Non-crypto natives launch social tokens to interact with the community and fans

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The COVID-19 pandemic, along with other recent events, has revealed the need for a fully digital economy, giving rise to the Metaverse ecosystems, Web3 platforms and the adoption of digital currencies.

For example, the Ukrainian government recently reached out to the crypto community on Twitter asking for donations in Bitcoin (BTC), Ether (ETH) and Tether (USDT). Non-fungible tokens, or NFTs, have also gained mainstream adoption as artists and creators around the world have discovered new forms of monetization with these models. While innovative, these use cases also demonstrate the idea that blockchain-based concepts that emerged early on often take years to resonate with mainstream society.

Social token in 2022

This also appears to be the case with social tokens or tokens that are issued by individuals and communities to build engagement. While social tokens were predicted to be the next big trend in the cryptocurrency industry in 2020, they appear to be taking off this year due to growing interest from non-crypto natives.

Jan Baeriswyl, a token design specialist at Outlier Ventures, a venture capital firm that supports the development of new technologies, told Cointelegraph that social tokens are fungible, ERC-20 tokens that can be used for purposes other than those financial. “For example, social tokens can be used to log into specific communities, like on Discord. By being less financially focused, social tokens are more accessible to the mainstream, which is why we are seeing increased interest, “Baeriswyl explained. He added that social tokens can take different forms for various purposes, noting that these digital tokens can be used by creators to interact with fans or by communities to raise awareness of certain causes.

Furthermore, social tokens are also being leveraged to help creators and communities access Web3 platforms that offer decentralized models and incentives for community participation. Andrew Berkowitz, chief executive of Socialstack, a social token issuing platform built on Ethereum, Polygon and Celo, told Cointelegraph that Socialstack targets non-cryptographic native communities to help issue social tokens that enable the development of a Web3 ecosystem. . “At Socialstack, we understand that 99% of the world is not crypto-native. We believe that people need a platform where they can simply use an email login to take advantage of the capabilities of Web3, “he said.

To put this into perspective, Berkowitz explained that Socialstack recently helped Project Zero, a nonprofit organization focused on protecting the ocean from climate change, launch a social token to create a “valuable ecosystem that benefits both the planet that the participants “. Michele Clarke, founder and CEO of Project Zero, told Cointelegraph that their social token, PZero, allows community members to earn rewards by taking specific actions.

An oceanic shot from Project Zero ambassador and photographer Ben Thouard. Source: Progetto Zero

For example, Clarke noted that Project Zero’s pre-existing user base is made up of approximately 1 million people. Users can now be rewarded with PZero by helping raise awareness of certain issues. “This can be further amplified by an ambassador with a huge following, a brand partner or a collectible artist or a piece of news that causes a spike of millions or even hundreds of millions, and we’ve had some activations that have surpassed the billion. “he said he said. Clarke also explained that a primary goal Project Zero sets out to achieve with its social token is to convert members’ short attention spans (often seen during a major crisis) into long-term participation with the organization.

Jake Beaumont-Nesbitt, founder and chief community experience officer of Project Zero, further told Cointelegraph that Project Zero was created eight years ago and has been decentralized by design, as the project is comprised of a scientific community located throughout the world. That said, Beaumont-Nesbitt explained that Project Zero was naturally in line with the ethics of Web3, as the organization has always existed without centralized platforms or third-party intermediaries. By adopting a Web3 model through the incorporation of social tokens, Beaumont-Nesbitt stressed that Project Zero is now able to better interact with its community. He said:

“The involvement of Web3 allows an organization to grow massively by creating value that returns to the contributors. Returning certain causes today isn’t just about dropping money in a jar and hoping it will help. Web3 allows transparency, allowing people to understand where their money is going, even participating in a broader way ”.

In terms of incentives, Clarke noted that Project Zero community members will be able to use their social tokens to redeem a variety of digital and real-world offerings. “For example, members could purchase an NFT on our platform and then be rewarded even more with social tokens to redeem for various incentives,” she said.

While Project Zero represents what Baeriswyl would call “community” social tokens, other projects are geared towards individuals, especially as the “creator economy” continues to gain ground. For example, Calaxy is a token-based app for creators founded by NBA star Spencer Dinwiddie and former financier Solo Ceesay. While Calaxy is still in its beta, Ceesay told Cointelegraph that the mobile app will essentially allow creators to create their own social fan-tokens within a Web3 ecosystem: “The Calaxy app allows influencers to create social. token with a simple interface, while having a market in the application to interact with fans.

Ceesay added that Calaxy is powered by Hedera Hashgraph’s distributed ledger technology, which allows the application to act in a decentralized way to allow users to interact in different ways using social tokens. Like Project Zero, Ceesay shared that Calaxy focuses on non-cryptographic natives. “We reach out to YouTubers, gamers, social media influencers, sports players and more. Our list of creators is extensive, “she noted.

NFT within the Calaxy app. Source: Calaxy

That said, Ceesay explained that Calaxy offers an Instagram or Twitter-like user experience, where people have a discovery page that also allows them to follow different influencers. Users can then visit an influencer’s home page to purchase their social tokens, where they will also be presented with a list of experiences offered, such as one-to-one video calls or access to exclusive events. While the creator’s social tokens may look similar to NFTs, Ceesay noted that non-fungible tokens are more about utility and artistic expression, while social tokens offer more flexibility:

“Let’s imagine a world where a sports player, for example, has a social token that portrays his image. They can then hold that token for any decentralized finance capability. This is a whole new economy where creators can do whatever they want with their tokens. ”

Regulatory concerns about “social currency”

However, while social tokens are gaining ground, it is also important to highlight regulatory concerns. The biggest issue to consider here would be a social token in the form of security.

To ensure that social tokens are not seen as securities, Ceesay explained that the tokens created on Calaxy are stable coins that are backed one-to-one with USDC. “These are stable coins due to the regulatory gray area, but that also helps with onboarding,” she said. For example, Ceesay pointed out that a Calaxy user could be an eight-year-old who is a fan of a specific sports player. “We don’t want these users to have a volatile resource,” explained Ceesay.

Berkowitz also noted that Socialstack is a completely closed ecosystem for ensuring regulatory compliance. Berkowitz added that while there are still no clear regulations on social tokens, some steps can be taken to ensure compliance:

“The best way to mitigate the risk of a stock is to do things through an NFT and then have a Know Your Customer level that identifies each person as an accredited investor. This is the best way to mitigate the risk, but at the moment we are making sure that the communities on our platform are not in risky situations. “

At the Berkowitz point, Clarke commented that Project Zero “is not a get-rich-quick scheme” but rather a social movement. “We are building a community. Web3 is creating great opportunities for value exchange, not only through currency and smart contract projects, but also social tokens, “she explained. Clarke added that Project Zero’s PZero social tokens have no monetary value:

“It was deliberate. As such, it was difficult to understand the initial values ​​for earning and redeeming PZero social tokens. Our tokenomics must be simple, but we must also develop it without referring to a single fiat currency and with the aim of creating scale “.

Will social tokens support DAOs moving forward?

While social tokens are being adopted more widely, use cases for these digital assets are still under development. As such, the future of social tokens remains unclear. “There are several ways people can use these resources. The most interesting part is that we don’t know the best use cases yet, ”Ceesay said.

That said, some in the industry believe social tokens will play a key role in decentralized autonomous organizations (DAOs), which typically leverage a token that can be spent to earn rewards. Stani Kulechov, founder and chief operating officer of Aave (AAVE), an open source DeFi protocol, told Cointelegraph that although social tokens are still extremely nascent, the cryptocurrency industry could see creators of DAO-backed social tokens in the future. .

Additionally, Baeriswyl expects to see combinations of NFT and social tokens emerge. While this is just a guess, she explained that the GameFi and play-to-earn spaces are already leveraging a combination of NFT and fungible token forms:

“With play-to-earn, you usually have NFT items and then a currency to exchange value. Therefore it may make sense to reward users with social tokens that are actually NFTs. “

Forecasts aside, it’s a safe bet to say that social tokens are here to stay as they are making it easier for creators and communities to launch these social tokens, for example. “Social tokens may not have gained ground before due to complexities and access ramps not easy enough to use. There are now apps and platforms that help with this, “said Ceesay.

Berkowitz also noted that Socialstack is working with a number of different communities, which has resulted in 20 different use cases across podcasts, artists, festivals, conferences, and more. “Our target audience are non-crypto native communities interested in bringing their community to Web3 through a social token. This will advance further with the development of Web3 “.