CoinEx Institution | What About A Personal IPO? An Introduction to Social Tokens

The year 2021 has witnessed the fast development of social tokens. Yet this promising segment failed to catch enough attention due to the better performance of other sectors (such as DeFi and the metaverse). This article will introduce the background and value proposition of social tokens, with several value gems for your reference.

What are social tokens?

Social tokens are tokens issued by individuals or a certain community. Investors can share the economic value of the issuing individual or the value of human resources in the issuing community itself by purchasing tokens. Through social tokens, you can invest in individuals and communities, rather than in a company or a project.

Social tokens allow community participants to financially support individuals, as a form of economic binding beyond spiritual ties (hobbies, interests, etc.).

Types of social tokens

There are two types of social tokens: personal tokens & community tokens, which can exist in the form of ordinary tokens or NFTs. To begin with, let’s see personal tokens. As early as 2008, an American named Mike Merrill divided himself into 100,000 shares and set an initial public offering price. Each share would earn a potential return on profits he made outside his full-time job (though he were only managed to get 13 investors). Today’s personal social tokens have evolved into fan tokens issued by content creators, or DAO tokens with a certain purpose endorsed by personal reputation. Such tokens usually serve following purposes:

• To influence the creator’s content through voting;
• To share the creator’s income through the share of tokens held;
• To simply support the creator. By this means, you will get some fan benefits (this model has been resisted by some fans because it does not require tokens but just traditional donations or membership mechanisms. What’s worse, tokenization may bring speculators).

Community tokens are slightly different in this term:

• To serve as a pass to the community, similar to a membership pass;
• Incentives for community involvement.

Value capture of social tokens

Social tokens go in line with the blockchain spirit as they make the community more decentralized and the distribution of economic benefits from community development more transparent. Here is a simple example. The big guilds in World of Warcraft used to be just QQ chat groups, yet once they grew bigger, the value they created, such as advertising sponsorship, etc., went to the guild manager’s pocket, which was unfair to every participant in the community, especially to those early contributors.

Through tokenization, the economic value of a community can be better reflected and distributed. That justifies the necessity of social tokens, and also represents an innovation in the community economy, inspiring by the incentive mechanism of the blockchain.

The same is true for personal tokens. The intrinsic value of tokens can be regarded as an approximate estimate of the current commercial value of content creators. Early fans are supposed to share the economic value of the creator after he/she becomes fully-fledged. This can be made a reality if the fans hold the tokens from the very beginning, because the creator cannot do without support from early fans. At the same time, tokenized communities also show greater user stickiness than traditional community forums or chat rooms:

• A token serves as a symbol of the community, not a bonus point of a centralized platform;
• Users can govern the community they like by holding tokens;
• After a token has some liquidity, early contributors can enjoy considerable returns.

Community tokens bring the community and individuals closer to each other by financial incentive, making them cooperate for not just hobby and love but money as well. And the concepts derived from tokenization are even more diverse: say, if Douban Goose Group (a well-known Chinese gossip community) issues a community token, will there be a Gossip-To-Earn model? In fact, many sub-sections of Reddit have tokenized points. For example, the sub-section of Ethtrader has issued Donuts, which can replace the original points in all scenes. At present, its market value is about $1 million. In other words, about $1 million rewards have been distributed to community users.

It seems that personal tokens and community tokens are basically the same, since the individuals, the core of personal tokens, can be a community itself. When there are enough participants in an individual’s community, the token he/she issued can be the community token. For example, the community Friends With Benefit (FWB) was hatched by Cooper Turley, who leads crypto strategy at Audius, and, having attracted increasing participants, it has developed into the community with multiple sub-sections as we see today.

Quality small projects

There can be many forms of protocols for community tokens. If you want to be part of it, buying certain community tokens is not the only option. Here are some good small projects of social tokens for your reference.

Ash (ASH) — FDV: $80 million — Full circulation & additional issuance — Market: Uniswap Gemini

Ash is a relatively innovative social token recently established by the well-known artist Murat Pak who is also an NFT publisher and has released multiple collections of NFTs. Ash aims to make artworks more rare, and participants can obtain ASH by burning NFTs.

Meta Factory (ROBOT) — FDV: $41 million — 44% in circulation — Market: Balancer

Meta Factory is an NFT factory on the blockchain. It designs and manufactures community-related physical objects, such as sweaters, hats, etc., for blockchain communities. It also provides a marketplace to sell these community items, such as hair oil. At present, it has helped many well-known communities (such as Bankless, Sushi, etc.) to issue a series of derivative products. Meta Factory is also a community where anyone can get ROBOT rewards through production and purchase.

DAO Haus (HAUS) — FDV: $18.94 million -Full circulation & additional issuance — Market: Swapr (xDai’s Dex)

DAO Haus is a platform that allows people without coding capabilities to initiate DAOs. The platform provides a series of functions such as fund management and issue management. At present, it is home to 606 DAOs, the well-known ones including The LAO, MetaCartel, Moloch Rises, UltraDAO, etc.

Forefront (FF) — FDV: 25mm — 9% in circulation — Market: Uniswap

Forefront is an information aggregation platform for community tokens, or in simple terms, a platform of chain news that provides an introduction to various community tokens and knowledge of community tokens for beginners. FF is its governance and reward token. Participants can get FF rewards by participating in tasks published by the Forefront community. For example, they can get 100–400 FF rewards (about $250-$1000 ) by writing an article about social tokens and publishing it on the platform.

Firends With Benefits (FWB) — FDV: $ 80.7 million — Full circulation — Market: Uniswap

Friends With Benefits follows a membership-like mechanism: users can join their Discord channel by purchasing the equivalent of $75 in FWB. Community members can enjoy corresponding FWB rewards by taking active part in community activities and tasks.