Cointime

Download App
iOS & Android

What are Social Tokens

Validated Individual Expert

The crypto market has experienced tremendous growth over the past decade. The faster adoption of cryptocurrencies and their maturing ecosystems have paved the way for more Web 3.0 technologies to emerge, and social tokens are a prime example of these breakthroughs.

While initial coin offerings (ICOs) have faded, social tokens have leveraged a lot of the same underlying technology to power online communities. The combination of social tokens and NFTs could be transformative for the creator economy over the coming years.

Let’s take a closer look at social tokens, their use cases, the different categories, and how beneficial they are to the blockchain ecosystem.

Defining Social Tokens

Social tokens are essentially a type of cryptocurrency that a person, brand or organization can use to monetize themselves besides traditional avenues, like paid advertising, ambassadorships and sponsorships.

For a long time, creators have been restricted in their ability to monetize their work and get a fair share of their hard-earned money. That’s because platforms like Youtube, Instagram, Spotify and Tiktok take a cut of as much as 45% from their earnings. And that’s not to mention other content limitations in place.

On the other hand, with social tokens, creators can more fairly monetize their offerings, as there is no middleman, which also means they can also retain their artistic control all the way.

The idea started being explored a few years ago, when the crypto world saw a boom of influencers and brands being paid to promote initial coin offerings (ICOs) to help raise funds for blockchain-backed projects.

There are other terms that may be associated with the concept like creator coins or community tokens, but they all refer back to social tokens.

Social Tokens’ Use Cases

Social tokens are one of the many innovations emerging from the crypto industry and the they’re beginning to become adopted across a number of industries, including:

  • Arts
  • Entertainment
  • Content creation
  • Design
  • Culture
  • Gaming
  • Sports

Social tokens are decentralized and built on top of a blockchain, typically the Ethereum blockchain, following the same model as cryptocurrencies. They also stand at the intersection of DeFi (decentralized finance) and non-fungible tokens (NFTs).

Overall, social tokens are backed by the reputation of the underlying brand or individual. As such, tokens will have an increasingly higher value the more well-regarded are the entities they’re associated with.

Categories of Social Tokens

For content producers or any other entities looking to share their work online, these tokens can be a great opportunity to re-think their interests and create content that better aligns with the community that consumes it, unlocking new value in the process.

Social tokens can be broadly divided into three categories:

Personal Tokens (also known as creator tokens)

These digital assets are created by influencers and public personalities in return for forms of labor and services. Examples would include a token that can be redeemed for consultations or a one hour one-on-one with a celebrity. Some influencers are already selling social tokens, giving their fans access to monthly conversations with them.

Community Tokens

These tokens are targeted at engaging community members through exclusive content and perks like, say, access to limited edition merch, early access to content and entry into private events. Community Tokens are also a way to gain access to a specific community and they’re issued and controlled by a group, typically a decentralized autonomous organization (DAO).

Social Platform Tokens

Crypto tokens can also represent control over a platform that facilitates social token issuance and exchange, allowing holders to rip benefits from the growth of tokens issued or burnt in the network.

The rewards and the value that come with each token are determined by the issuer and they can vary depending on the sector, but holders can expect to be offered a vast number of benefits.

In the case of Whale, for example, owners of it get a fractional stake in Whale Shark’s NFT collection. Whale Shark is an influential collector in the NFT space and owns some of the rarest and sought after non-fungible tokens (NFTs) in the industry.

In order for users to purchase these coins, they’ll have to open a digital wallet like Metamask, through which they can buy different types of tokens and easily manage them.

In return, creators can use their personal digital currency to fund their projects and create the content their followers are expecting in return for their investment.

Benefits of Social Tokens

Now that we know what a social token is, let’s take a closer look at why they’re a crypto innovation that brings multiple advantages to the industry and the communities within it:

Community Benefits

Token holders can get access to private chats and forums, exclusive collectibles, early-access to content drops and share with the other members of the community not only the latest news about the brand of influencer they follow, but vote on decisions that affect the group, like who could be hired as a community manager or how best to manage the common treasury (if one exists).

Co-Owning Content

The emergence of social tokens eliminates the role of centralized authorities that have control over content and the ability to censor or limit creativity as well as establish rates or even demonetize creators. As such, token holders are the ones taking control over the creator economy of the online world. They co-own content, in the form of NFTs, in return for, say, crowdfunding the creation of a specific piece of digital art.

Co-owning Passive Income

By funding a brand or person, social token users can co-own NFTs that might be re-sold several times, and every time that happens, they might take a cut from the sale. In the same way, content makers might use smart contracts to establish the royalties associated with them and set out future earnings for when their NFTs change hands.

Fair Monetization

Instead of relying on donations through platforms like Youtube or Patreon, that might take a cut of transactions and earnings made by creators, fans might have economic incentive to help their favorite creators succeed when they know their investment is going directly to their accounts. On the other hand, that’s also a more transparent and fair way for creators to make money.

Vote of Confidence

Holding a social token can be a way for fans to show loyalty and continued support when it comes to the career of their favorite content creator. As they keep getting more popular and seeing their profile rise, so will the value of the token surge. The more tokens are bought, the bigger the bet is being made on a creator. An aspiring musician, for example, can release a social token that allows their fans to invest in their career while also profiting as their fame grows.

More Control Over Revenue

For creators, social tokens are a valuable way of building a closer relationship with their following, but also a profitable new monetization avenue that now only means higher earnings but more control over them.

Safety

As a social token runs on a blockchain, it’s virtually impossible that a network can be hacked or that fraudulent transactions take place there. Holders can be assured that their tokens are authentic (and that their digital ownership rights cannot be disputed), while creators and businesses know they’re engaging with genuine fans.

Final Thoughts

Social tokens might seem like a strange idea in a world where creators and businesses already have endless ways of monetizing themselves.

But the concept is not only intriguing but massively relevant in the context of the rise of the next iteration of the internet — Web 3.0 — that aims to connect people more directly. As such, social tokens are poised to become an important asset in this new economy of ownership over people’s digital presence and digital creations.

For now, they’re more an experiment than an accepted practice, but that might change in the near future as more publishers, influencers and online communities jump on board and create social tokens, attracting and building significant followings in the process.

Comments

All Comments

Recommended for you

  • BTC Surpasses $61,000

    Market data shows that BTC has surpassed $61,000, currently priced at $61,003.44, with a 24-hour increase of 2.88%. The market is highly volatile, so please ensure proper risk management.

  • US Spot Bitcoin ETF Sees $296 Million Net Outflow Yesterday

    On July 2, according to monitoring by Trader T, the US spot Bitcoin ETF experienced a net outflow of $296 million yesterday.

  • US Spot Ethereum ETF Sees Net Inflow of $14.92 Million Yesterday

    On July 2, according to monitoring by Trader T, the US spot Ethereum ETF saw a net inflow of $14.92 million yesterday.

  • Bitwise CIO: Current Market is at the End of the Cycle, New Bull Market to Begin This Fall

    On July 2, Bitwise Chief Investment Officer Matt Hougan stated that the sharp fluctuations in STRC combined with the pullback in MSTR stock prices are typical characteristics of the end of a cycle. As for when the market bottom will arrive, he could not provide a precise timeline, as no one can accurately predict it. Market bottoms can only be confirmed in hindsight. However, there are several key signals to watch for a potential bottom: First, MSTR trading below its net asset value per share indicates a complete shift from market greed to panic, which is a critical signal for bottom formation; second, the crypto fear and greed index hitting historical extremes and entering the extreme fear zone suggests it is a suitable time to position for a bullish trend; third, the negative funding rates in derivatives indicate that retail investors are much more inclined to short Bitcoin than to go long. The peak of market pessimism often presents a reversal opportunity. The current market is in a clearing phase, and the issues exposed by STRC are an inevitable part of the cyclical adjustment. All market cycles go through this painful period, which is unavoidable. The market is still digesting various risks, and I firmly believe that the bottom is near, with a new bull market set to begin this fall.

  • Bitwise CIO: The Role of Strategy in the Bitcoin Market Has Transformed

    On July 2, Bitwise Chief Investment Officer Matt Hougan stated that the role of Strategy in the Bitcoin market has undergone a fundamental change. For many years, it has been the world's most essential Bitcoin buyer, continuously providing bullish demand to the market. However, this era of one-sided accumulation is likely coming to an end. Moving forward, Strategy will flexibly buy and sell Bitcoin based on market conditions. Importantly, it will not engage in large-scale sell-offs. The existing mechanisms will not force Strategy to sell billions of dollars in Bitcoin each year; once a Bitcoin bull market arrives, Strategy is likely to return to a net buying position. However, in the next cycle, its influence on the Bitcoin market will be far less than in the previous cycle.

  • Uniswap Officially Launches on Robinhood Chain

    On July 2, Uniswap announced on platform X that the layer two network Robinhood Chain, developed by the Robinhood crypto business team, has fully launched Uniswap V2, V3, V4, and the UniswapX protocol. Uniswap serves as the core public automated market maker (AMM) on Robinhood Chain, supporting the Uniswap web interface, wallet client, and application programming interface (API) from day one. An AI plugin called uniswap-trading-tools, featuring three new functionalities, is also set to be released soon. Users can now utilize Uniswap on Robinhood Chain for token swaps, providing liquidity, purchasing stock tokens, deploying AI trading agents, and deeply experiencing this layer two network. This mature product system, trusted by millions of users, has now arrived on Robinhood Chain.

  • Senator Warren: Legislation Needed to Prevent Trump from Gaining More Cryptocurrency-Related Profits

    On July 1, U.S. Democratic Senator Elizabeth Warren stated that legislation is needed to prevent Trump from gaining more cryptocurrency-related profits.

  • Spot Silver Rises 4% Today, Currently at $60.90 per Ounce

    Spot silver has surged 4% today, currently priced at $60.90 per ounce.

  • Fed Chair Waller: Aiming for Real-Time Data-Driven Policy Making Within a Year

    On July 1, Federal Reserve Chair Waller set an ambitious timeline aimed at enabling the Fed to rely on new technologies that provide real-time economic data, thereby reducing dependence on lagging government survey data. Waller stated, 'My vision is that within the next 9 to 12 months, we will leverage new technologies to grasp the dynamics of the real economy in a synchronized, real-time manner, allowing us to make more informed decisions; we will no longer solely depend on data from government agencies that have statistical biases and are no longer applicable.'

  • Venice AI Raises $65 Million in Series A Funding at $1 Billion Valuation, Led by Dragonfly

    On July 1, Venice AI, an artificial intelligence platform focused on privacy protection, completed a $65 million Series A funding round, achieving a valuation of $1 billion and becoming a unicorn. This round was led by the crypto venture capital firm Dragonfly, with participation from Coinbase Ventures, NorthIsland Ventures, and others. Venice AI stated that the platform provides access to over 200 AI models and emphasizes user data privacy protection and a 'low censorship' experience. The company claims to have over 3 million active users, an annual revenue exceeding $70 million, and has already achieved profitability. The company plans to use the new funds to purchase graphics processing units and build its own data centers to reduce reliance on leased computing power and improve gross margins.