What are Social Tokens?
While the official definition of a Social Token is still being defined as we continue to find utility and use cases for them, we believe Social tokens are a tool for cooperation and coordination, which create value through individuals or communities interactions and reputation.
This social capital, generated around the Social Token can be used as a means of exchange beyond pure financial value. A way to align incentives and encourage shared behaviors and well as reward collective value creation which would often go unrewarded. 💸
Examples of Social Tokens could be —
- 🎨 An influencer launching a Social Token to their most loyal fans — whenever fans create fan art, the holders of those tokens get exclusive access to content created by other fans.
- ⛔ A community token-gating entry to their Community discord, so that not anyone could enter.
- 🎙️ A Creator giving out a token through their new album drop, which allowed listeners to vote on their future products or remixes.
Social Tokens are deeply connected to unlocking the Creator and Ownership economy, while the Creator Economy has existed ever since the creation of the internet, Social Tokens are a way to supercharge the often unrewarded time, energy, and authenticity creators and communities generate through their actions and reputations.
You can think of these examples as ‘money plus’, as in addition to the financial incentive of having the token, tokens have the potential to include ownership, control, recognition, and status.
Still, not all individuals or communities will want their social tokens to have or want utility, there are a few emerging categories of token. Creator Tokens, Community tokens, Brand Tokens, and Personal Tokens.
A Creator Token might allow for access to a future gig or vote on a future album, whereas a community token may allow for a profit share of future revenue. A Brand Token might be used as a Web3 loyalty card, and a Personal Token might allow you to vote on someone's life decisions. What you’ll be able to do with tokens is completely up to you, however much like DAOs, the purpose, mission, and intentions of introducing a token will define your Social Token.
Wait what?! How do tokens distribute value, ownership, control, and create recognition…
Let’s explore ways in how Community Social Tokens create value that goes beyond speculation:
- ❓ Governance. As we saw in our last article on DAOs, governance is key to the momentum, structure, and organization of decentralized Communities. Social Tokens can be used in the governance process to make decisions within a community, using the tokens to ‘vote’.
- Social Tokens can either have governance utility built-in, or communities can ‘mint’ another specific governance token designed for decision making.
- 🔑 Ownership For Communities, Social Tokens can be thought of as a share of equity in the collective whole, so when the whole value of the community increases, so does your share.
- ⛔ Access Communities can use tokens to create exclusive access to channels, spaces, content and events. We’ve seen examples of this done for online and in real life events, and creates a barrier to entry where members have to have a social or financial stake in being part of the community.
- ✨ Rewards for value created Communities can use social tokens as a reward for behaviors which add to the collective value of the community. As we saw in ‘What is a DAO’, there are often small tasks that become the glue of communities that often go unrewarded and unrecognized, Social Tokens are a way to reward this. Communities can also set bounties for projects, where members can complete the community set briefs in order to receive the reward.
- 🏆 Recognition Tokens can be used as a means to recognize early adoption and value-added to the collective whole. This can be done through ‘tipping’ or rewards like NFT badges and granted roles. This recognition can also have the utility to unlock content and spaces through token holdings.
So these tokens have real monetary too?
The question of whether these tokens are ‘real money’ comes up a lot. Whether these can be used to buy things like pay bills, pay rent, buy an ice cream… 🍦
Ultimately it comes down to the design and utility of the tokens and how the Community wants to use them. Currently, due to a lot of legal uncertainty around Social Tokens, it is normal that Social Tokens primarily start as a means of ownership or a tool for access, giving them clear utility.
⚙️ Utility here means the token has a use for people outside of pure financial speculation.
However because of the nature of decentralized Communities and Web3 technologies, once someone has a large number of tokens there is nothing to stop holders of the tokens from creating liquidity on an exchange for the token.
*Liquidity would allow for other members to start trading and exchanging the token for other assets (*This is something we’ll explore in a later article)
Easy. I might just launch a token myself. Like now!
While it may seem very tempting to create a token right now, it’s safe to say that creating a social token is relatively easy, it's giving it value which is hard.
Not all projects, influencers, or communities should have a token and with them comes big social and legal responsibilities, challenges, and implications.
The reality is that whenever you bring in monetary expectations and speculation, you add a third dimension to value creation in Community. One which can become dangerous and toxic if not used and planned in a thoughtful way.
So what are examples of communities using social tokens in a thoughtful way?
As we mentioned earlier different tokens will emerge from creators and communities with different utilities based on their purpose, some of the most notable are;
🐔 Friends with Benefits: Friends with Benefits is the community at the intersections of crypto x culture, bound together by shared values and shared incentives ($FWB).
🖼️ Alex Masmej ($ALEX): Alex Masmej, entrepreneur and founder of ‘Showtime’ an instagram for NFTs’ launched his social token to fund his move to San Francisco to build his startup. $ALEX raised $20,000 and give investors voting decisions in his life, and a percentage of his personal revenue for a set amount of time.
🎹 RAC ($RAC): $RAC is the community token behind Grammy-winning musician RAC. RAC used the token as a reward for his previous supporters as well as a tool for allowing fans to unlock access to various perks and exclusive content.
🐋 Whale ($WHALE) $WHALE is a social currency (cryptocurrency) that is backed by a collective value of the NFTs the community purchases, held in the Whale vault.
🌱 Protein Token ($PRTN): $PRTN is the token of Protein’s global Community. The purpose of the community token is to help people and ideas to grow. $PRTN token can be used for access, collaboration, and reward between the community as well as Community selected partners.
So to summarise;
Social tokens benefit me because they…
- Give me ownership in the collective value of the organization
- Allow me to vote on the decisions of the community
- Allow me to receive rewards in the native token (which can or cannot be exchanged for ‘traditional money’ like pounds or dollars)
- Show how much involvement and care I have in the community
Where are my Social Tokens?
Your Social Tokens like other cryptocurrencies will be stored on your ‘unique address’ which is attached to the specific blockchain the address is created on.
The most common address which you will see is an eth address, which starts with an ‘0x’. Your address will be a record of every transaction which you’ve made with it, whether that’s sending or receiving money. You can see your address through a crypto wallet.
Next, we’ll be talking about what a Cryptocurrency wallet is and how you can set up your wallet! This is where you will keep all of your tokens!