(Part 2)

This is Part 2 of the Social Token article series where we’ll explore the practical use of social tokens for creators and communities using some examples. See Part 1 for a more detailed introduction and overview on social tokens and how Waivlength will implement them.

How social tokens capture value for the creator

The primary mechanism for capturing some of the value of social tokens for their creators is through ‘founder allocations’ — an allocation of a certain percentage of the total token supply to its creator(s) or the shared treasury of a community.

At this point and especially for community (vs. creator) tokens, it is considered best practice for founder allocations to have vesting over several years. Whether as founder equity in traditional venture capital, pre-mines in early crypto projects, or team allocations of token sales, this mechanism of value capture is well-known to investors.

This method of value capture is popular because it aligns incentives across stakeholders: The same way that the founder rewards capture value for the founders, all community members benefit from holding tokens in the same way. As the community becomes more successful, its tokens rise in value, which benefits all of its members. Most current social tokens capture value through founder allocations, such as $FWB and BitClout.

In addition to founder rewards, some social tokens have also conducted a direct sale to raise money, which allows them to collect funds at the time of the sale. This makes sense if there is a specific project that needs to be funded right away.

Most social tokens might start around an individual creator and over time develop into a community token, certain advantages of social tokens hold no matter what the focal point is:

• Shared ownership — Tokens are truly owned and cannot be taken back unless the user willfully sells them.

• Shared decision-making — In successful cases, tokens end up being used for voting and therefore as a means of control over valuable resources.

• Tangible value — Increasing community value will generally be seen in increases in token price and, if liquid enough, allow early contributors to exit with an upside comparable to early startup employees at IPO.

The shared ownership from the beginning glues token-based communities together.

Examples of how social tokens can/are being used

1 — Creator/Community Token of a Podcast Host

Sample: Podcast host launches social token to offer premium features to holders and help turn the collective listenership into a tightly-knit community.

• Exclusive content: Token holders beyond a certain threshold gain access to bonus podcasts and content.

• Exclusive chat rooms: Holders gain access to messaging servers with the host and top fans to build a community around the host.

• Early access: Tickets to live shows or new merchandise gives priority to token holders.

• Shared decision making: Host can allow holders to vote on decisions for the podcast moving forward — future guests, show segments, real-life events etc.

Collaborative community: Hosts can leverage the power of their community to help curate their content, segment the best parts for publishing/marketing, increase the reach of content and grow the community. Fans who enjoy the content are already likely to do so, but token holders are also financially incentivised to do so because of the potential upside of the token price. Incentive structures of host and fans now become aligned.

As prominent members of the community become established, the token evolves to resemble more of a community token than a creator token and the podcast ‘brand’ lives on, stronger than ever before with tokens representing a collective ownership.

Token price will fluctuate based on trading, increasing as more new community members buy in. Holders can opt out and sell their tokens at any point, with the potential to profit from the contributions they’ve made to growing the community as token price rises.

2 — Creator Token of a Sports Star

Sample: Professional athlete launches a creator token to form an exclusive fan club, where they can grant token holders unmatched access to their life — on and off the pitch.

• Exclusive updates: Holders might receive regular updates on how their sports star is doing on and off the field, pre and post match insights, video logs etc.

• Exclusive chats: Holders could have access to exclusive chat rooms to interact with their sports star, do Q&A sessions etc.

• Fan experiences/prizes: Sports stars can raffle off prizes or experiences for fans eg. signed training gear, tickets to events, personalised training session, exclusive access to team events etc.

This has been done already by Keisuke Honda — KSK Honda Coin — Professional Japanese soccer player‌ ‌and‌ ‌entrepreneur.

3 — Creator Token for an Artist

Sample: Artist pursuing a full-time career in music/painting/sculpting. Faces a period of financial uncertainty as they follow their dream. Launches creator token to facilitate it.

• Fundraise: Token launch acts as direct sale to fund expenses for equipment/travel/living to pursue their career.

• Income-share agreement: In return holders may be promised a share of future salary over some years, capped at an agreed amount.

• Exclusive access: Holders get updates and insights into the work and progress of the artist they’re supporting.

Products/services/giveaways: Holders may get privileges/opportunities of availing of content/art pieces that are not going to market.

4 — Creator Token of an Entrepreneur

Sample: Alex Masmej ($ALEX) — Used his ICO to raise $20K as a young entrepreneur to fund his move to San Francisco and launch a career in crypto. In return he offered an income-share agreement with token holders and has now expanded other use cases:

• Income-share-agreement (ISA): Holders were promised a share of 15% of his salary over 3 years, capped at 100k.

• Products and services: Holders get a discounted rate on his services and can use their tokens to purchase social/marketing actions like tweets or shoutouts, Alex’s personal range of merchandise, his time/services as a contractor etc.

• Long-term investment: By holding long-term, token holders may be provided an equity stake in future business ventures and gain access to the open community he’s building on the Ethereum blockchain.

• Vote on life decisions: More recently, Alex has allowed holders to vote on his life choices where he produces a poll and holders vote.

5 — Community token of a sports club

Sports organisations and clubs can fundraise and create a new experience for their fans, bringing new opportunities to build a hardcore community.

• Access to information: Get notifications on the latest team/club news and announcements.

• Exclusive chats: Holders get access to exclusive chat rooms where they get to interact with coaches, players, and staff.

• Influence novel club decisions: By voting in polls proposed by the club, this could involve kit designs, club mottos, player of the match etc.

• Early access: Holders get priority on match tickets, admission to specified events, early access/discounts to club merchandise.

• Fan experiences/prizes: Entry in raffles for prizes or experiences for fans, for example travelling on the team bus to a match, sit alongside club legends at a game, meet and greet with players, signed team memorabilia etc.

An example of this is FC Barcelona Fan Token ($BAR) — Professional football team.

Forthcoming Updates

Waivlength is a grant recipient from the Algorand Foundation. While Waivlength developers and advisors continue to work hard over the months ahead on platform build and securing external investment, it is clear that this platform has the potential to make a huge global impact as a competitor to current mainstream social media. Learn more at www.waivlength.io where you can find a more detailed whitepaper and roadmap for the development of the platform along with contact details for the team.

There is an incoming series of articles providing more detail on how Waivlength is seeking to revolutionise the social media space. Be sure to follow so you don’t miss out.

Special Mention

As previous, acknowledgement for information gathered for this article must go to Jan Baeriswyl (Twitter — @JanBrswl) for his written work on social tokens and token design. He has done amazing work in this space and those looking to further their knowledge should sign up for the Edge and Pace newsletter.