem of creative output. Creators can put their content, experiences, and products behind a paywall that can only be unlocked with their own social token. This means that a creator’s path to monetization operates outside of payment processors, ad networks, or membership platforms. Therefore, the creator and the consumer doesn’t lose any money in the margins. And they’ve effectively created their own economy.
Control over monetization is perhaps the greatest benefit that social tokens provide to creators and communities. And through this control over monetization, we gain a greater ability to manage how a creator delivers experiences to fans or how a community creates value for its members.
Social Tokens → Social Status
I want to clarify that social tokens are not just a currency that allows creators or communities to set up independent economies. Social tokens can also act as status markers within a community. All communities have a means of signaling status. In church groups, the most active members may lead bible studies or put together food drives; later being recognized for their work by the pastor during Sunday service.
Social tokens are not just bought but can also be earned. In some (but not all) cases, social tokens may be given out as rewards for participation within the community. The token’s creator will set aside an allotment of tokens to reward participation, whether that’s showing up to an in-person meetup or doing some work for the community (such as managing the messaging group).
But how do social tokens translate to social status?
It’s more common to see this take place with Community Coins than it does with Creator Coins. And furthermore, it’s only a subset of Community Coins that will purposely design this feature into their community. Specifically, it’s the Community Coins that operate on DAO (Decentralized Autonomous Organization) principles where they’re organizing around a common mission. DAOs are essentially democratized companies that govern themselves and produce work through a voting system that uses governance tokens. I’m taking some liberties in relating governance tokens to social tokens. But it helps drive home the idea of how a token can translate to social status.
Typically a DAO operates and progresses through member proposals. Members propose ideas or plans and other members then use governance tokens to vote on the proposal. If the proposal gets enough votes, then the proposal is approved and that member can put the idea into practice. In some cases, an approved proposal will be rewarded with an allotment of tokens or that proposal had an associated cost of doing the work which the DAO treasury will award to them. Obviously, the more tokens you amass, the more status you have because it signals that you either have earned a lot through your contributions or you have a lot of voting power in that DAO.
For example, Krause House is a DAO that aims to one day own an NBA team as a community. They use a governance token called $KRAUSE that acts as the social currency within their group. The more you contribute to the Krause House mission the more $KRAUSE you earn and thus more voting power you have on the direction of the DAO. Let’s say you’re a member of the Krause House and were able to land some press on The Ringer podcast, which helps expand their awareness. That may award you a small allotment of $KRAUSE. Let’s say you work in the legal field and have drafted up a proposal to buy a minority stake in the San Antonio Spurs – putting into words the tall task of getting the NBA to agree that a community can own a partial stake in a team. That effort would go a long way on the Krause House mission and would surely be rewarded with $KRAUSE tokens. Although the amount of $KRAUSE one holds may not directly translate to ownership in the NBA team, it’s a status marker that will ensure you’re known for what you’ve contributed to the mission.
DAOs have done a solid job in showing the concept of using tokens to incentivize participation and contribution. While there’s a technological difference between governance tokens (which cannot be listed on public exchanges) and social tokens (which can be listed on exchanges), they have proven how tokens can lead to creating status in a community.
Ultimately, the goal for social token creators is to design a model where members are empowered to participate and provide value to the rest of the community. The social token provides a means to quantify participation and status. They show who is serious and active in the community.
In many ways, social tokens can act like Karma Points on Reddit. Users are rewarded for their posts and comments that people like (through upvotes and awards). The more Karma Points a user has, the more respect and social status they have within subReddit communities. But the problem is that Karma Points are universal across all of Reddit. They don’t actually signal one’s social status within a single subReddit community. Rather, they show social status across the entire Reddit platform. This makes it difficult to truly understand the hierarchy of valued members in a given subReddit.
The solution, therefore, is replacing the Karma Point with a social token specific to a single community. This is essentially what the DONUT Foundation is building. They’re one of the first to pioneer Reddit Community Points, which is a means of adding custom tokens to subReddit communities. Today, DONUTs are the official token of the r/ethtrader community.
Overall, social tokens allow creators to put up walls around participation in their community. This allows creators to build true hierarchies in their community or fandom. Thus, giving rise to social status within one’s following.
Now let’s take a step out of the theoretical application of social tokens and into the use cases in practice today.
Social Tokens in Use
By now, you probably see how broad of a concept social tokens encompass. There’s truly not a single best use case for social tokens. We’re in the experimentation phase. Many creators are pushing the boundaries of this technology, but there isn’t one case study we can point to and confidently say “this is how everyone will use social tokens”. That said, here are various ways social tokens are being used.
Notable Creator Coins
I’d be remiss in creating an entire analysis of social tokens without mentioning Mike Merrill. About a decade before people began experimenting with social tokens and even a year before the blockchain was introduced to the world via Bitcoin, Mike Merrill created the world’s first Human IPO in 2008. He created 100,000 shares of himself, offering them at a list price of $1 per share. The initial value proposition was to raise funds so he could launch his ideas with the promise of shareholders receiving a share of his revenue. But it was ultimately the voting rights in Merrill’s life which became the enticing factor for shareholders.
Over the next decade, Merrill allowed his 805 shareholders (more or less at times) to decide the course of his life. Some of these proposals he issued included voting on his dating life, registering as a Republican, changing to a vegetarian diet, exploring a polyphasic sleeping routine, how to distribute his life insurance policy when he died, and whether or not to get a vasectomy. Merrill’s choice to turn his life into a publicly-traded company landed him features in places such as Wired, The Hustle, and Vice News, along with inspiring platforms like HumanIPO and NewNew to provide a service for others to follow in Merrill’s footsteps.
Although Merrill didn’t issue social tokens, he showed a vision of what was possible. He walked so that others could run. And now we find ourselves with many creators following his path, but in a more practical way – mostly issuing tokens to fans for support.
$ALEX – Alex Masmej launched $ALEX token to fund his move from France to San Francisco and fulfill his entrepreneurial endeavors. The token included an income-sharing agreement for three years. He’s also used the token to gate experiences like a monthly newsletter, a private Telegram group, a voting system to let people choose his daily habits, a liquidity mining experiment, and a partnership with another social token.
$BOI – Matthew Vernon tokenized his time through the $BOI token. Holders can redeem 1 $BOI token for 1 hour of design or consulting work on crypto projects. Thus, Vernon created his own creative services economy on the blockchain, paving the way for other creative types.
$RAC – André Anjos, the musician known as RAC, created the $RAC token to further the relationship with his fans and build his personal crypto-powered music community. He retroactively rewarded his most loyal fans by distributing over 400,000 $RAC tokens to his active supporters on Bandcamp, Patreon, Twitch, and merch buyers dating back to 2009. His mission is to use the $RAC token to build his own economy that exists outside of music industry intermediaries, allowing him to connect and distribute music to his fans without either of them losing value in the process.
These three examples should give a general idea of how Creator Coins are being used whether as an income-sharing agreement ($ALEX), to deliver services ($BOI), or as a creator support community ($RAC). Generally, the utility of Creator Coins will fall into one of these three buckets or a combination of the buckets. Other notable Creator Coins include $HUE, $FIRST, $SKULL, and $JOON.
Notable Community Coins
For a period of time in 2021, DAOs with the mission of pooling money and making major purchases were all the rage. It started with SpiceDAO purchasing a rare copy of Alejandro Jodorowsky's Dune at auction for $2.66 million. Members of the DAO were given $SPICE tokens respective to their contribution, which allowed them to vote on future plans for the book. Then there was ConstitutionDAO which raised more than $47 million in Ethereum between 17,000 members to buy a first-edition copy of the US Constitution. Ultimately, they lost the auction which led to the fallout of their $PEOPLE token.
These two stories put DAOs and Community Coins on the map. They exposed the world to the concept of decentralized organizations where social tokens were used to manage all correspondence and action between members. Of course, this is one small sliver of how Community Coins can be used within a community. What you’ll find below is a wide variety of ways that groups are using Community Coins to deliver value to members.
$CLUB – Seed Club is a DAO that invests in tokenized communities and supports growth through its accelerator. They’ve backed both Krause House (mentioned earlier) and Water & Music (mentioned below), among 30 other projects. For the time being, $CLUB tokens are used to gate access into the DAO which consists of a Discord, private events, educational content, and governance.
$DIRT – Dirt was the first NFT-backed subscription newsletter, but has since launched the DirtDAO which utilizes the $DIRT token to manage their community. The DirtDAO is turning Dirt into a media company where members can submit long-form articles and short-form dispatches which the DAO votes on, then rewards members whose content is accepted.
$FWB – Friends With Benefits is a worldwide group of cultural creators, thinkers, and builders who convene digitally and in real-life to collaboratively shape Web3’s future. It’s like a Soho House for digital natives, where membership is gated by owning $FWB tokens. Members must spend the $FWB tokens to attend periodic events and experiences, ensuring that the $FWB is always flowing through their economy.
$HVND – BLVKHVND is an eSports gaming DAO that is decentralizing ownership of its eSports team and incentivizing participation through the $HVND token. Members can contribute and earn $HVND either through competing, creating content, streaming, or working on the admin side of the BLVKHVND team (community building, design, product, editorial, legal, finance).
$STREAM – Founded in 2019, Water & Music is a paid newsletter focused on unearthing insights in the music and technology spaces. They have since expanded into a research DAO, using their $STREAM token to incentivize, credit, and reward collaborative knowledge-sharing in music, tech, and entertainment. The $STREAM token has no inherent financial value but rather represents on-chain credit for contributing to the research community, events, or Discord messaging. In other words, $STREAM acts as a social status marker in the Water & Music community.
$WHALE – WhaleShark amassed one of the largest collections of NFTs called The Vault which holds NFTs across blockchain gaming, digital art, virtual real estate, and other digital collectibles. $WHALE is the social token backed by the assets in The Vault. Owning $WHALE tokens not only connects you to ownership in The Vault, but also grants you access to networking, NFT airdrops, and other member benefits.
Given that Community Coins often overlap with DAOs, there are more examples than I can possibly cover. Other notable Community Coins to check out include $BANK, $FF, $GCR, $JUMP, $PRTN, $ROBOT, $RNG, and $YUP. Some of the DAOs (which have tokens) we’ve been watching closely include VitaDAO, CityDAO, LexDAO, MoonDAO, JournoDAO, LinksDAO, FriesDAO, and EarthFund.
We encourage you to continue exploring other documentation about social tokens out there. Check out the projects we’ve listed and see how they’re putting social tokens into use. We will provide updates periodically as our views change. However, this is a technology that will come to encompass a lot of ideas. And you’ll benefit from consuming many different opinions on it.