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Social Tokens: Creating User Centered Economies in Web3by@yellownetwork
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Social Tokens: Creating User Centered Economies in Web3

by Yellow NetworkOctober 10th, 2022
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With the crypto space getting more impacted by the Web3 vision and creator economy, it's no surprise that social tokens are becoming the next big thing. The long-term goal of social token implementation can be building unique ecosystems that are far more user-oriented and rewarding than currently existing business models. For fans or customers, social tokens can provide participation in the economies they like - either as owners, investors, or a workforce.

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Social tokens are invaluable for creating and marketing user-centered economies in Web3. Here is how they work and why they have great moonshot potential.


Last year, Nasdaq named social tokens the next massive crypto trend.


This prediction has proved true. Social token popularity continues to grow rapidly, with more use cases and new designs constantly coming out.


What are social tokens, and what’s their value?


I’ll get you covered in this article on all these questions and more. By the end of its reading, you will fully understand the concept, the existing designs, and perspectives.


Let’s get right into it.

What are social tokens?

Social tokens are cryptos that represent the value of a project, brand, community, or unique creator.

In other words, social tokens are currencies that’re agreed to be used within a particular environment or micro-economy as a means of exchange for services or experiences it provides.

Despite “social tokens” being a relatively new term, the idea behind this concept is not that fresh. We can think of them as upgraded token incentives adjusted to the current hot Web3 trends: creator economy disintermediated digital ownership, and community-focused framework of doing business.

How are social tokens different from token incentives?

In fact, they are not so different.


The reason why we haven’t heard about social tokens until 2020 is that the Web3 ideology has not been firmly formulated yet.


Just a few years ago, there was not much clarity about what Web3 is, and many would think of it as yet another hype rebranding of crypto.


However, things have tremendously progressed since then, both on ideological and practical levels.


The theoretical framework of Web3 and its foundational principles have been shaped. On a practical level, we got a whole ecosystem of platforms and projects making this vision real.

As the crypto space evolves and transforms into the Web3 movement, so do some of its concepts.


The same happened to token incentives. The old well-known concept was rethought and adjusted to the Web3 vision. And finally, we got social tokens.

How are social tokens used?

Depending on goals, social tokens can be used in many different ways.


Only the sky and law are the limits.


In most scenarios, they apply as marketing tools that help:


  • bootstrap a project. Through social token distribution, projects can engage more users and coordinate them for the project mission;

  • strengthen community loyalty and dedication;

  • attract investment and workforce; and

  • increase brand value and visibility.


The long-term goal of social token implementation can be building unique ecosystems that are far more user-oriented and rewarding than currently existing business models.


For their holders, social tokens can provide different kinds of value: VIP access to information or events, discounts, governance rights, free NFTs or other digital goods, merch, and the like.

Below, I will walk you through particular types of social tokens and cover in more detail what they can grant to a user. Stick with me.

How many social tokens are there?

Let me answer with Coingecko data (constantly changes):

What are social tokens examples?

So far, there are loads of social token variations out there. Depending on who stands behind them, all social tokens can be broadly grouped into four categories:


  1. Personal or creator tokens
  2. Brand tokens
  3. Community tokens, and
  4. Social platform tokens.


Here is the excellent infographic by Forefront that can help you better understand the social token landscape.

Image source:https://outlierventures.io/research/understanding-social-tokens/

Now in more detail about each type.

Personal or creator tokens

These tokens are issued by a unique creator or a group of creators (an influencer, an artist, an actor, a band - actually anyone who has something to offer) to capitalize on their creativity and market it.


Depending on a creator's goals and value proposition, personal tokens can come in many different designs: earnable/buyable, granting access, discounts, swappable to NFTs, and the like.


Essentially you can wrap literally anything your fans may be interested in into your personal token to the extent it's legally permitted.


The examples of personal tokens are given in the Creators Map above.


I would also like to mention Portugal. The Man. ($PTM) - a Grammy Award-winning pop-rock band that is considered one of the most successful cases for fan-focused token launching.

Brand tokens

Any brand can issue brand tokens, whether a crypto native or not (like, for example, Coca-Cola), to boost sales, create new revenue streams, and strengthen customer loyalty.

For instance, in the traditional retail industry, the most native scenario of tokenization would be tying customer loyalty programs to retailer brand tokens.


A KPMG study on brand loyalty has shown that if tokens are proven to be simple to use, 79% of brand followers will use them.


Let’s take another non-crypto example - a sports club.


Spanish soccer giant FC Barcelona had successfully sold out its social token (BAR) and attracted USD 1.3 in less than two hours!

Community tokens

Community tokens are based around particular communities and intended to provide their members exclusive access to information, expertise, human talent, events, etc.

Examples of community tokens:


  • Donuts token - represents the Ethereum investment community around the subreddit r/ethtrader. Members can earn Donuts by actively participating and contributing content to the subreddit.

  • FWB token - represents Friends with benefits - a community of artists, creators, thinkers, and people leading Web3 transformation. FWB token incentivizes community members to participate in Discord, attend calls, and host events.

  • $CLUB - a community token of Seedclub - a social token incubator. $CLUB holders gain access to Discord, events, educational content, contribution opportunities, and governance.

    Social platform tokens

    These tokens represent some interest in a platform that facilitates social token issuance and exchange. For example, they can provide their holders with membership perks (VIP access to events, discounts, etc.) and other special features like staking and participation in the platform's governance.

    Examples: Roll, Rally, Chiliz, and Fyooz.

    Is an NFT a social token?

    Originally, NFTs were not designed as social tokens.


    They are digital collectibles, providing their holders with a kind of exclusive IP rights to the unique content they represent.


    However, with time use cases of NFTs have evolved, and now many brands and individual creators use them as non-fungible social tokens.


    Examples: IreneDAO, VeeFriends, etc.


    The purposes are the same: self-marketing, user engagement, and capitalizing on that.

    So despite many saying that there is a whole different world between NFTs and social tokens, I would argue with that. NFTs can play the role of social tokens when used for the purposes described above.


    It’s worth noting that some creators apply NFTs in tandem with fungible social tokens to boost engagement.


    For instance, a creator can use NFTs to monetize their artwork while also releasing a social token that gives the holder access to personal Q&A sessions or art lessons.

    Meme social tokens

    Meme social tokens are hybrids of silly memes and reward tokens.


    They are a relatively new design of social money, which has all chances to explode.


    Here is why.


    First, meme social tokens preserve all qualities of meme coins, which are cryptos inspired by a joke or some funny narrative.


    Basically, pure meme coins are not supposed to represent any value but fun or to have any meaningful cases of application. However, despite their unserious nature, some meme coins like Dodge or Shiba Inu achieved enormous user adoption, and their prices saw meteoric growth at times.


    Second, meme social tokens are reward tokens, meaning their holders can benefit from them in more ways than just price speculation.


    One of the pioneers in meme social tokens design is theDUCKIES platform, backed by Yellow Network.


    DUCKIES platform aims to accelerate Yellow Network’s community growth and reward its participants (Yellowians) for their dedication and commitment to the project.


    Essentially, the DUCKIES Platform offers Yellowians a reward meme token $DUCKIES, that can be swapped for particular NFTs, Yellow Tokens, and other digital assets.


    $DUCKIES also enable their holders to participate in the community's governance and access its events.


    $DUCKIES are earnable tokens, which means you can't buy them on the market.


    New community participants can get some DUCKIES for free as a welcome bonus. Those who want to increase their DUCKIES’ holdings can do it by participating in DUCKIES learn-to-earn activities, contests, community initiatives, and the referral program.

    Is DUCKIES the next meme coin?

    Chances are, it can be. At least now, DUCKIES proves to have a great moonshot potential.

    Despite the crypto winter, DUCKIES crossed 2000% growth and tens of thousands of users in just one day upon its release. By the second week since the launch date, there are almost 150K active DUCKIES holders.


    Here is the proof:

    If the DUCKIES keep walking at this pace, they are well on their way to becoming the next meme coin.

    Combining meme and social tokens’ traits can be a huge step forward in social token design.

    Conclusion

    With the crypto space getting more impacted by the Web3 vision and creator economy, it's no surprise that social tokens are becoming the next big thing.


    For businesses and individuals, they can be great marketing shortcuts to build dedicated communities and create new revenue streams.


    For fans or customers, social tokens can provide participation in the economies they like - either as owners, investors, or a workforce.


    Sounds like win-with IMHO.


    By Julie Plavnik for Yellow Network.


If you want to learn more about DUCKIES and Yellow Network, don’t be shy to ask your questions in Yellow Telegram.