The Social Token Bible

By Mason Nystrom

Apr 5, 2021 ⋅ Enterprise Research

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Preface

Social tokens are an intriguing category of cryptoassets. Using social tokens, creators and entrepreneurs could unlock new monetization opportunities leading to a tremendous amount of value being created by this emerging asset class.

Disclosure: The author of this report holds cryptoassets and may own assets mentioned in this report. Please see our disclosures page for more details.

What are Social Tokens?

Since we’re in the infancy of social tokens, the language and definitions are not entirely agreed upon. While the categorization of social tokens will change over time, this report outlines a foundation for how to classify social tokens as an asset class and explain their value proposition.

Generally speaking, social tokens can be divided into a few categories:

  1. Personal Tokens - issued and controlled by a primary individual
  2. Community Tokens - issued and controlled by a group, often managed by a decentralized autonomous organization (DAO)
  3. Social Platform Tokens - tokens that represent control over a platform that facilitates social token issuance and exchange

Why Would An Individual Issue a Social Token?

As Hasu describes, tokens act as a catalyst to alleviate the cold start problem all early networks face. The cold start problem – also termed chicken and egg – relates particularly well to any sort of content creator or influencer. At first an influencer starts creating but has no community (YouTube subscribers, newsletter readers, etc). And it’s not until an influencer hits a certain number of community members/followers that their flywheel can truly take off. So creators are able to sacrifice future personal benefits (e.g. profits) and some utility to their users in exchange for accelerated adoption and growth.

In the case of issuing a personal token, a creator makes the notable sacrifice of revenue since the entrepreneur effectively dilutes their future value in exchange for capital. This value is distributed to the earliest adopters/followers who then are financially incentivized to grow the creator audience. A social token acts as a hybrid combination of startup capital and early adopters, both of which are essential to the development of any network.