DeFi brings about on-chain finance and develops it to the next level.
Gaming with the Play-to-earn model monetizes the Game Industry.
Social Tokens monetize every community-related thing and expand network effect.
While DeFi was leading the crypto market trend and we were looking for DeFi gems, out there existed a game project exceeding every DeFi protocol in terms of revenue. The seed price of the project’s token got x1000 and started leading the Play-to-earn game trend.
Cryptocurrency is still a new space with lots of potentials to be discovered, and today I’ll introduce you to a possible market trend, which may even eclipse DeFi in the future - Social Tokens.
This article will cover the definition of Social Tokens, why we need Social Tokens, how many Social Tokens types there are, their potential, and finally, a deep analysis of this market trend.
What is Social Token?
Social Token is a type of token that is created around an individual, a group, a creator, or even a brand. Each Social Token will have a different use case depending on the issuer. Just like how it’s called, the more “social” the issuer’s community is, the more valuable the token becomes.
Social Tokens can also be referred to as: Personal Tokens, Community Coins, Creator Coin.
Imagine every individual, every celebrity, every brand, every entertainment industry, every department,... currently existing in this world issues their own token. How much do you think the value of this market will be?
What are the benefits of Social Tokens?
It is no coincidence that I believe this sector is gigantic in crypto, whereas the benefits Social Tokens bring are too massive, and everyone wants to be a part of it.
Here are some applications of Social Tokens:
The “Play” element on top of “Earn” is the reason for the miraculous growth of the Gaming sector in crypto. Similar to Gaming, monetizing opens new gateways to both individuals and brands. Some common examples can be mentioned as:
- Payment method: Fans can use tokens to trade for accessories, merchs (hats, shirts, CDs,...) of their favorite idol or brand. Tokens can also be used as a discount voucher in the payment process.
- Unlock exclusive content: Fans can hold a specific number of tokens to unlock exclusive priorities (similar to the tier system).
- Flexibility: When creators (or other parties) want to raise funds, instead of waiting for their products to be sold, they can sell a number of their Social Tokens.
- Remove third parties: Individuals or groups can raise funds directly from the community who trust them by using Social Tokens.
Promote Network Effect
Dogecoin (DOGE) is a worthless token in terms of application and value capturing. Nevertheless, thanks to memes and a strong community, Dogecoin has become one of biggest projects ranking in Market Cap, showing the influence of Network Effect. What Social Tokens can do to promote Network Effect are:
- Scalability: Owning a token means you are owning a part of the project. When we are holding a token, we tend to help build and develop the project as we all know that the bigger their community is, the higher the value of our tokens will be.
- Symbolism: Social tokens are highly symbolic in the aspect of mentality. Instead of using money as rewards which makes users pay little attention to afterwards, gifting Social Tokens and being a part of the community will promote the development of the whole network.
- Free Incentive: Do you remember working on testnets and hoping to receive “worthless” tokens from the project? However, we are still enthusiastic about that and wish that one day those tokens will be valuable. This case is similar to Social Tokens, whereas creators don’t have to spend much effort on incentivizing users to buy the token, but rather use tokens as the incentive. This invisibly opens new opportunities for creators as they can increase awareness among fans with minimum expense.
Social Tokens classification
There are 3 types of Social Tokens:
(1) Social Platform Tokens: Represent platforms that allow creating and trading Social Tokens. Some typical examples include Rally (RLY), Bitclout (CLOUT), TryRoll (-),...
(2) Personal Tokens: Represent an individual. Fans can buy these tokens to receive unique rights from creators.
(3) Community Tokens: Represent a group. Some examples can be mentioned as $WHALE, $FWB,... Users need to own tokens in order to participate in the community and earn exclusive benefits.
The potential of Social Tokens and first signs of growing
If every individual, every organization, every brand, department,... with a community all release their tokens, how much in value will this market sector become?
- According to Selectusa, the Professional Services Industry in America alone already earned nearly $2 trillion in revenue in 2017.
- According to hollywoodreport, the revenue of the media and entertainment industry in the U.S. reached $685B in 2020, which had declined by 4.5% as the result of the Covid-19 pandemic.
- Not to mention a massive number of celebrities, influencers, creators,... all of whom have had their gigantic communities and now have another way to monetize themselves.
We now see the development of this trend when the number of individuals, groups creating Social Tokens as well as their own value are increasing.
There have been a variety of celebrities approaching Social Tokens like the rapper Lil Pump with $PUMPCOIN, whereas token owners can play game 1 on 1 with this rapper who has more than $16M followers.
Or we can mention the rapper Lil Yachty raising more than $276,000 through selling YACHTYCOIN, whose token owners can receive souvenirs from Lil’s career and meet this idol online.
In terms of cash flow, projects working on Social Tokens recently started receiving the attention from VCs:
- Rally: One of the pioneering platforms in creating and using Social Tokens. Raised more than $22M in April 2021.
- Showtime: Allows users to create and share NFT artworks, as well as buy the creator token. Raise $7.6M on 5 May, 2021.
- Coinvise: A social platform. Raised $2.5M on 29 June, 2021.
- Calaxy: An application allowing creators and celebrities to raise funds using tokens, at the same time helping fans interact with their idols. Raised $7.5M on 1 July, 2021.
- Lazio Fan Token: The most recent Fan Token being featured on Binance Launchpad. Had more than 225K participants in the Token Sale. Raised $4M (Max Cap) on 21 October, 2021.
Some prominent Social Tokens
As mentioned above, there are 3 types of Social Tokens and I will mention each of them with their strengths and weaknesses.
Social Platform Tokens
1. Rally ($RLY)
Rally is the platform that allows users to create their own Social Tokens whereas buyers can benefit from the creator’s exclusive rights.
- Easy to use. Rally creates a framework that makes creating and monetizing Social Tokens extremely simple for both Crypto and non-Crypto users.
- Cheap fees as Rally is built on a separate sidechain.
- As it is built on its particular sidechain, Social Tokens on Rally have to depend on the platform, meaning that tokens created within Rally can only be used within Rally.
- Besides, in or to create a token on Rally, users have to go through a form-filling and approval process.
2. TryRoll (-)
Similar to Rally, TryRoll is also a platform that enables users to create and use Social Tokens. The project was hacked and had to bear a loss of $5.7M. However, the project didn’t quit and continued to develop.
At the moment, TryRoll is one of the most popular platforms and is the place to release multiple outstanding community tokens. You can check out their website: https://tryroll.com
Strength: Social Tokens are created in the standard of ERC-20, which is a huge advantage as these tokens can be traded on exchanges, put into liquidity pools, and used to provide liquidity,... Tokens from TryRoll can do everything that an ERC-20 token can do.
Weakness: To create a token on Roll, users need to be approved by Roll, and of course, users need to understand about crypto to create an ERC-20 token and withstand high gas fees.
3. Bitclout ($CLOUT)
Bitclout is a social network similar to Twitter, Facebook,... but working on the decentralized mechanism and allowing users to create Social Tokens representing themselves.
- Anyone can create an account and possess their own token immediately.
- Others can invest in the token of anyone, whereas creators can send tokens, charge fees, and conduct other transactions.
- Bitclout has individually developed its own blockchain, hence the gas fee is really low.
- The project is still at its early stages, lacks infrastructure as well as tools compared to other social networks at the moment. Social Tokens on Bitcloud can only be used on Bitclout.
- Difficult to approach non-crypto users (as creating an account on Bitclout requires paying in Bitcoin or buying on CEXs).
Currently, more and more individuals have been and are issuing their Personal Tokens, each of which has specific privileges from creators and token buyers can earn those benefits.
You can go to platforms like Rally to refer to Tokens’ use cases from different people.
Some interesting cases can be mentioned as the token $ALEX and $KERMAN (you can search on Coingecko). Token holders of these projects can vote on the life decisions of Alex and Kerman. Alex and Kerman will also use a portion of their revenues to buy back tokens.
1. WHALE (WHALE)
WHALE is currently the biggest Community Token being created on TryRoll.
The notable point about WHALE is that the token is backed by a vault consisting of NFTs, which will be traded to increase the value of that vault, therefore increasing the value of the token.
Users need to possess a specific number of WHALE tokens to join the community on Discord, which can unlock different roles based on how many WHALE tokens you hold.
At the moment, WHALE is owning the most valuable NFTs on the market, while there are myriads of ways for WHALE to generate revenues from those (renting NFTs, displaying NFTs,...). The community of WHALE is one of the most active communities right now.
Nevertheless, users have to remember that the NFT vault used to back WHALE tokens is actually a wallet address on OpenSea ⇒ WHALE token holders are not actually owning the NFT vault and there is no guarantee that the community is safe if one day, the creator of WHALE wants to “Rug-Pull”.
2. Friends With Benefits (FWB)
Friends With Benefits is one of the first communities to be tokenized. Users have to hold the FWB token in order to participate in the invisible Discord by Friends With Benefits.
To not mislead you, Friend With Benefits is a community of people with the same vision on the development of Web3. The FWB community is willing to help and share various aspects of technology, problem-solving,...
3. Cherry Token (CHERRY)
The CHERRY token was hacked and has decreased more than 99% in value. However, the concept of the project still stands out.
Cherry is simply a website with 18+ content. The more CHERRY you hold, the more content you can unlock. Before the CHERRY token was hacked, it had grown dramatically and there was a time when the Market Cap of Cherry reached $100M.
I put this example here so you can see how diverse Social Tokens are and how much value they have after being tokenized. This is a really enormous space and real opportunities can come from anywhere.
Analyze the trend and seek investment opportunities
Here are the price lines of exceptional tokens in the 3 Social Tokens types:
As you can see, except for FWB, most tokens have the same price model => There is a high possibility that the skyrocketing growth before was just a short-term trend and it is uncertain which Social Tokens will be focused on initially.
Below are my analysis and predictions about different Social Tokens to help you make your own decision.
Social Platform Tokens
Social Platforms are currently split into 2 directions:
- (1) Easy to approach for newcomers but limited within the platform (Rally, Bitclout).
- (2) Difficult to approach but flexible (TryRoll).
In either case, they are both potential such that:
- (1) Suits individuals who can create tokens with their desired use cases without having to spend too much time learning new things.
- (2) Suits communities and brands that need flexibility and scalability.
From the perspective of investing, Social Platform Tokens are a safe and sustainable option as there are not many of them, at the same time, they are the go-to place before creating the other two tokens. The biggest limit of Social Platforms is that they are still too new and need time to develop the infrastructure, tools, and efficient work model,...
- Bitclout only supports the basic interactions of a Social Network.
- TryRoll has not released its token.
- Rally has its token but lacks an efficient work model to capture value for that token.
Rally is the top platform among other Social Platforms at the moment. Nonetheless, the project still needs a better work model to capture value for the platform’s token. On Rally, if fans want to buy the token from a specific individual, they have to pay directly with the Debit Card or different types of cryptocurrencies.
The RLY token mostly has no effect. Even though recently Rally has announced about adding the governance use case for RLY, I don’t think that is enough.
There should be a “Charge fees” model to create the revenue for the Social Platform. For instance, if someone mints a Social Token, they have to pay for a small cost; or when fans buy Social Tokens, they also have to pay for a small amount of fee (similar to trading on AMMs).
Before, the NFT trend rose in the world of artists, whereas a variety of celebrities start transforming their artworks and assets into NFTs and selling to the community.
The most prominent of all has to be the music producer 3LAU after auctioning his NFT album at $11.6M.
The Twitter founder Jack Dorsey also turned his first tweet into NFT, which was later sold for $2.9M. Other celebrities on the list include Shawn Mendes, Steve Aoki, the rock band King of Leon,...
Different from Social Platform Tokens, this branch can succeed more easily and faster due to the fact that Personal Tokens can be created at ease, at the same time, creators have also possessed a massive fan base.
WHALE and Friends With Benefits are two Community Tokens, but it turns out that their Market Caps have nearly equalized Rally - the current number 1 Social Platform. This has proved the massive potential of Community Tokens.
This is somewhat similar to the definition of DAO (Decentralized Autonomous Organization). You can refer to the work model of the biggest DAOs at the moment to understand more about the potential development of Community Tokens.
To invest in Community Tokens, we need to pay attention to their community as well as think if those Community Tokens can be valuable or not.
- Social Platform Tokens: Small browse scope, high potential for sustainable growth. However, they’re still at the early stages and it is pretty risky to invest in.
- Personal Tokens: Large browse scope, high risk high return, can skyrocket anytime.
- Community Tokens: Large browse scope, but worth finding a project with a solidary community and a suitable model.
You’ve been through an article about Social Tokens. I hope it has helped you in gaining more valuable insights into this project and understanding its potential. Here are some notable points:
- Social Tokens can become a big trend like DeFi or Play-to-earn.
- Social Tokens are still at an early stage, having high risk high reward.
- There are 3 types of Social Tokens, each of which has different styles. Hence, we need to research thoroughly before investing in any token.
If you want to know further about Social Tokens, please feel free to leave a comment below and join Coin98 Community for further discussions!