Today, our article will cover one of the biggest rising trends in the blockchain and crypto world: Social Tokens.
Social Tokens are a way for creators to issue Tokens in permissionless blockchains and then use them to reward their fan community in many different ways.
In short, it’s a way for groups, artists, celebrities, and individuals to create more direct ways to connect with their fanbase, monetize themselves beyond traditional means, and also share value in a more meaningful way with their biggest supporters.
Why Social Tokens?
Social tokens appear as a direct answer to one of the biggest challenges in media and entertainment: the significant gap between creators and their fans.
Although creators like artists, musicians, and writers are the primary revenue drivers for media, they are often not adequately rewarded for their efforts. It is common to find a bunch of middlemen and intermediaries between the artists and their fans. Most of the time, this relationship is intermediated through one or several third parties, whether that is a Music Label, an Agent, Netflix, Spotify, or even Instagram.
These entities exert some kind of control over the artist’s creative direction and the way the creators connect with their community. And, most of all, they extract a huge amount of value from that Fan/Creator relationship (sometimes even larger than the content creator themselves).
By creating a way for creators to be rewarded directly for their work, social tokens may be what’s needed to fundamentally disrupt a long-standing model. With Social Tokens, creators can, in essence, create their economies around their community.
Early experiences: Bowie Bonds
The idea of artists and creators finding ways to connect directly with the fanbase for engagement and fundraising is not necessarily new.
One of the pioneers of these was David Bowie, creating Bowie Bonds. During his career, Bowie realized that he didn’t have full ownership of the music he made (his former manager owned 50% of the rights), and he was looking for ways to fundraise money to repurchase those rights.
As a creative force and genius, Bowie decided to launch, in 1997, an exciting financial innovation: the “Bowie Bonds.”
In short, these were a type of bond backed by David Bowie’s royalty streams, and they marked the first security backed by a performer’s cash flow potential. Moreover, Bowie openly distributed it, and anyone who wanted to be part of it could buy, sell and trade at any given point.
David Bowie used the bonds to raise $55 million to buy back his music rights, and during ten years, he would distribute the royalties of his music and live performance to bondholders.
In a sense, Bowie Bonds was an early form of Social Tokens. Bowie created the Bonds in 1997, which was the mechanism he found. But back then, the entire process was not easy and was still highly centralized and managed by institutional middlemen.
Jumping to 2021, and artists and creators have in their hands a much better set of options to accomplish these goals: blockchain-powered tokens.
The power of Blockchain: issuing your tokens
In 1997, typical value share structures alternatives were rare and difficult to set up. Things are much different in 2021.
One of the most significant impacts that blockchain brought to the digital world is its removal of intermediaries in many different areas of activities and industries. Nowadays, anyone can issue Tokens in popular permissionless blockchains like Ethereum, Polygon, Avalanche, or Solana.
With this, Creators can issue their own fungible or non-fungible tokens, and supporters can give something back to show their loyalty.
Tokenomics for each Social Token varies depending on the objectives of the creator. Still, they all have one thing in common: participants all have financial exposure and share in the artist’s growth, and Social Tokens make the fan relationship a two-way street with the artist.
Specific uses of social tokens can vary from creator to creator, but below are some common use cases creators can make for their tokens:
- Gated Access: Fans may simply buy tokens for the access they provide. For example, depending on the number of tokens you own, a band can give you access to specific benefits such as special editions, invitations to events, access to backstage;
- Payments: The coins can be used as a medium of exchange, and creators can create their website where they accept their tokens as payment;
- Investment & Speculation: Tokens can also be used for active trading or speculation. With the token supply limited, rising demand increases its value. Fans can redeem and lock coins, treat them as an investment, and speculators can create a market to establish a fair value of the token;
- Composability & DeFi — Another potential use case for Social Tokens is how they can be applied to Blockchain interoperability and composability, particularly for DeFi applications. With DeFi, you’ll soon be able to ask for loans using your favorite artist tokens (or your own!) as collateral;
As you can see, the options are very diverse, and we’re still discovering many new use cases for Social Tokens. The individual creativity of the artist is the limit.
Projects
Finally, if you want to know more and explore a few existing social tokens or even create your own, below are some examples of projects that allow creators to create and issue tokens:
- Bitclout (https://bitclout.com/) — BitClout is a new social network that mixes speculation and social media, and it’s built from the ground up as its custom blockchain. Every profile on the platform gets its coin that anybody can buy and sell. We call these coins “creator coins,” You can have your coin too simply by creating a profile. The price of each coin goes up when people buy and goes down when people sell.
- Rally (https://rally.io/) — Rally is an open Ethereum-based network that enables creators to launch independent economies with their communities. In addition, the platform supports “creator coins,” which help to facilitate an economy around a creator or influencer by providing them with additional avenues to monetize themselves.
- Talent Protocol (https://www.talentprotocol.com/) — Talent Protocol is a web3 platform where you can support the future. Undiscovered talent can launch a token to help their career, and users can back people they believe in.
- Seedclub (https://seedclub.xyz/) — Seed Club is a DAO that builds, supports, and invests in tokenized communities.
- Roll (https://tryroll.com/) — The Roll network mints branded digital tokens unique to your online presence, allowing you to own, control, and coordinate the value you create across platforms.
Summary
I hope this was useful as an introduction to Social Tokens. It is still a very developing part of the whole Web3 ecosystem, but it’s worth following because it’s making many moves.
If you’re a creator, you now have the chance to monetize yourself in different ways, and if you are a fan, you have new ways to support your favorite artists and be part of a closer relationship with them.
If you have questions or ideas around the topic, feel free to reach out directly to us, and I’ll be happy to help! Just ping me directly at filipe@bepro.network!
About BEPRO Network
BEPRO Network is a codebase for DeFi, Gaming, Prediction Markets & More. We are a Code-as-a-Service protocol providing technology and support for blockchain-based applications.
