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Seed Club Creator X Crypto Summit
Seed Club (@Seedclubhq) is currently hosting a conference called the "Crypto x Creator" summit bringing together some of the most interesting thinkers at the intersection of the Creator Economy and the Crypto world. They hosted three panels today, I was able to catch the panel "How To Launch A Social Token in 2021", hosted by Jade Dharmawangsa (@jadedarmawangsa)
I was able to jot down some notes as people were speaking, and hopefully this sparks some exploration in the space, both for myself and others.
How to Launch a Social Token in 2021?
Speakers: Jade Darmawangsa (@jadedarmawangsa - Moderator), Mahesh Vellanki (@mvellank), Reuben Bramanathan (@bramanathan), Jess Sloss (@thattallguy)
Why should you launch a social token? Reuben answers that his token was a personal token, being redeemable for an hour of his time. He mentions NFTs are cool but that social tokens allow more of a community building thing.
Jess mentions Rally is like a shopify for a creator economy, starting with social tokens, but we later may launch into NFTs or other things. Right now its invite only, fill out at vip.rally.io - once you set up you have a templatized coin, where you don’t have to worry about other things (supply, ERC-20, need for wallet,etc. which are abstracted away by Rally). Fans can buy the coin then with credit card or with other crypto. All tokens build on Rally are backed by a Rally token which is an ERC token.
What have we seen as alternate ways to create currencies? Jess - Rally has been busy extracting the crypto from it. When you are buying a creator coin you are buying a token on the Rally platform. We see other projects where they are building straight up ERC-20 coins that people can buy. Creators thinking of building their own institutions, legacy projects, etc and want to build that way may want to spend the time actually building a token on Ethereum. Rally v Roll, Rally is more about abstracting away the crypto part. Reuben - There are gonna be more tools for people who want to build their own tokens. One thing about social tokens is there is only one shot; unlike NFTs which you can release a lot of, you really only have one shot to release a social token which does have much of your social credit tied up in it.
Jess mentions there is an idea around Minimum Viable Token, and more features can get built out. A lot of creators start out by having gated discord or telegram channels where you need a given number of tokens or value to access.
Audience: Are tokens like domains in Web 2.0? If you have XXXX on Rally, is it prevented from being used on Roll? Mahesh: Its not like domain names, because every blockchain has different platforms. Ethereum would be separate from FLOW, etc. When the tokens become ERC-20, the coins will have their own Ethereum token address.
When does a creator community know when it makes sense to launch? Mahesh - What we have learned so far from Rally experience, is that its best to work with communities/creators that already have some semblance of an economy; ie creators/streamers that sell a lot of merch or get a bunch of donations. An economy consists not just of giving coin away for free, holding incentives, and uses when a coin is sold. Those three things in conjunction are a fully formed economy.
How have you seen people encourage those exchanges? Mahesh - All those creators are already interacting on various platforms, so what we have done is help them integrate their coins into things like discord servers. We have integrations with Stream Labs on Twitch. We create more transactional capabilities, use an API that pulls that crypto components into Web 2 experiences.
Fragmentation - If every creator launches a token, will it become like instagram where you have a close friends separation from everyone else? For the consumer/investor side, how do you see future of creator:collector increase in ratio? Reuben - When you introduce economic incentives to an existing community, you could tear the fabric of the community. Concepts of close friends/100 true fans/etc, tokens allow us to reward them, and align them to the creator and around the collective. Around them is a circle of loosely involved people. Around them is a circle of speculators. It is important to incentivize true fans. Jess - We have been looking at really interesting experiments over large audiences, Web 3 allows for really interesting transfers of value. Transfers of value differ from mere transfers of information. Abstracting away challenges for creators is good for people with huge followings, and other creators are trying out more experimental things. There's a discord called SongCamp that has 30 people but is doing very interesting things in that space. Jade - I did meetups as a creator over 10 years, I didn’t have a huge audience, but I had a community. Vanity metrics are just vanity metrics, you don’t need 1MM followers to have a community.
Are social tokens a pyramid scheme? Reuben - You can design a pyramid scheme if you want, but the successful social tokens will be the communities that create lasting value over time, with rewards for contributors and stuff. A successful social token is an inverted pyramid where value is given away. Mahesh - We put into place flow restrictions/volume caps, where large token holders can only sell up to a certain amount of coins per day. We don’t see social tokens as a stock market so we try to reward those who generate real value.
What are the precautions creators should take on the security /legal side? Reuben - I wrote a post on this in December. Securities agencies are very aligned on definitions of tokens. If people are buying to speculate, it will be treated as a security, if its from more of a community mindset it gets treated in a different manner. The more the messaging, design, participation, is centered around membership rather than value speculation, the better.
Jade - Firstly, the priority has to be a community, what's the place for financial upside? Reuben - There should be some financial upside for the community and nothing wrong with it, but when its purely around financial upside, then that creates problems for the community.
How do you prevent audience going crazy on the token? Reuben - You don’t want crazy hype and pumping price, but having token holders and community and fans advocating for you is something you want.
Distribution of tokens? Jess - There is no one size fits all. There's securities regulations concerns and concerns over how community will be structures and those are likely the biggest concerns. Questions around how to reward your most active fans. There's also some interesting distribution built around gamification. Questions of "Who's in your community / Who do you want to hang out with / Who do you want to co-own with?" are important, there needs to be some binding tie to make sure community is bound long term. Reuben - Some people will define their earliest fans as the people that deserve the most tokens, some will for those that bought a lot of albums. When you start a new community from scratch, there might be other questions to explore. Social tokens are interesting, because it allows us to organize in new ways, and also figure out new ways to organize and relate to each other.
Reuben - Social Tokens and DAOs are two ways of organizing a community, in fact in the future people might think of them as the same thing. Jess - Many of our projects are releasing NFTs as milestones in a community, so NFTs can also be merged or used in conjunction as well. All these things are increasingly tied together.
Do you see non-Ethereum blockchains being competitive, or will Ethereum win? Reuben - In the long term its not going to matter to creator, the blockchain the token is built on will be abstracted away by companies like Rally. It doesn’t matter for creators but likely does matter for builders. Jess - It might matter in the short term. Where is innovation happening? We see innovation in a small number of blockchain including ETH. We want our creators to be playing in a place where big volumes are happening. Ethereum also has a lot of liquidity.
Jade - Main thing I drew from this conversation is that a big community is not necessary; a strong community empowers things to happen.