The crypto market has experienced tremendous growth over the past decade. The faster adoption of cryptocurrencies and their maturing ecosystems have paved the way for more Web 3.0 technologies to emerge, and social tokens are a prime example of these breakthroughs.
While initial coin offerings (ICOs) have faded, social tokens have leveraged a lot of the same underlying technology to power online communities. The combination of social tokens and NFTs could be transformative for the creator economy over the coming years.
Let’s take a closer look at social tokens, their use cases, the different categories, and how beneficial they are to the blockchain ecosystem.
Defining Social Tokens
Social tokens are essentially a type of cryptocurrency that a person, brand or organization can use to monetize themselves besides traditional avenues, like paid advertising, ambassadorships and sponsorships.
For a long time, creators have been restricted in their ability to monetize their work and get a fair share of their hard-earned money. That’s because platforms like Youtube, Instagram, Spotify and Tiktok take a cut of as much as 45% from their earnings. And that’s not to mention other content limitations in place.
On the other hand, with social tokens, creators can more fairly monetize their offerings, as there is no middleman, which also means they can also retain their artistic control all the way.
The idea started being explored a few years ago, when the crypto world saw a boom of influencers and brands being paid to promote initial coin offerings (ICOs) to help raise funds for blockchain-backed projects.
There are other terms that may be associated with the concept like creator coins or community tokens, but they all refer back to social tokens.
Social Tokens’ Use Cases
Social tokens are one of the many innovations emerging from the crypto industry and the they’re beginning to become adopted across a number of industries, including:
- Arts
- Entertainment
- Content creation
- Design
- Culture
- Gaming
- Sports
Social tokens are decentralized and built on top of a blockchain, typically the Ethereum blockchain, following the same model as cryptocurrencies. They also stand at the intersection of DeFi (decentralized finance) and non-fungible tokens (NFTs).
Overall, social tokens are backed by the reputation of the underlying brand or individual. As such, tokens will have an increasingly higher value the more well-regarded are the entities they’re associated with.
Categories of Social Tokens
For content producers or any other entities looking to share their work online, these tokens can be a great opportunity to re-think their interests and create content that better aligns with the community that consumes it, unlocking new value in the process.
Social tokens can be broadly divided into three categories:
Personal Tokens (also known as creator tokens)
These digital assets are created by influencers and public personalities in return for forms of labor and services. Examples would include a token that can be redeemed for consultations or a one hour one-on-one with a celebrity. Some influencers are already selling social tokens, giving their fans access to monthly conversations with them.
Community Tokens
These tokens are targeted at engaging community members through exclusive content and perks like, say, access to limited edition merch, early access to content and entry into private events. Community Tokens are also a way to gain access to a specific community and they’re issued and controlled by a group, typically a decentralized autonomous organization (DAO).
Social Platform Tokens
Crypto tokens can also represent control over a platform that facilitates social token issuance and exchange, allowing holders to rip benefits from the growth of tokens issued or burnt in the network.
The rewards and the value that come with each token are determined by the issuer and they can vary depending on the sector, but holders can expect to be offered a vast number of benefits.
In the case of Whale, for example, owners of it get a fractional stake in Whale Shark’s NFT collection. Whale Shark is an influential collector in the NFT space and owns some of the rarest and sought after non-fungible tokens (NFTs) in the industry.
In order for users to purchase these coins, they’ll have to open a digital wallet like Metamask, through which they can buy different types of tokens and easily manage them.
In return, creators can use their personal digital currency to fund their projects and create the content their followers are expecting in return for their investment.
Benefits of Social Tokens
Now that we know what a social token is, let’s take a closer look at why they’re a crypto innovation that brings multiple advantages to the industry and the communities within it:
Community Benefits
Token holders can get access to private chats and forums, exclusive collectibles, early-access to content drops and share with the other members of the community not only the latest news about the brand of influencer they follow, but vote on decisions that affect the group, like who could be hired as a community manager or how best to manage the common treasury (if one exists).
Co-Owning Content
The emergence of social tokens eliminates the role of centralized authorities that have control over content and the ability to censor or limit creativity as well as establish rates or even demonetize creators. As such, token holders are the ones taking control over the creator economy of the online world. They co-own content, in the form of NFTs, in return for, say, crowdfunding the creation of a specific piece of digital art.
Co-owning Passive Income
By funding a brand or person, social token users can co-own NFTs that might be re-sold several times, and every time that happens, they might take a cut from the sale. In the same way, content makers might use smart contracts to establish the royalties associated with them and set out future earnings for when their NFTs change hands.
Fair Monetization
Instead of relying on donations through platforms like Youtube or Patreon, that might take a cut of transactions and earnings made by creators, fans might have economic incentive to help their favorite creators succeed when they know their investment is going directly to their accounts. On the other hand, that’s also a more transparent and fair way for creators to make money.
Vote of Confidence
Holding a social token can be a way for fans to show loyalty and continued support when it comes to the career of their favorite content creator. As they keep getting more popular and seeing their profile rise, so will the value of the token surge. The more tokens are bought, the bigger the bet is being made on a creator. An aspiring musician, for example, can release a social token that allows their fans to invest in their career while also profiting as their fame grows.
More Control Over Revenue
For creators, social tokens are a valuable way of building a closer relationship with their following, but also a profitable new monetization avenue that now only means higher earnings but more control over them.
Safety
As a social token runs on a blockchain, it’s virtually impossible that a network can be hacked or that fraudulent transactions take place there. Holders can be assured that their tokens are authentic (and that their digital ownership rights cannot be disputed), while creators and businesses know they’re engaging with genuine fans.
Final Thoughts
Social tokens might seem like a strange idea in a world where creators and businesses already have endless ways of monetizing themselves.
But the concept is not only intriguing but massively relevant in the context of the rise of the next iteration of the internet — Web 3.0 — that aims to connect people more directly. As such, social tokens are poised to become an important asset in this new economy of ownership over people’s digital presence and digital creations.
For now, they’re more an experiment than an accepted practice, but that might change in the near future as more publishers, influencers and online communities jump on board and create social tokens, attracting and building significant followings in the process.
