This piece was written in collaboration with Eliot Couvat as and exploration of Social Tokens and how to make the contributor experience more rewarding beyond the monetary. If you’d like to check out Eliot’s musings on the Social Token Revolution, make sure to follow him on Substack!
In her wonderful essay "The Social Token Paradox", Gaby Goldberg wrote that if you measure a community's worth by the price of their token, you'll reduce access to valuable contributors that may bring unique perspectives to your community.
Most DAO builders nowadays want the price of their tokens to go up without realizing that it's also what can lead them to their ruin.
That's why we shouldn't consider social tokens as financial assets, or, at least, not take their price as the measure of the community's success because, really, this is not where their value resides.
In a crypto world, where anything can become financialized, and anyone can make an asset out of anything, social tokens have emerged to unlock the power of nonfinancial goods and bring tangible value to social connections.
But it's essential that we first separate a social token's monetary baggage from the actual use case being built and show individuals that reputation & network are more important than money.
So how, concretely, do we show individuals that reputation & network are more important than token prices going up?
Today, people still mainly see social tokens as a financial asset when in reality, their true promise resides in the ability to build trust through reputation, helping individuals worldwide align their talents and build toward something they care about.
Indeed, as their name suggests, social tokens are, before anything else, the tokenization of human interaction and the opportunity it provides. They represent an itemized version of the value you add to the Web3 ecosystem. With social tokens, contributors in tokenized communities finally have something tangible and tradable to represent their work, connections, and history.
As Vitalik Buterin, E. Glen Weyl, and Puja Ohlhaver stated in their latest paper, "Decentralized Society: Finding Web3's Soul":
"Web3 aspires to transform societies broadly, rather than merely financial systems. Yet today's social fabric—families, churches, teams, companies, civil society, celebrities, democracy—is meaningless in virtual worlds (often called the 'metaverse') without primitives representing human souls and the broader relationships they support.
If web3 eschews persistent identities, their patterns of trust and cooperation, and their composable rights and permissions, we see, respectively, sybil attacks, collusion, and a limited economic realm of wholly transferable private property—all of which trends towards hyper-financialization".
Because they are earned the hard way, earned by contributing, making new connections, and providing value to a community, tokens represent status, reputation, and a voice within a group of like minded people.
Those concepts are perfectly illustrated and encapsulated in the $CLUB token.
When $CLUB - the social token of the Web3 accelerator Seed Club - launched a few months ago, only active members of the Web3 ecosystem, those holding multiple prominent tokens ($FWB, $FF, $BANK) or those who built projects through the accelerator could receive them.
They couldn't be purchased, and rewarded only individuals who pushed the space forward through active contribution. Because of this, $CLUB became a very precious token, one that people hold on to, no matter the market conditions at the time.
$CLUB, more than any financial upside, gives the opportunity to vote on the projects that will be accepted in the Seed Club accelerator. For $CLUB holders, having a voice and electing which teams to empower in this industry means much more than yet another get rich quick scheme
$CLUB is not about speculation but about reputation, friendships, and collaboration. The seed club team, through $CLUB, might have been one of the first teams to understand where the social tokens' power resides truly.
This is why social tokens will be the true unlock of crypto.
Tokenized communities are emerging as a new structural model that could leverage new coordination mechanisms and give a digitally-native way for individuals worldwide to collaborate through tokens.
"Web3 seems to be a toolkit for conjuring Scenius. More than financial speculation, web3 offers a set of tools (e.g., social tokens) that can align incentives in ways that allow groups to tap into their communal genius".
It might be the ERC-20 standard or the term "Token" that leads to the confusion of where their value lies. What’s clear however is that, in order to achieve this "Scenius", tokenized communities and DAOs have to build useful applications on top of the data social interactions provide - building utility beyond just the financial.
Tokenized communities have to embrace and share, through their culture, the non-monetary benefits of measuring contribution, curiosity, friendship, and an entire suite of human qualities that make this space worth working towards.
We believe the "Contributor-centric" approach could help solve the social paradox posed by Gaby Goldberg, enable a positive feedback loop of pride, coordination & ongoing collaborative vibes within your community, and let your people see their wins through a tangible asset, not just through a chart or a discord shoutout.
As we understand that social tokens are more than what price graphs show, our role as pioneers in this new avenue for credentialing is to build real-world use cases and create better experiments for the wider public to understand the possibilities.
This comes back to our question from the beginning - How do we show individuals that reputation & network are more important than money?
Today, people might still be attached to the idea of a social token as cash because no Web3 platform showcases beautifully in which communities you're participating in, nor how involved you are in them.
Social Tokens are great to reflect the quality of work and implications in communities, but we lack the design components and the story around it. In short, we have the technology but have no way for people to see and show what awesome things they made to push the space forward and what they can now do with their newly earned tokens.
Now, let's imagine a single app to keep track of opportunities to voice your opinion, stay up to date in the workstreams you're the most active in by showing if you’re part of the top 10% of the most active contributors. And even a way to organize the myriad social tokens you've earned through your valuable contributions to the space.
In our opinion, this "single app" should be more of a Dashboard than a Wallet per se. While the idea of a web3 wallet may sound enticing at first sight, maybe having your Social Tokens and DAO tokens in a wallet has a psychological impact on people's tendency to treat them as currency.
That's why we believe a better solution might simply be an interface that shows everything you can do with your Social tokens, similar to what Backdrop is doing.
Backdrop is a dashboard that launched a few months ago, and that helps everyone participate in web3 tokenized communities by showing in a well-designed interface what's happening in those communities. By visiting someone's profile, anyone can see if they have voted on a proposal, participated in an event, etc.
We think an app/dashboard similar to Backdrop, entirely focused on improving the social tokens experience from a contributor lens, can be the answer to making people understand what the value of a social token really is.
The dashboard should focus on one single question: "How can we create an interface that makes the experience of contributing and earning social tokens through value less of an exercise in constantly catching up?"
When people get the right interface, one that showcases their friendships easily, their work, and their implication in the space, maybe we'll start seeing fewer people considering the success of a token through its price and more through the story it tells.
Tokens quantify the depth of relationships amongst individuals, make social graphs more equitable and measurable, and most importantly, enable better coordination mechanisms – creating gamified incentives/rewards and building programmable digital economies.
Who's more likely to sell when the pressure and hype build up? Is there really a difference between holding 10 or 20 of a given token? All of these and many more are less of a riddle once you build an experience and purpose around your economy.
We need social tokens for the programmable digital economies they allow us to create, the ones that will help us tap into our collective Scenius. Though our activities have ever-more moved into the digital world, our tools to coordinate in a digitally-native way haven't much evolved.
With social tokens, a whole new world of possibilities is finally opening up, but at the condition of considering them as a representation of social capital, not as financial assets