The Social (Token) Network: Rally, Friends With Benefits and the Future of Branding

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!llmind is a Grammy-winning producer. He collaborates with artists like Beyonce, Kanye West and Lin-Manuel Miranda – it’s a protracted record.

The secret to his success? An idea he calls “BLAP,” which initially stood for Beats, Love, Alcohol, Parties. He builds communities. This began again in 2007, in a Soho lounge referred to as Katra, the place he threw occasions for up-and-coming producers to bounce, drink and swap concepts on the best way to collaborate.

“It turned into a mini networking event,” mentioned !llmind, who then expanded to meet-ups in London, Berlin and throughout the U.S. He stored constructing. He launched an internet enterprise that offered instruments to musicians, like the “BLAP Kit,” a digital drum equipment of “over 2,100 one-shot WAV snares, kicks, hi-hats, percussion, claps, snaps and more.” (Along the manner, BLAP developed into Belief, Love, Action, Positivity.) Then he embraced Twitch, Discord and even digital actuality studios.

Then got here the $BLAP coin.

In April, !llmind used Rally.io, a social tokens platform, to mint the $BLAP coin, which goals to create a kind of “local economy” for his followers and group. The token provides you perks. Let’s say you’re an aspiring producer, hoping to someday work with Kendrick Lamar. If you pony up sufficient $BLAP, you possibly can ship !llmind “melody templates” – like a four-bar guitar riff or a piano loop with no drums – and he’ll make you a customized beat. Or perhaps you simply need !llmind to provide you a personalised video shoutout that you may publish on Tik-Tok; ship him some $BLAP and he’ll hook you up. BLAP can unlock on-line coaching programs, offers on his drum kits or a Zoom session to collaborate.

“This is the type of technology that I wish existed many, many years ago when I first started doing this,” mentioned !llmind. And these are the sorts of issues you are able to do with social tokens, the newest blockchain disruptor d’jour.

Quick primer: Social tokens are available three flavors, roughly: Creator tokens, group tokens and the token platforms. $BLAP is a creator token. “Friends with Benefits” is a group token. Rally is a token platform.

“Social tokens put the power in the hands of creators,” mentioned Bremner Morris, the CEO of Rally, a former govt at Patreon, and – most impressively – by some means in a position to pull off a daring Clark Gable mustache. “Creators have an independent economy that they own wholly.” And creators will be virtually something: guitarists, DJs, tech influencers, thought leaders, celebrities or streamers on Twitch.

Creators will be school athletes. Historically, even the stars of NCAA soccer and basketball groups, who drive an estimated $18.9 billion in revenue to their universities, have by no means acquired a nickel. Then one thing extraordinary occurred: All 9 Supreme Court justices agreed on one thing, deciding, in June, that scholar athletes might now revenue from their NIL, or “names, images and likeness.” Suddenly they’re eligible for social tokens. “These college athletes have valuable brands, and they’re going to make a lot of money,” mentioned Mason Nystrom, a analysis analyst at Messari who research social tokens.

Read extra: What Happens to a Social Token When Its Creator Dies?

Some have already began. Jaylen Clark, a sophomore guard on UCLA’s males’s basketball workforce – who additionally has a aspect hustle constructing a following on YouTube, Instagram and Tik-Tok – created the $JROCK coin on Rally. Bruins followers should buy $JROCK for the present value of $0.63, basically betting on his future. They’re shopping for a brand new form of fairness. If, someday, Clark will get drafted into the NBA and turns into an All-Star? This might make his followers wealthy.

Of course, it’s straightforward to visualise the reverse. Imagine if Greg Oden, the high prospect from the 2007 NBA draft, had been in a position to problem a social token. Oden was hailed as the second coming of Shaq. He was destined for the Hall of Fame. Then accidents torpedoed his profession, forcing him into an early retirement. If you aped into an $ODEN token? Rekked.

Kayvon Thibodeaux of the Oregon Ducks (Steve Dykes/Getty Images)

Clark isn’t alone. Kayvon Thibodeaux, a defensive finish for the Oregon Ducks (already with 4 sacks on the season), just lately created the $JREAM coin on Rally. There are many others. The platform, which launched in October 2020, mentioned it has 212 creators, of which 74% have constructed six-figure mini-economies with their tokens, and 5 have constructed ecosystems price greater than $1 million. Rally’s creators embrace the actress Felicia Day (who presents weekly hangouts for individuals who maintain her $GEEX coin), the artist Jen Stark ($STARK holders can get digital studio visits), and BT, the electronica DJ, who presents perks like non-public listening events for upcoming albums.

To assist be sure that creators are literally making good use of their tokens – and not simply ignoring them – Rally doles out common rewards to each creators and followers. Creators must hit sure benchmarks to obtain $RLY, resembling weekly progress in the quantity of token holders. “The rewards have been fantastic for creators,” mentioned Jeremiah Owyang, an influential tech blogger who used Rally to create a $JOW coin. Rally distributes a median of 2.2 million $RLY every week, in keeping with Morris, or about $1.5 million at present costs. The share for every creator? “It’s thousands of U.S. dollars each week,” mentioned Owyang. “And the rewards are not limited to the creators. My fans are winning with me.”

The catch

Are you a preferred creator, tattoo artist, podcaster, pole vaulter, mime or perhaps a 13-year-old TikTok star who amassed 7 million followers by the movies of you flipping pancakes, and you’re pondering of cashing in with a social token? Careful. Tokens take work. One neglected problem of social tokens, mentioned Nystrom, is that “you kind of have to provide perpetual benefits.” In right this moment’s world, should you monetize your community with a free publication that’s ad-supported, you possibly can merely cease writing the publication whenever you get bored. “But if people are buying your token, you have to continue to provide value, or have some exit strategy, which is fairly challenging.”

Just ask Joon Ian Wong, a widely-respected crypto reporter and researcher (and CoinDesk alum), who determined, as an experiment, to launch a $JOON token. He did it partly out of mental curiosity. Wong was intrigued by analysis suggesting that community currencies can jump-start and speed up a neighborhood financial system, resembling the pre-bitcoin experiment of the Brixton Pound in London.

So in June 2020 (a lifetime in the past in crypto), utilizing a platform referred to as Roll, he launched the $JOON coin. “It’s true … I have my own token now!” Wong tweeted at the time. Flash ahead to now. His takeaway? “I discovered that it’s just a sh**tload of work to keep a token going,” Joon mentioned, chuckling a bit. “Oh, that’s why central bankers have jobs, because you have to think of all these things.”

He had headache after headache. For instance, when he launched the token, he wanted to create a pool on Uniswap – this may let individuals purchase it. “So then it’s like, oh, s**t, what’s my pair going to be?” Should he go along with $JOON/ETH, letting individuals purchase $JOON with ETH, or $JOON/USDC, utilizing a stable-coin? He selected $JOON/ETH. Then he found that was a “terrible idea,” as the value of ETH was low at the time, however then continued to climb for the subsequent yr and a half, which meant that “all the ETH is taken out of the pool, and you’re left with a ton of $JOON, so you have to keep pumping ETH in.”

Then he needed to distribute the rattling tokens. “I couldn’t get it into the hands of people,” mentioned Wong, though he tried to provide it away on Twitter. He tried a sequence of meet-ups, utilizing a intelligent service referred to as Kickback that tries to forestall no-shows; you stake $JOON tokens to RSVP, and should you no-show, the tokens are dished out to the individuals who bothered to attend.

“All of this was manually done, and it was just very cumbersome,” he mentioned. (It’s seemingly that the platform of Rally, which hadn’t launched but, would scale back a lot of this friction.) Then Roll was hacked, the $JOON was drained, and Joon ultimately put the challenge behind him. But the $JOON token nonetheless exists in zombie mode. “Tokens never die,” mentioned Joon, noting that if he’s by some means elected president tomorrow, “maybe someone would pump 1,000 ETH into that pool.”

Despite all of that, Wong stays bullish on social tokens, as “the concept clearly has a lot of resonance and traction with a wide variety of people.” He additionally likes that tokens are greater than only a gussied up model of fairness. “It’s a lot more like loyalty points,” he mentioned, “which itself is a massive, massive industry.” Wong even serves as an advisor to Rally and works with Seed Club, an accelerator for token communities.

Which brings us to the second kind of social token.

Friends with advantages

“Community tokens” are trickier to outline. At coronary heart, they “help members share in whatever upside there is of a community’s value,” mentioned Nicole d’Avis, the schooling and group lead at Seed Club. She provides an instance from her personal life. As a mother, d’Avis spends loads of time on Mom Instagram with the Mom bloggers. “There’s tremendous economic power behind that demographic,” she mentioned. “And those platforms are profiting from the creative work of the community members.”

(Alex Zhang/Linkedin)

By “centralized platforms,” of course, we’re speaking about the standard punching luggage of Facebook, Instagram and Twitter. But take into consideration Clubhouse. Its worth skyrocketed throughout COVID. And how does it reward the contributions of its members? “The platform wasn’t that technologically advanced,” argues Alex Zhang, the de facto head of Friends with Benefits, a social decentralized autonomous group (DAO). “The people brought the value, and all of the value accrued to the platform layer.” It’s the individuals who spoke, it’s the individuals who listened, and it’s the individuals who obtained nothing. (Clubhouse, of course, would argue that members acquired worth by having fun with the platform at no cost.)

More philosophically, Zhang sees this as an virtually existential limitation of companies, an issue we are able to solely crack with DAOs and social tokens. “Corporations are a century-old institution,” mentioned Zhang. “Most of them were built with the framework of selling goods and services… They were not designed for these grassroots, community generated social networks, where the product is the actual human, populating the platforms with their ideas and content.” He mentioned {that a} new construction – fueled by social tokens, non-fungible tokens (NFTs), and DAOs – is required to “incentivize all the pieces in the game.”

But what do these group tokens do, precisely, apart from the standard crypto hypothesis? In the case of Friends with Benefits, as Zhang explains it, the tokens play two roles: gating and compensation.

Read extra: What Do DAOs Actually Do? – Will Gottsegen

The gating begins with membership. Friends with Benefits isn’t low-cost. Aspiring members must fill out an utility, be part of a Discord server and then purchase a whopping 75 FWB tokens; as of this writing, that’s a tab of round $8,000. Joon remembers an incredulous buddy telling him, “This is ridiculous … You’re asking me to join Soho House [the exclusive social club], and it costs as much as joining Soho House, but there is no house.”

“That’s accurate,” Joon informed his buddy. But then he had a comeback. “Chris Dixon isn’t hanging out in Soho House … If you want to hang out with Chris Dixon, he’s in a freaking Discord server.” Dixon, of course, is a outstanding web entrepreneur and associate at Andreessen Horowitz … very a lot a buddy with advantages. The FWB group is about the intersection of “culture and crypto,” with the implicit lure of hobnobbing with notables. And only a few days after my name with Joon, Dixon co-wrote a piece on why he’s investing in Friends with Benefits, believing it’s going to allow “a different kind of renaissance for the next evolution of the internet.”

The gating continues when you’re a FWB member. It’s free to learn all of FWB’s content material on-line, however it’s going to price you 1 FWB token to learn the publication. The gating will be literal. Earlier this summer time at Bitcoin Miami, FWB threw an “All Time High” celebration, however you’d must pony up 10 FWB tokens to enter (greater than $1000 at right this moment’s costs). Are social tokens the new velvet rope?

The second use of the FWB token is compensation. A community of 150 contributors works on six totally different groups at FWB: Editorial, Product, Events, Membership, and Cities. These members don’t work at no cost. They’re paid in FWB tokens. For instance, the tribe of FWBers quickly encountered an issue that vexes many on-line communities: the sheer quantity of dialog will be overwhelming, particularly on the Discord server. It’s robust to maintain up.

So just a few plucky members scoured Discord for the most fascinating posts, flagged them, and basically created a “TLDR” abstract that members might skim in a weekly e mail. The creators of this e mail had been paid in FWB tokens, and the e mail itself price 1 FWB token to learn. Now scale this idea. In concept, all of the chores, initiatives and grunt work of on-line communities – which frequently will get uncared for – could possibly be incentivized and powered by social tokens. Such is the potential of hyper-local economies.

The line between “creator tokens” and “community tokens” can blur. It may even be a false distinction. !llmind is a creator, however he’s additionally constructing his group. Friends With Benefits, a tokenized group, is full of creators. Or contemplate one of the first social tokens, $WHALE, launched in May 2020 by the outstanding NFT collector who goes by “Whale Shark.” The token is impressed by an influencer (so a creator coin), however the 25,000 $WHALE token holders act as a group (and DAO) by voting on issues like which NFTs they need to purchase or promote, what occasions they need to plan or the best way to construction the WHALE month-to-month distribution funds. “Over the last 12 months, we have seen 40 proposals being voted on,” mentioned Whale, whose $WHALE vault valuation is now “conservatively pushing close to $100 mil.”

$COKE coin?

Then there’s the angle for manufacturers. Joon had in contrast tokens to “loyalty programs,” and this could possibly be prescient. The chief advertising officer of each company on the planet, one might argue, needs to be being attentive to social tokens.

“Brands are 100% going to embrace this stuff,” mentioned Jeff Kauffman, who has a deep background in advertising and promoting, and, like !llmind, has spent most of his profession constructing communities, ever since that point in 2005 he launched a MyHouse web page for his native skydiving chapter. Kauffman has created a group token referred to as $JUMP – as in Jump into Web 3.0 – crammed with model and advertising consultants, and they’re all attempting to determine the best way to make social tokens work for manufacturers.

The motive for Kauffman’s optimism? Users aren’t the solely ones upset with Facebook. Brands are grumpy, too. “Facebook promised a direct connection between brands and consumers, but then Facebook pulled the ultimate rug,” mentioned Kauffman. Facebook’s “rug pull” was switching to a pay-to-advertise mannequin, resembling telling manufacturers they wanted to fork over cash to see their posts seem on timelines. “Brands don’t want to pay a sh**load on advertising, but they’re forced to by these big intermediaries,” mentioned Kauffman. “The hope of social tokens is that brands can do what they really want to do, which is have a real relationship with customers, and build a real community.”

So will we quickly see a $NIKE coin, a $PEPSI coin, a $TESLA coin? Yes and no. In the brief time period, Kauffman suspects that regulatory hurdles will maintain conventional, publicly traded corporations from creating their very own tokens … however he expects them to associate with new communities. He provides the instance of Patagonia. Imagine {that a} tokenized group kinds round an environmental platform – let’s name it the $GREEN coin. “Patagonia cares a lot about the environment,” mentioned Kauffman. “It’s not a stretch to see Patagonia partner with that community. That’s what we’re going to see in a really big way. Tokenized communities will partner with brands that share the same values.”

Or perhaps the regulation considerations can all be conquered, and manufacturers embrace tokens extra straight. That’s what Owyang envisions. “Brands will convert their loyalty program points into social tokens,” mentioned Owyang, simply as many manufacturers have aped into NFTs. Owyang is conserving cautious observe of the many, many manufacturers now dabbling in NFTs (he wrote a nice summary), and the record spans from Jimmy Choo to Campbell’s Soup.

Tokens could possibly be subsequent. Unlike loyalty factors, tokens are programmable and will be wired to do sure issues. “Instead of United [frequent flyer] points, those will eventually be social tokens. Those will grant access to their website and premium content, and to watch movies on the plane,” mentioned Owyang. Maybe this United token will allow you to entry the lounge at the airport. Or should you tweet optimistic issues about United, you’ll robotically get UNITED zapped to your pockets.

In this world of hyper-tokenism, it is likely to be a breeze to maneuver your rewards from one firm to a different. “Anyone who has ever tried to exchange points, like from Marriott to American, knows it’s a nightmare. It’s a horrible process,” mentioned Nystrom. But what if each Marriott and American use social tokens, and they’re simply tradable in a liquid market on Uniswap or Coinbase? “It would be awesome,” mentioned Nystrom, “and so much better for the companies, too.”

Maybe. But as !llmind jogged my memory, “It’s still super early.” He’s enthusiastic about the potential of his BLAP token group, but it surely’s a tiny slice of his total pie. !llmind has 37,000 followers on Twitch, 106,000 followers on Twitter and 342,000 on Instagram. He has 615 holders of his BLAP coin.

“The entire system is very new,” mentioned the producer, however he expects it to develop, and lots of his bets have been proper. Because at the finish of the day, !llmind causes, social tokens may help him and his friends “ultimately make a living as a creator.”