As social platforms like YouTube, Facebook, and Instagram became more and more established parts of our lives, new opportunities and spaces opened up for creators to grow their personal brands, get their voices heard, and build their communities.
In our day and age, almost all of us have become a part of an online community, if not many. From dropping comments and liking videos to reacting to stories with emojis and participating in polls, every interaction we make on a creator’s page on social platforms supports the creator and helps them expand their community.
This web of interactions creates an ecosystem called the creator economy when financial support mechanisms such as monetization, subscription fees, purchasable products, and merchandise get into the picture. With web 3.0 technologies and social tokens in the crypto world, the creator economy has started to take a new turn that enhances the relationship between creators and fans and helps build stronger communities! Read on to find out how social tokens work and which factors top social token cryptocurrencies take into account for supporter incentivization and engagement.
Benefits of Social Tokens
So, what are social tokens, and how can they contribute to the creator economy? Social crypto tokens can be defined as digital subscription cards that can represent individuals, communities, and personal and commercial brands.
Below is a list of social tokens’ benefits and how they can enhance the creator economy:
1. Community Building
Social tokens allow creators to build a dedicated, incentivized, and engaged community around their brand, work, and passion. This way, creators and brands get to flourish with their communities as the value of a social token increases when the creator or the brand grows and climbs up the ladder to success.
As creators no longer have to share a percentage of their revenue with third parties and rely on sponsors for funding, they can take control of the artistic wheel and offer a personalized and an authentic experience to their supporters.
Furthermore, fans can get access to exclusive perks and rewards and make money by buying social tokens and selling them when the price goes up, which encourages the entire community to participate in collective growth and enhancement.
As an example, Snapmuse.io’s utility token SMX is a tool designed for social token holders to benefit from web 3.0’s thriving creator economy! When their favorite creator drops a brand new CreatorPass collection, fans can get access to them through SMX tokens, get discounted SMX tokens based on engagement, and hold SMX to get exclusive perks and rewards.
In the traditional sense, creator and fan interactions are maintained through third-party intermediaries such as social platforms or paid membership websites that get a portion of the revenue share. In this aspect, social tokens open the doors of self-monetization for creators and are renovating the dynamics of online communities.
Social tokens can be used as a tool for governance within the community through which token holders can have voting rights and be involved in decision-making processes for upcoming projects, releases, and content.
How Do Social Tokens Work?
Social tokens are created using cryptographic smart contract technology on a blockchain network such as the Ethereum network. The difference between social tokens and crypto coins is, unlike social tokens, crypto coins are native to a blockchain. On the other hand, social tokens are not native to a blockchain; instead, they are built on top of existing blockchain infrastructures.
A token’s smart contract specifies a variety of factors, such as the total supply of social tokens, their price, and distribution. As the amount of total supply limit needs to be set when creating social tokens according to the scripting standards of blockchains, the values of social tokens increase with demand.
While the most common standard for tokens on the Ethereum blockchain is ERC-20, some social tokens are also created using the BEP-20 standard on the Binance Smart Chain or the SPL standard on the Solana blockchain.
Types of Social Tokens
While social tokens are mainly categorized under two types, personal tokens and community tokens, we can also include platform tokens in the classification of social tokens listed below:
1. Personal Tokens
Personal tokens allow creators to monetize their work without relying on third-party intermediaries and sponsors. With these types of social tokens, creators can establish a reward system for their supporters, such as giving early access to their content, new releases, private community Discord channels, and exclusive events.
An example is Alex Masmej’s $ALEX token. Selling his own personal token on the market helped Masmej raise the money he needed to move to San Francisco, with a promise to share a portion of his income with his supporters for the next three years. The token holders were also given voting rights for Masmej’s daily habits and decided whether he would wake up at 6 A.M., stop eating red meat, or jog 5 kilometers every day for a month.
2. Community Tokens
While community tokens may offer perks and rewards that seem similar to personal tokens, the central difference between the two is that community tokens are mainly created by decentralized autonomous organizations, otherwise known as DAOs, and they represent a community or a group of people who share a common interest or goal.
These types of social tokens are issued to incentivize contribution and participation in the community and reward community members for their engagement. In this sense, community tokens follow a paid membership model, and the membership of the token holders has the potential to gain value over time.
3. Social Platform Tokens
Social platform tokens offer governance opportunities of a social platform and burn mechanisms to the token holders.
An example is CHZ, the native utility token for the Chiliz platform, which is a blockchain provider powering sports and entertainment ecosystems Socios and ChilizX. Sports fans who hold CHX tokens can attend exclusive meet and greets with the team and have voting rights to participate in their favorite football club’s decisions, such as official bus designs, the message on the captain’s armband, corner flag designs, and jersey designs. Sports clubs Chiliz has partnered with include FC Barcelona, Paris Saint-Germain, Juventus Turin, Arsenal FC, and more.
Key Factors to Consider When Creating Social Tokens
If you are thinking about issuing your own social token and searching the web to see the characteristics of the top social tokens, please keep in mind that you should not be quick to jump to conclusions. The best social tokens are the ones that are created with careful planning and consideration, taking into account what the token promises and the duration of the promises.
Here are some key factors to consider:
- Purpose: The type of social token you create is related to the purpose of your social token. Consider whether you want to create a social token to monetize your work, build a community, or incentivize supporters and community members.
- Tokenomics: Tokenomics are related to the factors that impact a token’s value and use case, such as distribution, supply and demand, token burn schedules, and incentive mechanisms like rewards and benefits you will set for token holders.
- Community: Whether you want to build a community or strengthen the bonds within an established fan or supporter base, knowing the dynamics in your target community and considering how you will encourage engagement and what type of perks and rewards you will offer is a safe way to start.
- Blockchain Platform: As blockchain platforms have different features, benefits, and limitations, you should decide what blockchain platform you will use to issue your social tokens.
- Legal Considerations: If you are thinking about issuing your own social tokens, it is often recommended to seek the guidance of actors specialized in web 3.0 or lawyers to avoid unwanted outcomes.
Social Tokens and Web3
Web 3.0 technologies focus on decentralization and self-governance principles, and as information on a blockchain is stored in an open and transparent ledger, transactions can be made without the need for third-party intermediaries.
With the corporation of social tokens into web 3.0 platforms and environments, creators can empower their brands and communities and directly receive a large portion of their income without intermediaries that exert artistic control over their creative processes.
As an example, web 3.0 platforms like Snapmuse.io use blockchain technology to empower the connections between creators and fans and enhance community engagement, incentivization, and social media experiences.
On Snapmuse.io, fans can become part of their communities, support their favorite creators by minting CreatorPasses, join private Discord servers, and get exclusive perks and rewards. Furthermore, CreatorPass holders can get discounted SMX, the utility token native to our platform, and get access to exclusive benefits by holding SMX tokens.
Social Tokens vs. NFTs
Social tokens are often compared to NFTs, but although they are both built on blockchain technology, their functions and use cases differ.
NFTs are non-fungible digital assets that are unique in value, and they cannot be exchanged for something that is similar in value. NFTs are digital proof of ownership, and they monetize a digital artwork or creation.
Social tokens, on the other hand, are fungible digital assets as each unit of a social token is similar in value. Social tokens have a more community-centric focus and can be used to monetize the creator rather than a specific work while also offering benefits, perks, rewards, and governance for community engagement and incentivization.