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Social Tokens: Are They Truly Valuable?

‘Social Token’ is the new buzzword. Many celebrities, musicians, and content creators are being onboarded, and tokens are being launched in their names. What value do these tokens hold? Are they here to stay? Do they truly serve the fans? Do they at least serve the content creator? With these questions in mind, I dove in to find out more.

I found a platform called Fyooz that markets itself as “social money for creators.” I found their platform to be well-organized and used by some popular artists. 

Lil Yachty’s token sale launch on Fyooz was hyped and sold out in twenty-one minutes and forty-one seconds. However, when we talk about Lil Yachty’s token being sold out, we need to look at the total investment size. The total investment in Lil Yachty’s token was about $305k, which is possibly the largest on this platform.

The total investment size of other artists’ tokens is significantly smaller. A $283 market cap with 37 tokens in circulation is too small to benefit anyone. An artist cannot support a token in their ecosystem if it was sold and held this little. Also, they will not be committed to keeping token holders entertained. 

What is the purpose of such minimally held social tokens? Is it a fun experiment, or is it supported by a functional ecosystem? 

I decided to look at another platform – Roll

On Roll, I found quite a few social tokens (even tokens with larger market caps). 

But when I tried to see the list of all markets, I ended up here:

Roll has integrated ezDeFi for trading/swapping tokens. However, some parts of the platform just did not work. Another issue is that most of these tokens belong, not to artists, but to other platforms that facilitate artists. I found very few actual artist-based tokens on Roll, and most of the tokens had neither description nor details. When I looked these tokens up on Roll and Google, I still could not find any details. Should I invest in a token with no details? I better not. 

This token, for example, lists its supply and other specifics. But what is this token about? What is the token’s website? Is there a whitepaper? What are the benefits provided by this token? As a potential investor, I am lost. This is the same case for 95% of tokens on Roll, while the remaining 5% provided only 3-4 lines of description: still an insufficient amount.

Roll may be a platform that can help facilitate the creation of a token. However, as it lacks the essential infrastructure to bring the tokens to life, it’s nothing more than that. It’s like an “ERC-20 token generator” that can create a blank token. There is much more to creating a sustainable ecosystem than just creating a token.

So let’s move on to our next platform: Rally.

Rally is better than the two platforms we discussed above. 

Every coin in Rally has a description, a log of activities, and the gist of all details one would require. It’s clear, simple, and to the point. Rally also has a detailed FAQ and Wiki that are both very helpful. Rally allows content creators to create their tokens and use them as they see fit. As their wiki says, “With this tool, it’s ultimately up to the Creator to use Creator Coin responsibly and respectfully with their communities.”

While Rally is a great platform for content creators to create and launch their tokens, it does not solve the inherent problems with social tokens. It does not prevent the creator from abandoning his/her token nor create an ecosystem that ensures a commitment between the content creator, the fan, and the platform. The value and utility of the token are left to the content creator. These two issues will lead to many dead and/or inactive social tokens. Nevertheless, the Rally platform does a good job of facilitating a token creation segment with a $RLY backing mechanism. Funds spent on the token turn into $RLY. $RLY backs the social token and creates its value dynamically. The technology is great and the ecosystem is open. A good start, but the onus lies with the content creator.  

In 2020, due to restrictions on normal life, social tokens provided an alternative or additive way for creators, artists, and brands to connect with their fan communities. Once the foundational concept evolved, artists like Akon, Ja Rule, and Lil Yachty all announced their social tokens. The NBA’s Spencer Dinwiddie and Japanese superstar soccer player Keisuke Honda also launched tokens. 

With this much social token activity, why are the prices of social tokens not skyrocketing? Why are the market cap and tokens in circulation too tiny for it to be practical? The answer is this: for social tokens to boom, better frameworks will need to evolve. Decentralized autonomous organizations may assist with this. The structure must be on multiple levels, as platforms must bind, but also add value. Artists need infrastructure to help them flourish. At the same time, artists need to be committed to their audience. Sticking to the commitment is important for sustaining the social token—for the artists, fans, and the platform. 

Where are we now in this ideal set-up? Far from where we wish to be.

Virtual engagements and livestreaming are nothing new. Many artists experimented with platforms like Patreon or tried to double down on monetizing their social media platforms like YouTube and Twitch. Performers now have the opportunity to monetize their popularity through social tokens that made the leap from crypto circles to consumer audiences. 

Fans and performers alike discovered inherent biases behind various platforms’ decisions to censor content. Big social platforms rake in huge profits and often give creators the raw end of the deal. In addition, creators can be de-platformed through unilateral decisions made by the platform.

Actual valuable creations are being made by influencers using social tokens to help their existing community-building efforts. Some have deployed personal tokens on apps like Discord to enable token-permissioned chats and channels. By integrating tokens into their existing communities rather than duping their fans into investing in third-party token projects, these creators are adding value to their brands and proving the usability of cryptonomics. 

Creators are excited by the idea of using their token to build their economies and interact with fans on their terms. Blockchain takes the decision-making process out of the hands of large platforms and puts it in the hands of creators, their fans, and community members. It’s up to the creators and their communities to decide how the creator’s social token will be used and valued. 

This seems like a fine idea, but there are a few hitches. For one, artists or performers are mostly non-technical. I expect celebrities like Logic and Maisie Williams to create their own currencies, shifting the narrative from ‘which creators are launching tokens?’ to ‘what they are doing with their tokens?’. Grading social tokens on their usability and utility is the key.

I’ve noted that almost a good portion of the social tokens are based on experiences. If those experiences are integrated into the social token platform, it will make for a very sustainable and committed ecosystem. Yes, Rally allows artists from Twitch, YouTube, Twitter, etc. to create tokens, but unless a bridge is created between the social token platform and content creation from the artists, the token is not viable in the long run. 

With this in mind, I ran into ZapTheory–The Social Money Platform–which helps create social tokens like every other platform. But what really differentiates them from every other platform listed above is that ZapTheory has an ecosystem that includes a separate yet related company, ZapLife–The Ultimate Livestreaming Platform. What makes this relationship even more exciting is that both ZapTheory and ZapLife are represented by a social token called ZapCoin. I was amazed at the setup where the fans actually sustain the whole infrastructure through their direct participation with the content creator on both of those platforms. In fact, the fans turn into content creators themselves as they engage in a dynamic way with celebrities and influencers. 

The token holders of ZapCoin have the opportunity to vote and influence the future direction of both platforms, such as what features to build out and even how to structure the revenue model.  The artists are committed to creating exclusive content, events, and engagement for their participants. On ZapLife, there are virtual gifts via in-app purchases, and the ability to cash in on them creates an earning potential for both the artists and the participants. Unlike Instagram Live, Facebook Live, and other social media platforms,  participants can ‘go live’ and ‘be’ in the event rather than just passively viewing and commenting. This can sustain the value of the social token for token holders, and encourage the artist to regularly create content.

To recap, ZapCoin has two platforms: 

  • ZapTheory – helps artists launch their social tokens, and investors can invest in the growth of the artists via incubators referred to as “wombs”.
  • ZapLife – people can participate and feel they are part of the action by viewing and co-creating music, content, and dance.

Jim Jones is currently one of the prominent artists on this platform. Unlike other platforms explored above, the social token page has all the information a fan or an investor needs to decide.

The best part? It allows US investors to join the opportunity as tokens created on this platform pass the Howey test and are designed and engineered to be in compliance with SEC regulations. Every token buyer needs to engage on the platform with prescribed actions to unlock the tokens and ensure effective community engagement. 

Both the artist and their fans participate in the activities like a live party. Fans can log in to the ZapLife app to participate in a live performance of the artist, and even send or receive virtual gifts. 

While some of these features are not currently live, it’s expected to be released in the coming months. Overall, it paints a promising future for social tokens, if they can keep up to their commitment to developing the platform.

This arrangement allows for three levels of interaction for the performer and the fan base.

  • Structure
  • Process
  • Community

These levels help to sustain the system, which allows consistency in giving what the fans want. Thus, artists have a revenue model and fans ensure that the artists are committed to their craft. 

After reviewing various players in the social token sphere, I realized that creators, artists, brands, and their fans need to focus on the long-term value-creation and partner with platforms that aim to build richer solutions for community management and monetization. I picture a great year for social tokens where influencers will tap crypto to engage their fan bases with a live streaming party, in addition to token-permissioned chat, voice, and video functionality.

As more developers get in on the action, DeFi enthusiasts will develop the financial infrastructure needed by celebrities to bring their fan bases into crypto. Social tokens will go down in history as a bright spot of 2021, and may perhaps serve as the catalyst for mass adoption.

What are your experiences and expectations with social tokens? How do you see it evolving over time? What other platforms do you think should be part of this review? How was your experience with some of these platforms? What’s your favorite social token? Send me a shout-out on Twitter with your views: @KarnikaYashwant.

This post was last modified on June 13, 2021 10:49 pm

Karnika E. Yashwant

A prolific writer, KEY brings an insider perspective to blockchain ventures and crypto startups. He shares cutting edge content marketing strategies from his 11 years of management experience. Perfectly balanced in mind and body, he runs marathons, target-shoots, engages in extreme sports and takes a vacation break in 5+ countries annually.

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