just now
July 10, 2023 - (The following is a guest post by LBank Labs)
Web3 social networks can leverage token-based networks to initiate early liquidity and relevance. Important users can gather and curate content, forming small communities that support creators. These communities can pool resources and coordinate economic activities that benefit both the creators and members. The future of the creator economy lies in digital cooperatives, social graphs, and the composability of DApps.
Firstly, there has been a significant improvement in people’s understanding of financial mechanisms in recent years. People have begun to realize that anything, whether it’s artwork or an individual, can be financialized as long as it becomes important enough. The development of cryptographic technology has made this financialization even easier. In this context, the success stories of creators or communities combined with cryptographic technology have become increasingly fascinating. Early supporters of someone can prove their identity by owning tokens, and this model is likely to become popular in the future. At the same time, people are also starting to explore the potential of personal tokens as a way to own someone. By auctioning tokens, people willing to buy can determine someone’s fame, potentially bringing them significant influence and recognition.
An example of this can be seen in a hypothetical encrypted social application called “ArtLive,” which connects art creators and viewers. ArtLive allows artists to live stream their creative process and interact with viewers in real-time. Here are some potential new livestream formats that ArtLive could implement:
- Creator Tokens: ArtLive introduces creator tokens, which are cryptographic tokens representing specific artists. Viewers can purchase these tokens and use them to interact with artists during the live stream. For example, they can send tokens as support and encouragement or use tokens to purchase the artist’s digital artworks.
- Programmable Content: Artists can showcase programmable art during the live stream, allowing viewers to interact with and modify the artwork. For example, viewers can provide creative ideas and suggestions, and artists can adjust the direction of their work based on viewer feedback.
- Tokenized Assets: Artists can convert their artworks into NFTs and promote them to the market through auctions or sales during the live stream. Viewers can support artists by purchasing these NFTs and owning unique digital artworks.
- Social Interaction: ArtLive provides social interaction features that enable viewers to communicate and collaborate with other viewers. Viewers can share ideas and creativity with others through chat rooms, groups, and collaboration tools, forming an active community.
These innovative livestream formats elevate the live streaming experience in encrypted social applications to a new level. Through tokens, programmable content, and the tokenization of artworks, there are more opportunities and incentives for interaction between viewers and artists, enhancing the engagement and personalization of the live-streaming experience. This new livestream format can change the dynamics between viewers and creators in traditional social media and promote more open and innovative social interactions.
Another interesting development is that people can convert their online behavior into “credit” on the blockchain. Whether it’s being active on social media, participating in video games, or using decentralized financial applications (DeFi), every interaction with encrypted applications and ownership of an Ethereum wallet contributes to building an online identity. This identity can serve as a trustless, secure, and transparent way to validate and share information about an individual or entity. On-chain credentials can provide proof of identity, achievements, skills, or other attributes without the need for centralized authorities.
On-chain credentials can be used to create and manage secure, private, and user-controlled digital identities. These identities can help authenticate users in decentralized applications (dApps) or grant access to restricted resources based on verified attributes. People will be able to convert their online behavior into “reputation” on the blockchain. For example, each wallet bound to an NFT profile that interacts with crypto apps will build a history and begin to establish an on-chain identity based on cryptography. This identity can then unlock different things: airdrops, which are purely monetary, or, on a social level, entry to a secret chat room.
Long-term, communities are expected to evolve into entity DAOs resembling digital nation-states. In DAOs, the significance of physical location will diminish while the importance of digital presence will increase. In fact, we have already witnessed the emergence of this trend. Cryptocurrency technology has the potential to change the rules of the game, enabling communities to coordinate independently of current platforms, both in social and financial aspects. This will provide individuals with greater autonomy and participation, fostering the prosperity of the digital ecosystem.
For example, an encrypted social application could offer a feature that allows users to collectively purchase NFT artworks or digital assets. The platform would only display relevant content to users who hold specific tokens, enabling more targeted social interaction and communication within groups with shared interests. Users can invite friends or community members to contribute funds for the purchase and collectively share ownership or profits of the artwork. This facilitates capital coordination through collaborative investments and project involvement. Players can participate in DAO voting and governance, collectively determining the direction of game development and resource allocation. Platforms can incentivize users to become curators by implementing reward mechanisms and token-based incentives for sharing high-quality content. This will elevate content quality and provide users with a more engaging and personalized content discovery experience.
In conclusion, Web3 social networks and cryptocurrency technologies have the potential to reshape the dynamics of communities, leading to the emergence of entity DAOs resembling digital nation-states. These developments empower individuals, enhance participation, and drive the prosperity of the digital ecosystem.
Two Pioneering Examples of Community-Driven Finance: Community Investing (MEME Coin) and Community Fundraising (ICO, IDO, etc.).
Community Investing: MEME Coin
MEME Coin has always been one of the hottest topics in the cryptocurrency space, as well as one of the most controversial investment assets. The main reason is that discussions and perceptions of MEME Coin often revolve around speculation and getting rich quickly while overlooking the emergence of a new investment paradigm it represents. In fact, the true value and appeal of MEME Coin lie not only in its speculative nature but also in its immersive, collaborative, and creatively entertaining gamified investment experience. MEME Coin attracts attention and participation by constructing names, images, and narratives, similar to building a worldview in a game. It plays a significant role in the cryptocurrency field by stimulating emotional resonance and establishing a shared narrative framework. Community participation and collective identity further enhance the dissemination and marketing of MEME Coin. In this process, the participatory investment brought by MEME Coin leads to real-world value such as a “sustainable participatory economy,” “great people era,” “cognitive profit dividends,” and “becoming super collaborators.”
MEME Coin is a type of blockchain-based cryptocurrency that emphasizes community involvement and narrative dissemination more than traditional cryptocurrencies. According to CMC data, Meme Coins have two distinctive features compared to other segments in the market.
- Feature 1: Meme Coin projects are diverse in nature and have relatively smaller market capitalization, making them suitable for retail investors who employ strategies that involve smaller capital and casting a wide net.
Currently, there are 749 Meme projects in the market with a total market capitalization of around $14.2 billion. The average market capitalization per project is $20 million, significantly lower than Web3 (around $200 million), DeFi (around $90 million), and DAOs (around $100 million). It is roughly in the same range as community-driven projects in the NFT asset class (around $32 million).
Feature 2: Meme Coins have low initial valuations, making them attractive to community-driven investors. High-quality projects have significant growth potential and can achieve high market caps, offering the potential for exponential returns.
The top three Meme Coin projects in terms of market capitalization are DOGE, Shiba Inu, and PEPE, with market caps of $8.6 billion, $4 billion, and $400 million, respectively. DOGE has experienced a 700-fold increase in value over the course of 8 years, Shiba Inu has seen an 80,000-fold increase in value over 3 years, and PEPE has surged 100,000-fold in just 3 months from its lowest point.
It originated from DogeCoin in 2013, whose image is derived from the popular “Doge” dog meme on the internet. However, the story of DogeCoin goes far beyond the scope of this image.
On April 4, 2023, Twitter CEO Elon Musk changed the official homepage icon of Twitter users from the traditional blue bird logo to a cartoon image of a Shiba Inu. By showcasing a humorous side through meme references on social media, he established emotional resonance with the Z-generation audience, further increasing his influence and visibility.
As a representative of the second-generation MEME Coins, Shiba Inu’s story incorporates multiple elements, including the skyrocketing story of DogeCoin, the similarity between Shiba Inu and Doge’s dog meme images, and an updated token distribution approach. The shaping of this story creates a sense of anticipation and potential returns for new projects. The success of Shiba Inu tells us that MEME Coin stories can create a unique charm and appeal through the fusion of multiple elements.
In terms of exposure and dissemination, Shiba Inu learned from DogeCoin’s experience. In 2021, the Shiba Inu team transferred a large number of Shiba Inu tokens as a community donation to Vitalik Buterin, which garnered widespread attention and triggered a series of market movements. Additionally, Elon Musk has also expressed interest in and support for Shiba Inu tokens on social media. He has posted tweets related to Shiba Inu, sparking discussions and attention on social media.
Moving on to the third generation of MEME Coins, Pepe is a well-known meme image that serves as a countercultural symbol. In some internet communities, people use the Pepe image to express a rebellious attitude against mainstream culture, attracting a following with its rebellious atmosphere. The story of Pepe also goes beyond the image itself. The story of Pepe is closely linked to the skyrocketing story of DogeCoin, the association with meme images, and the adoption of innovative token distribution methods. The creation and dissemination of this story further increase community engagement and market attention. The example of Pepe demonstrates that MEME Coin stories can shape their unique value through images, associations, and innovative token distribution.
In addition to DogeCoin, Shiba Inu, and Pepe, there are many other MEME Coins with unique stories and narratives. For example, SafeMoon attracts attention through its story of anti-money laundering and automatic liquidity-locking mechanisms. Elongate touches hearts through its story of charitable donations and community building. These stories are closely linked to MEME images, but more importantly, they construct a broader narrative framework that stimulates community participation and market attention.
As an emerging form of cryptocurrency in the crypto space, MEME Coins are more than just their association with MEME images. Their true value lies in the impact brought by the underlying stories and narratives. The storytelling aspect of MEME Coins attracts numerous investors and community participants, driving the development of their market. However, we should also be aware of the investment risks and market uncertainties associated with MEME Coins. By understanding the storytelling characteristics of MEME Coins in-depth, we can go beyond the simple MEME images and recognize their potential and opportunities. MEME Coins are not merely images but virtual worlds constructed through stories and narratives, capturing people’s interest and engagement. When exploring and investing in MEME Coins, we should focus on the content of the story, community participation, and project sustainability. Only by doing so can we better understand and leverage the value of MEME Coins and contribute to the development of the cryptocurrency field.
Community Fundraising
Creators raising funds from the public using cryptocurrency is not only a way to obtain community support but also a fundraising strategy in itself.
Some creators choose to use cryptocurrency as a tool for fundraising, which can be achieved through token sales (ICO) or crowdfunding campaigns.
This approach helps creators secure funding to support the development of their projects and ideas while also serving as a distribution strategy to enable broader participation and community building. This typically involves issuing their own cryptocurrency tokens, allowing holders to have a stake in the project and enjoy corresponding benefits. The advantages of this approach include:
- Community building: By issuing cryptocurrency tokens, creators can attract and establish a loyal community, fostering closer interaction and collaboration with supporters.
- Incentivizing participation: Individuals holding cryptocurrency tokens can gain specific rights within the project, such as voting rights, early access, profit sharing, etc., which incentivizes active participation in the project’s development.
- Decentralization: The use of cryptocurrency eliminates intermediaries, allowing creators and community members to interact and transact directly, promoting more open and transparent collaborative relationships.
It should be noted that for creators using cryptocurrency, fundraising, and distribution strategies are not mutually exclusive. In fact, many creators combine both approaches by raising funds to support project development and building a community through the issuance of cryptocurrency tokens to incentivize participation.
In summary, creators using cryptocurrency may have both a need for fundraising and a desire for a distribution strategy, depending on their specific circumstances and goals. Some creators may prioritize fundraising to support project development and operations, while others may focus more on community building and engagement.
Creators using cryptocurrency as a fundraising tool typically emphasize on raising funds and advancing their projects. They may leverage token sales or crowdfunding campaigns to attract investors and supporters for financial backing. These creators may place more emphasis on project feasibility, business models, and financial planning to ensure that the raised funds are effectively utilized for project development and realization.
On the other hand, creators using cryptocurrency as a distribution strategy prioritize community building and participation. They attract and incentivize holders to actively participate in the project’s development and decision-making processes through the issuance of cryptocurrency tokens. These creators may focus more on community engagement, social interaction, and the spirit of co-creation to ensure an active community and project sustainability.
In conclusion, creators using cryptocurrency have both fundraising needs and distribution strategy intentions. The specific approach depends on the creator’s goals, project characteristics, and the relationship between the creator and the community. Fundraising and distribution strategies can complement each other and collectively drive the creator’s creativity and project development.
Among them, the two stages that are most suitable for user participation are the Seed round and IDO. By allowing community users to participate in projects during the seed stage as early fund providers, they have the opportunity to benefit from the potential significant growth and appreciation of the project in the future. For project owners, this approach enables diversified funding sources, market validation, and brand building. For example, if a fundraising project receives positive feedback and financial support from users, it indicates market interest in the product or service and provides validation for further development.
IDO can reduce the time dimension uncertainty faced by users, as most projects can enable liquidity within 1 day after completing IDO. Users participating in IDO can then trade and invest in token shares.
