What Are Social Tokens?
At PurpleTrader, we strive to be the number one exchange to discover and buy community and brand tokens in a simple way. Community and Brand tokens are still relatively new types of tokens that fall under the umbrella of “Social Tokens.” We believe that community and brand tokens, along with other social tokens, will play a massive role in the future as blockchain technology continues to evolve and become more mainstream. Social tokens’ opportunities and benefits have already opened new foundations for digital economies, monetization, engagement, and community management.
In 2021, a market report by Forefront showed that the total market cap of key Social Tokens eclipsed $303M, a 500% growth from 2020. Since then, the market cap for those key social tokens is now valued at $1.66b, which isn’t even considering the new types of social tokens that have been issued over the past year. The market cap of social tokens is expected to grow exponentially in the coming years.
We understand that social tokens can be a foreign concept and overwhelming to understand, which is why we’ll help educate you through this process. This article will break down what social tokens are, the types of social tokens, and the utilization of social tokens.
Social Tokens Explained
Social tokens are a type of cryptocurrency that allows brands, individuals, and communities to collaborate and share digital ownership. The issuer of the token defines its benefits and uses cases. These benefits and use cases can include exclusive content, community resources, access to events, experiences, rewards, and voting power. Think of social tokens as a membership pass, but on the blockchain.
With social tokens, creators, brands, and communities have new abilities to monetize their content and engage with their fans in a way that rewards them for participating in their digital economy. The value of a social token is usually dependent on the value of the brand, creator, or community using it and the use cases. Most often, social tokens are not tied to financial interest and are not a representation of legal ownership of the issuer. “Creator coins,” “Community Coins,” “Personal tokens,” “and Brand Tokens” are other terms that are sometimes used interchangeably to describe social tokens.
The Different Types of Social Tokens
This section breaks down the different types of social tokens you might encounter on PurpleTrader and the characteristics of each.
Community Tokens: Community tokens are often created by a collective group that centers itself around shared mutual goals and vision. Community tokens are used to gain access to a community where you can vote, access community resources, and earn more tokens. Community tokens have often been associated with Decentralized Autonomous Organizations (DAOs). An example of a community token is $FWB, the native token of Friends with Benefits. Widely regarded as one of the most innovative and recognizable DAOs in the space, the Friends With Benefits DAO is a social DAO with more than 3,000 members — including artists, builders, and thinkers from across the crypto and cultural sectors. The $FWB token enables ownership and participation in the community. Another community token is $CULT, the native and tradable token for the CULT DAO - a DAO that services “those contributing or building toward a decentralized future.
Community Tokens are not limited to social clubs. $MANA is a cryptocurrency that facilitates the purchase of LAND (Non-Fungible Token), virtual goods and services used in the virtual reality platform Decentraland. Holders of $MANA can vote on the platform’s future. A user’s voting power depends on the quantity of $MANA and LAND they have.
Brand/Fan Tokens: Brand and fan tokens are often associated with companies looking for a new way to engage and monetize customers. The line between brand and community can seem blurry, but one distinction is that brands use tokens in a way that looks like a loyalty reward system. A good example would be the rise of professional sports teams that have launched fan tokens. Fan tokens are a way for sports teams to capitalize on their brand and reward their fanbase. One of the more popular fan tokens is $PSG - the official fan token of the professional football team Paris Saint Germain. Owning $PSG provides fans with voting rights on official club decisions, VIP access, signed merchandise, and other exclusive opportunities. In the past, $PSG holders could vote on kit designs, bus designs, official team motto, and even starting XI.
It’s not just sports teams that benefit from these types of tokens. CoinDesk - a content site specializing in digital currencies and Web 3.0 news - launched its social token, $DESK. Their website specifies that $DESK is not a financial or investment product, and instead, $DESK intends to be used as an engagement rewards program for their broader audience.
Creator Tokens: Creator tokens are often associated with content creators — musicians, artists, writers, and social influencers — who use creator tokens similarly to a fan club. Creators will use creator tokens to reward fans with different kinds of perks and levels of access. For creators, tokens can help mobilize a creator-centric community and build a digital economy around it.
André Allen Anjos, better known by his stage name RAC, issued his creator token $RAC to give back to fans who support the RAC project. Holders of $RAC have access to exclusive content, discord channel, merchandise, and more. For RAC, social tokens are a way to connect fragmented fans across different platforms and bring them together to grow the RAC project. Another example of a creator token is the token $ASH, a social token created by the popular digital artist Murat Pak.
That isn’t to say that non-creators can’t utilize social tokens. There have been some cases of people who have tokenized themselves to provide services and raise funds. One of the early pioneers of using personal tokens is entrepreneur Alex Masmej. Back in 2020, Alex launched his personal token $ALEX, as a way to fund his next big move. Holders of his coin were able to make significant decisions in his personal life. Additionally, Alex sold 10% off $ALEX supply against $20,000 in exchange for some of his future income for the next three years. Alex is now a co-founder of Showtime, a start-up that aims to offer a social media interface to the crypto community while enabling them to discover and share NFT art.
Utility of Social Tokens
While social tokens can be a lucrative financial speculation, the real value streams from the utility that social tokens can provide holders. That is why, whether you’re planning to launch a token yourself or looking to purchase social tokens, understanding the utility of social tokens will put you ahead of the game. This section will discuss the significant ways communities, creators, and brands utilize social tokens.
Access: Fans might want to buy the tokens simply for the access they provide. The idea of feeling a part of an exclusive and resourceful community is a critical value that social tokens enable. Below are examples of the types of access that social tokens can provide holders.
- Token Gated Access (ex: Private Discord)
- Exclusive Events (ex: $APE and $FWB parties, $CITY and $PSG VIP events )
- Early exclusive access to the material (ex: $GCR crypto-related content)
- Meet a professional sports player ($CITY and $PSG players)
- Discounts in an online store (ex: $RAC merchandise)
- Exclusive NFTS (ex: $WHALE NFT drops)
Engaging a Community: Social tokens as a reward can greatly incentivize engagement within a particular community. Members can be rewarded with social tokens for labor, community management, promotion, and interaction amongst the community. $RAC and $GCR are examples of social tokens that have been used to reward their members for contributing to their community.
Speculation: Some traders speculate on social tokens due to the volatility. When $APE first launched, the coin debuted at $5 and immediately surged over 250% within its first 48 hours of trading. Since then, the coin has fallen back to around the $4-$5 mark. It’s important to note that many social tokens don’t consider themselves an investment, so we urge potential investors to do their research before trading.
Self-Governing a Community: Social tokens can be used for community governance, allowing token holders to participate in crucial proposals and decisions. This type of democratic participation has been seen in DAOs — which often require a set amount of tokens to vote and make decisions. The CULT DAO sets itself up so that the top 50 holders of dCULT are the only ones allowed to make proposals to the community.
What is the Difference Between an NFT & a Social Token?
NFTs are non-fungible, meaning unlike social tokens and other cryptocurrencies, NFTs cannot be traded or exchanged equivalently with another digital asset. A good way to think of NFTs is that they are digital representations of assets and have been likened to digital passports because each token contains a unique, non-transferable identity to distinguish it from other tokens. For example, in the CryptoPunks NFT collection, not one of the 10,000 NFTs in the collection is the same, making each CryptoPunk NFT unique and valued differently.
Social Tokens are fungible, meaning that each unit of a social token unit has the same value and is completely interchangeable with one another, just like a currency or cryptocurrencies such as Ether or Bitcoin. For instance, if you look at the social token, $FWB, you will notice that each coin of $FWB is valued at the same price.
Both social tokens and NFTs can complement each other if used correctly. An example of utilizing both NFTs and social tokens is how the APE ecosystem works. ApeCoin, also known as $APE, is the governance and utility token that serves the popular APE ecosystem. The Ape ecosystem is known for its popular NFT collections, such as the Bored Ape Yacht Club, Mutant Ape Yacht Club, Bored Ape Kennel Club, and the Otherdeed for Otherside. ApeCoin opens up the ape ecosystem to those that want to be a part of the ecosystem but missed out on owning the NFTs.
Social tokens provide all their token holders the same benefits, privileges, and rights. NFT owners, on the other hand, can have special rights to a particular piece of a creator's work. NFTs can help create the community, and social tokens can help manage and grow that community.
Social tokens are a true product of the WEB 3.0 revolution, allowing for decentralization, connectivity, truthfulness, and greater utility. It is the next step for creators, communities, brands, and individuals to connect and engage with their fans or customers. Social tokens help value the social capital, reputation, trust, and intangible value that a creator, brand, individual, or community contains.
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