Social tokens are a new crypto asset class that has been gaining more and more attention: several new creators and communities alike have started to launch social tokens of their own. I wanted to take a quick look at this growing ecosystem and explore the basics.
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What Is A Social Token?
Social tokens are crypto tokens created by individuals or communities. They fall into roughly two categories: personal tokens and community tokens.
Personal tokens are created by individuals and often used to exchange forms of labor. For example, a graphic designer will do one hour of work if paid 100 of their social tokens. In this example, the individual drives the token’s value by performing a service.
Community tokens are generally used for memberships or communities. For example, creators will launch a community token that users must acquire in order to gain access to private Telegram groups, Discord servers, newsletters, etc. They are also given as rewards and thus incentivize behavior within a community. For example, a community could launch a competition where participants compete to create the best infographic and then token holders vote on the winner.
For more info about personal vs community tokens, check out this great Twitter thread.
As you can clearly tell, social tokens can be used for almost unlimited purposes, and we are just in the early stages of this revolution. As the ecosystem continues to be built, social token use cases will expand dramatically.
Note: I am a holder of all of these social tokens.
As previously mentioned, a social token is whatever you’d like it to be, so it’s always interesting to explore different social tokens and their unique uses. Let’s take a look at some social tokens in the wild.
$ALEX is an extremely intriguing social currency that single-handedly drew many people into the space. The reason this token received so much attention is that its Founder, Alex Masmej, raised $20,000 via the “initial $ALEX offering,” i.e., a method to monetarily support him moving to San Francisco to pursue a career in crypto. The $ALEX token is “a blend between a small Income Sharing Agreement and a human IPO.” The income share agreement is extremely interesting: 15% of all income he makes for the next 3 years (capped at $100,000) is distributed to token holders every quarter. The token also gives its holder’s rights such as 1-1 meetings, access to his network, and even governance of some of his life decisions. To dive deeper I suggest checking out his medium blog.
$SWAGG is a multifaceted social token focused on the SWAGG community. Carlos Gomes, the founder of SWAGG, stated, “With SWAGG the goal has always been to cultivate and expand that passion, through this weird intersection between crypto, culture, community, and collaborative creativity.” In other words, $SWAGG is used for a myriad of purposes. Holders of $SWAGG get access to the entire ecosystem surrounding the $SWAGG token. The benefits include:
Access to SWAGG NETWORK creations
Access SWAGG DROPS before the public
Receive SWAGG GRANTS for community-initiated projects
Gain SWAGG REWARDS for valuable content sharing
Redeem the token for community creations
Propose and vote on SWAGG community actions
Soon, holders of at least 10,000 tokens are able to propose voting actions over $SWAGG governance, which is exciting because it gives community members direct control over the network. To learn more about $SWAGG I suggest reading this blog post.
$JAMM is currently being used to access Brian Flynn’s newsletter called “Jamm Session” (it’s really good, I suggest you subscribe). To access the newsletter you need 1,000 $JAMM tokens. A social token is ingenious for a newsletter because of the potential network effect it could create. When I pay for a newsletter, I normally use a credit card. While I might tell people how good it is, I have no real incentive to. But when I pay for a Jamm Session, I have a huge incentive to tell people how good it is because the more people that buy $JAMM, the more money I make.
Newsletters utilizing social tokens perfectly aligns incentives. Most newsletters earn value linearly because each new subscriber pays, let’s say, $5 per month. But a newsletter that uses a social token enables the creator to earn exponentially because each new subscriber must purchase a baseline (in this case 1,000 JAMM) and gains a direct incentive to tell more people about the newsletter. The more people that sign up, the more demand there is for $JAMM. This dynamic allows the entire Jamm Session community to potentially grow wealthy together and Brian gets monetary and social support for his project. Great outcomes on all sides.
What gets me excited about the $COIN token is that new functionality is always being added to it. The $COIN vision statement is also very exciting because it states that $COIN is “A community of inclusion and experimentation scaffolded by a gamified social network.”
Today, $COIN holders get access to a community network called the E-Den. This community has direct and exclusive input in the direction of $COIN. They get to do interesting things, like design crypto puzzles, which is something that Coin Artist is very well known for. There is also a very interesting mechanism that allows $COIN holders to stake their tokens in exchange for $CRED. The $CRED tokens will be used to acquire rare items in the upcoming game Neon District. It is great to see a social token being used in another ecosystem like a game, and I expect to see more crossover from social tokens to other platforms, networks, and games in the future. Follow Coin Artist's blog to stay updated on all things $COIN.
WhaleShark - $WHALE - Total Supply - 10,000,000
$WHALE has been the most successful social token to date and it is very clear why. Launched by WhaleShark in May of 2020, $WHALE has swiftly become the dominant social token. It even reached a market cap of $30m. $WHALE has now expanded into an entire ecosystem and community, which is incredibly impressive considering it began with a single individual. What sets $WHALE apart from other social tokens is that its value is backed by a large collection of NFTs, which are held in what is called “The Vault.” The Vault contains NFTS estimated to be worth $1.4m in sum (Numbers as of Sep 2020 - Audit performed by Nonfungible.com). $WHALE is not only backed by NFTs, but also used for a litany of different functions within the community, like:
Governance decisions via staking to the $WHALE DAO
Purchasing specific assets from The Vault
It is fascinating to see that $WHALE created a DAO to become completely community-governed, which makes sense for a community-led social token. The $WHALE community is constantly pushing and growing, so I will be on the lookout for more updates.
Social Token Ecosystem
I can tell that social tokens are going to be a massive component to the crypto landscape: not only because of the astonishing price increase we have seen but also because of the rapid innovation and growth around the social token ecosystem. Here is a quick ecosystem overview.
Forefront is the go-to website for the social token ecosystem. It features news, resources, drops, and (my favorite) a section dedicated to social token markets.
Rally - “Mainstream” Gateway For Social Tokens
Rally is a platform where Twitch streamers can create their own social tokens, called “Creator Coins.” These tokens are used for all sorts of purposes, but mainly to reward community members and viewers in creators’ Twitch streams. What I love about Rally is that they focus on mainstream audiences by encouraging non-crypto native Twitch streamers to launch their own social tokens.
Seed Club - Social Token Incubator
Seed club is an accelerator for social token creators. In exchange for services, participants provide a small % of their tokens to Seed Club. Eventually, Seed Club will have its own token representing both the value of the community and the basket of social tokens it has helped to launch.
Cooper Turley even created a social token agency, where he manages and discovers the best practices surrounding creators and their social tokens. I think this makes complete sense since social tokens are new and pretty difficult to manage. Having someone help manage operations with skin in the game would be very valuable.
This ecosystem may be small, but it is rapidly growing and will play a major role in the metaverse - my area of focus. You can expect more social token related content in the future as I dive deep into specific social tokens and examine how they drive value to their ecosystems.