A concept that is at the crossroads of decentralized autonomous organizations (DAOs) and non-fungible tokens (NFTs), social tokens have taken the world by surprise. Basically, social tokens are crypto tokens that can be used to monetize any content of creators, celebrities, brands and influencers in addition to the regular monetizing avenues. The problem with typical social media avenues is that the hosting platform (such as Facebook or Twitter), takes a considerable percentage of revenues these people earn and even controls the content that should be posted. Also, some platforms have creators working for them and such media divert their users towards these creators than providing a level field for third-party creators. For some creators though, such measures did not do any good. So, they created tokens of their works and are currently selling them by themselves. Other famous personalities have ventured into social tokens just for fame.
What are the Types of Social Tokens?
Social tokens can be divided into two categories – Namely personal tokens and community tokens. Let us see each of them in detail.
Personal or Creator Social Tokens
Personal social tokens are the ones that revolve around individual creators, that being the reason for their other names. Usually, such social tokens come with benefits related to the creator, such as premium access to exclusive chat rooms or early access to their next works. Every creator has various reasons for making the switch to social tokens. Some of them include – the necessity to connect closely with the fans, distribute their works directly to buyers, or even sell their content (such as tweets and shoutout posts).
Although there are different ways being tested on how to go about with social tokens, most creators seem to approach them just like loyalty points or membership cards. Redeeming these tokens depends on the creators (they decide how the token would be useful to the buyer). Currently, exclusive access to Discord servers and email groups of creators is the norm, even though more ideas are blooming up.
Clout Social Tokens
Clout social tokens are the ones that allow people to buy tokens of their favourite social media influencers, thus enabling influencers to measure their reputation and even monetize on these tokens if they get enough value. BitClout is doing just the same by selling tokens of Twitter influencers and it is claiming to become a decentralized social media platform.
Community Social Tokens
Community social tokens are the ones that predominantly serve as membership tokens to exclusive communities, just like how the Bored Ape Yacht Club (BAYC) NFTs had given. They function as gate access tokens essentially regulating participation in the community. In the current trend, such communities tend to function on a portal like Discord, Telegram or Slack, where people can enter only if they have the relevant token. As the tokens are minted as limited edition ones, the policy of limited access is ensured.
- One of the earliest communities utilizing such tokens was Karma, which had minted just 650 tokens for an exclusive group chat.
- Friends With Benefits ($FWB) is one of the popular communities that use community tokens. The community uses these tokens to give incentives to their active members on Discord, hosting calls and attending events.
- Donuts, a subreddit group relating to Ethereum, continuously issues social tokens to their active members. Their website says that “Donuts are the first implementation of Reddit community points”.
- As a group concentrating on incubation and acceleration for startups and creators who are looking to delve into the world of NFTs. They focus uniquely on social tokens and support such projects that utilize social tokens.
How can Utility be Placed in Social Tokens?
As an increasing number of celebrities and influencers have started releasing their exclusive social tokens to present their community and fans, the question of how would having a token from a favourite icon be of any utility pops up. Usage for such social tokens comes under three categories – Access, Exchange and Investment. Let us see more on each of them below.
Such tokens give you access according to the numbers you have. Some celebrities send curated gifts to their loyal fans who buy their social tokens. Another common access technique is to grant access to exclusive video clips and chat groups which strengthens the bond between the creator and their followers. This gives token owners what is known as “Intrinsic Community Value” and the owners can brag themselves owning such a rare item, which has been human nature. Some crypto-based creators provide consultations for their token holders and some creators even retweet the owner’s tweet. This can be a great marketing tool in hindsight.
Such tokens offer fans a chance to appreciate them through monetary means. It is just like how Twitter and YouTube have similar features that allow fans to contribute to their favourite creator through a third-party payment portal. Enabling such features earns trust from the fans towards creators, as there is no possibility of sensitive personal information being leaked.
Social tokens minted as a limited edition can be an option for investment, even though it is a risky option as the value of the tokens depends on the reputation of the creator. Keeping that aside, if the tokens gain enough popularity, they can be traded and earning royalties through every resale ensures a passive income for the creator. From another perspective, a young crypto entrepreneur Alex Masmej has launched his own social tokens $ALEX and has promised to give its holders a proportion from 15% of income that he makes for 3 years with a capping amount of $100,000. Furthermore, he has announced that he will let token owners have some extra utility if they own a sufficient amount of ALEX tokens.
How Do They Matter?
Particularly to creators as it facilitates two-way communication between fans and creators, without the involvement of a third-party hosting platform that reaps profits exploiting such creators. Blockchains help icons to identify their top fans and facilitate a fan moment for the token owners. Also, creators can understand the pulse of their loyal fans easily and work accordingly in the future.
Look out For That Danger Sign Too!
While social tokens can empower creators to have a close-knit relationship with their fans, the balance can swing out of their favour, as creators would now face more pressure to produce content that is engaging as they might concentrate more on valuing their tokens than anything else. Stressing out a lot to produce content might cause burnout and the creator cannot even take time to rejuvenate as the token value could drop. The relationship between fans and the creator can take a turn for the worse if fans disapprove of a proposed new style that the creator had always wanted to, thus hurting them personally.
In addition to all this, the regulations on social tokens are sparse and upcoming. So, putting money into such tokens as an investment strategy might be very risky.
A Final Note
To wrap up this blog, one should consider both sides of the coin before spending any money on such tokens as there are many associated risks and always get such tokens if you are very sure about whom you are going to invest in irrespective of the utility the tokens might provide.