Social tokens are rapidly transforming online communities. From enabling equitable pay for creators to coordinating activities for communities, these virtual currencies disrupt traditional ways of thinking about our online relationships and offer a vibrant tool to build entirely new worlds.
But why the shift toward social token communities? Why not just use fiat currencies for payments and ToS contracts for agreements?
In this first installment of FF Learn: Social Tokens, we explore the historical and contextual precedents for social tokens to better understand their world-changing potential and how they reconfigure the relationship between capital and labor.
“Over the past 20 years, we’ve seen people create content that has been proved to be worth billions of dollars. This largely goes to platforms. We’re simply posing a question. What if instead of creating content on the web, you could create your own capital?” - Bradley Miles
Social Tokens are part of a larger movement away from web2 and towards web3. According to Ethereum's Development Documentation, web2 is the internet as we know it today, one "dominated by companies that provide services in exchange for your personal data." Represented by companies like Facebook, Google, and Spotify, web2 is often criticized for its exploitative business models, wherein owners capitalize off the free content generated by creators.
Web3, on the other hand, hinges largely on blockchain technology and the concept of a decentralized internet. For social tokens, blockchains allow for decentralized coordination, trust-less and secure transactions, and ownership/power that's distributed in a more democratic fashion. Where web2 favors paper contracts, free labor, and fiat currencies, web3 favors "smart contracts" (automated code-based contracts accessible on a public blockchain), shared ownership, and cryptocurrencies.
Which is where social tokens come in. A social token is a form of cryptocurrency that gives power back to creators, facilitates incentive alignment, and moves us towards an open and participatory economy with greater access to ownership and less reliance on closed, for-profit, and extractive web2 platforms. This movement represents a shift in economic power away from hegemonic platforms and towards communities and creators that generate value.
|Social Media||Social Tokens|
|Digital Content||Social Capital|
|Relationship Graph||Ownership Graph|
“Artists have historically been deprived of capturing their value by a sea of intermediaries like corporations and platforms that have a monopoly on creative ownership. I’ve been fascinated with crypto for years and its applications beyond currencies, and believe that it can create a new paradigm for creative ownership directly between artists and their communities. This new paradigm is what I want to pursue with $RAC and I want to put it in the hands of my existing fans and community.” - RAC
Social tokens play an important role in this new web3 economy, unleashing creative potential and leading to new creative business models. It’s why we at Forefront are focused on incubating exciting projects pushing boundaries in this space.
Social tokens, and their ability to empower creators and communities, fit within a larger context of the “creator economy” and the “ownership economy,” all of which intersect with ideas surrounding the future of work.
“Creator economy” is a term used to describe an economic model in which creators and cultural producers make money from their audience, directly or indirectly. Often, this is used to describe web2 technology and tooling that allows creators to interface with and sell directly to their community. The creator economy has evolved in several stages over time, beginning with creators monetizing primarily through advertising on UGC platforms, to direct monetization through patronage and support, and now towards new crypto-enabled models of creator- and community-driven microeconomies.
The conceptual cornerstone of the creator economy is the idea of “1,000 true fans”, first written about by Wired founding editor Kevin Kelly. In his original essay, Kelly argues that 1,000 true fans are all a creator needs to make a living. As an example, if you have 1,000 true fans that purchase $100 worth of merch, tickets, artwork, etc. per year, you will have made a six-figure income as a creator. This means that artists and creators can create sustainable income by serving passionate niche communities instead of seeking to find the biggest audience.
Although web2 creator economy tooling has given creators access to more ways to monetize their work, there is a structural problem with creator reliance on web2 platforms: They do not share ownership with the creators who generate its value. Instead, they are often owned by venture capitalists who have inherent competing interests with creators who rely on platforms.
“For a long time we’ve seen creators creating a ton of value for their communities and ecosystems as a whole. There’s never been a way to share that directly with their fans and community members. The creator economy, to me, is a relationship with creators and community to share value with one another.” - Cooper Turley
What social tokens enable is a web3 future, where creators and communities can organize independent of any particular platform and capture the value they create.
Meanwhile, “ownership economy” is a term used to describe alternative models to web2 value extraction wherein networks can be “built, operated, and owned by their users”.
“The ownership economy doesn’t always mean a literal distribution of tokens, stock options, or equity. It also doesn’t necessarily mean that an application or service is entirely built on a blockchain. Rather, it means that ownership — which may manifest in the form of novel economic rewards, platform governance, or new forms of social capital — can be a new keystone of user experiences, with plenty of design space to explore.” - Jesse Walden, Variant Fund
More recently, both the “creator economy” and the “ownership economy” have begun converging to suggest new ways that creators can build community-owned networks.
Social tokens are a tool that creates new possibilities for self-organizing microcommunities and new forms of human organization. While tokens can be used for many purposes and represent many things, one thing that tokenized networks can enable is community ownership over a network.
Although social tokens are not explicitly linked to the concept of DAOs (decentralized autonomous organizations), they are often used in tandem and in mutually reinforcing ways. Forefront, for example, is a DAO that uses social tokens at its core. Social tokens are also often used within communities that function in ways similar to digital guilds or cooperatives, which further underscores the blurring and overlap between DAOs and other social token-based communities.
"Although many DAOs would not embrace the label of digital cooperative, one could say DAOs embrace cooperativism as a protocol, meaning an evolving set of relational practices that are distinct from traditional corporate structures or decentralized autonomous corporations, because they prioritize member ownership. The label cooperative is further qualified here by digital because today DAOs act primarily to coordinate around digital assets." - Kei Kreutler
In many instances, a social token may also serve governance functions, like creating or voting on proposals on Snapshot, which allows members of a community to have both collective upside and a democratic voice and codetermination.