Interview Transcript

Tom (00:01):

Hey, everyone. Welcome back to the podcast. Today, I’m with my cohost, Piers Kicks, and we have Jess Sloss, who’s instigator at Seed Club, and Cooper Turley, who has quite the CV, but he also mainly does crypto strategy at Audius. He’s a social token manager, he’s a contributor to Defiant. Really amped to have you guys on to talk about your social token post. How’s it going, guys?

Cooper (00:22):

Doing well, man.

Jess (00:22):

Good.

Cooper (00:22):

Thanks for having us.

Tom (00:27):

Cool. What was the impetus to write a social token year in review? Whose idea was it?

Cooper (00:33):

That’s a good question. Jess, do you remember who teed it up, that idea? I think it was Carlos, huh?

Jess (00:37):

Yeah, I think so. We have a really active group chat around Seed Club, and I think just a lot of these ideas just emerged from somebody throwing something in that chat, and I think Cooper took it by the horns and turned it into this collaboration between Cooper, some people, and Carlos from Forefront.

Cooper (00:55):

Yeah, and I saw this opportunity to basically recap all the stuff we had been talking about. I think at the end of the year, everyone’s looking for a recap year in review, et cetera, et cetera. Rather than focus on a specific project, I wanted to take a step back and be like… Social tokens are still small enough that I feel like we can really give an overview on the entire industry and ecosystem. I think everyone was expecting there to be a DeFi year in review, but I don’t think anyone saw social token year in review coming. On my mind, it was a way to categorize everything that’s happening and give a little bit more legitimacy to all this stuff that I know that Jess and I are really passionate about.

Tom (01:28):

How did social tokens get their start? I feel like there’s been a lot of waves here and there. Some people are tokenizing their time, and other people are tokenizing other things. But I feel like it’s just bubbling up a little bit from everywhere. What was the social token push?

Jess (01:46):

I think there’s a history that even comes before what we talked about on the year in review. It stems out of the founding of Ethereum and this idea of being able to tokenize individuals or have individual tokens. I don’t think we get into the detail there in the report, but some of the earliest examples are people tokenizing their time. Matthew, Vernon, or what Peter had done with his magic token. Really clear use cases where somebody is buying a token to get access to some sort of service or privilege from a person.

Cooper (02:26):

Yeah, and I’ll add to that. I think adding a financial value to social capital is something that’s pretty unique to crypto. We can basically tokenize any asset or any category of service, and I think that this sector particularly was taking a step back from a deeply financial DeFi-type scenario to more like, “Hey, I’m either a human or a community or a brand, and I want to put a financial value behind my services, and this felt like a good way to do that in a new and exciting way.”

Tom (02:53):

Yeah, it’s interesting. I guess the question is, what’s the most prominent social token you think that’s launched? In your post, you guys share a lot. Peter Pan made the magic token to share his time. You have ConnieDigital social tokens with HUE token. There’s a lot of them. What’s the most prominent in your guys’ mind? Obviously, they’re all different.

Cooper (03:15):

Jess, I’ll let you take that first, and then I’ll add in.

Jess (03:18):

Yeah. I think the largest is WHALE, which started off as a basket of NFTs. WhaleShark.Pro launched a central token that represented, that’s involved essentially a growing vault of NFTs, but it really spun into multiple associated communities and used those tokens as a way of incentivizing or sparking new communities alongside it. The work-in-progress podcast and community and metaverse experiences is one of those derivatives. I think that, just from a market cap standpoint, it’s the largest. But there’s also a lot of really interesting communities that I think are really gaining traction and are focused much more on the community dynamics, so this idea of wanting to be in there and getting a lot of value of being a part of the community versus just a token price, which I think is one of the big themes you’ll see emerge in this space. It’s just how we balance off those two. What’s a good way of measuring success in this space? Is it just market cap, or is it some other measure? I think most of us are leaning towards it being a mix of that, but some other measure being important.

Jess (04:26):

One of the communities that I’m most excited to be a part of is what the Friends With Benefits community is doing. Every single time I go back into that Discord, there’s a ton of new comments on every single new channel and a bunch of insight there that I just couldn’t get anywhere else. I feel like a part of this thing that gives me access and new ideas in a way that maybe the internet did or Twitter did in the early days, but isn’t quite the same right now. I know Cooper’s deeply involved with Friends With Benefits, so I’m interested in what his thoughts are.

Cooper (04:57):

Yeah. To answer that question, I think that word prominent is really interesting. I’d probably say the answer to that would be RAC token, and obviously, I’m biased on this because I’m involved with the project. But when I think of social tokens, I think of what is a stamp of approval from a mainstream lens. RAC being a Grammy Award-winning musician, him leaning into this space and showing that a musician can embody Web3 and align their community felt really big to me. I think it’s the start of this wave of influencers, high-profile individuals, communities leaning into social tokens. That specific event felt like it had the most impact for the space this year.

Cooper (05:31):

Beyond that, I would really echo Jess’s point that the most interesting social tokens are the ones that have really vibrant communities, right? FWB and WHALE specifically, those Discords were incredibly active and still are active today, and I think that the token played a big role in that. So, you can think of social tokens from a vanity side of things. There are big names getting involved with social tokens. But on a more deep level, I think that these community-based tokens, where there’s people that are interacting every day, and they might not be showing the token, but they use that community as a foundation or a home for themselves, are the ones that I found the most value out of personally.

Piers (06:07):

Definitely agree with what you suggest there. Been super impressed, obviously, with the evolution of WHALE and, as you say, how active it remains now. Obviously, there’s all kinds of initiatives within that community. I originally found it pretty crazy looking at the actual value, obviously non-fungible, value the WHALE vault, looking at the premium that the actual token trades at versus what supposedly the binding instrument, the actual purpose for it. But you quickly realize that there’s a communal aspect on top of it, which gives it great value. And once they’ve established that user base, it’s really awesome to then see them cross-pollinate with others. The RNG example is a really cool one, where we had the massive tidal wave of WHALE users came into… Nearly called them losers then. My bad. WHALE users came into the RNG Discord, and it was cool to see that tsunami happen.

Cooper (07:01):

Yeah, totally agree. And I think to your point about the NFT origins of WHALE, I think that played a huge role in why that community’s been so successful. When we think about crypto and the different subcultures, the NFT one is one that’s very deeply intertwined. And I know that, specifically with Discord, that’s a native platform for basically all these users, so them having something to rally around like a token, the success of that I think was largely intertwined with the culture that was being focused on for that community specifically.

Tom (07:27):

Guys, how do you… Oh, sorry, Piers. Go for it.

Piers (07:29):

I was just going to really quickly add there that… You mentioned that it is built into the Discord there. Having spoken to WhaleShark, and that was one of the core reasons that they went for actually building everything right into the Discord. Obviously, we have all these tools to do so now, but the rationale behind that being not wanting to fracture the user base across different interfaces and stuff early on. I think the success of that project is a real testament to that, and we have all of these cool integrations now across Discord, which are really exciting.

Tom (07:58):

Guys, quick question for you on WHALE, for anyone here. How do you break down or bifurcate the difference between a social token and a DeFi token? If I look at WHALE through a DeFi lens, hey, if I own the token, I have a claim on a balance sheet of assets, right? But if I look at it through a social token lens, hey, it’s a vault that has a ton of assets. There’s so much community involvement. How do you decide between the two classifications there?

Jess (08:26):

For me, the core is what is the thing that we have tokenized first. WHALE might be a unique example, but if we go down the list of the other 20 or so projects that we listed in the report or a list on Forefront, there’s a lot more of this social capital that’s being pooled or being leveraged to spark a community. I think there’s a natural tendency, or at least most of these communities start to look kind of like DAOs. And as more infrastructure builds out, there’ll be a lot more on-chain-type revenues and more fundamental ways of analyzing the value here. Where do they come from, what was the initial intention, and where do you have to see the final evolution of these things? And I would expect you’re going to see a big mashup of DeFi, two-lane, interesting community integrations, great storytelling, and these fungible tokens.

Cooper (09:25):

Yeah. I don’t think that they are mutually exclusive. I think the best social tokens will have DeFi characteristics in terms of cash flows, as Jess alluded to. I think how you can distinguish is that, for social tokens, the primary use cases are social in nature. The first thing you tell people about is this token’s used to join a Discord, this token’s used to get exclusive benefits or to get discounts on merch. And that’s drastically different from a governance token in DeFi, where you’re governing this big protocol that has a lot of moving pieces technically, has cash flows in different treasuries and stuff like that, and it feels a little bit more human in nature. It’s not to say that DeFi tokens aren’t human, but I think that social tokens specifically, it’s starting with the focus on the individual rather than the whole protocol or technical aspects of the project.

Tom (10:11):

Yeah, that’s a great answer. Definitely makes sense to bifurcate community and social tokens from DeFi tokens. One more question on that point. What are the differences between a social token that’s for one person, say if RAC made a token, versus the WHALE token or the Friends With Benefits? It seems like there’s a dichotomy between having your own social token and having a community social token.

Jess (10:36):

We use the language of personal token versus community token, and I think maybe the best example is what Alex did with his [ISAS 00:10:44] best token, selling some future revenues. And what RAC’s doing, I think he’s maybe in the middle, where there’s definitely this individual who has a bunch of social capital, but it really is the community around him that is the experience. And then maybe on the far side where community is first is Friends With Benefits or RNG. You see categorization at the high level, but really quickly, the tendency here is for these tokens to coalesce a community around them, and the value to really be generated through the cooperation, co-creation between community and individual.

Cooper (11:24):

Totally. There’s this great post that Mason Nystrom from Messari put out, talking about the dichotomy of social tokens. And a point that he made that I really liked is that most social tokens start as a personal token and become a community token. There needs to be a strong leader for them to be successful. And even if it starts around a single creator, the end state of these and where they become successful is when it ends up being owned by the community. I think there’s an opportunity for a lot of creators to make something very light that’s centered around them. And in the event they want to take that into something more serious, empowering their community and empowering the moderators to give more responsibilities feels like a nice way to bridge that gap and make it more community in nature.

Tom (12:04):

Yeah, that’s awesome. That makes a lot of sense. How exactly do the social tokens get out there? In your post, you guys share a lot on issuers. You have Roll, you have Rally. I’m not sure what all the differences are between them, but what’s the difference between launching a social token and yield farming a DeFi token, and it eventually getting just listed on Uniswap?

Cooper (12:25):

This is a great question, because I think it’s really important to highlight that issuance is different from distribution. Those projects that you mentioned, they solely mint the token for you. They have tools to allow you to get it out there, but that’s really on the creator to decide how they issue it to their community.

Cooper (12:38):

What I’ve seen work well on this front is… Airdrop’s the oldest trick in the book for crypto. Someone completes an action, they get tokens in return. What we’re seeing now that’s more interesting, I think is doing active participation. Using tools like SourceCred, you can basically reward people for their offline contributions and basically say, “Hey, if you come to Discord every day, if you show up to our community calls, if you vote on governance, there’s a way that we can give you tokens for doing very human tasks.” And I think that the more granular you get about the creative ways in which a community member engages with that creator, that feels like a good recipe for effective distribution.

Piers (13:13):

Yeah. Sorry, go ahead.

Jess (13:16):

No, you go first, Piers.

Piers (13:18):

I was just going to say, around that point of issuance and distribution being different things, one of the projects I think you guys definitely touched upon was Unite. That’s looking really cool. Alex speaks of the idea of effectively doing a vampire attack on the Web2 social grasp for some of these platforms, where actually just interacting with a tweet through a retweet or whatever can actually serve as the function around which tokens are distributed. And you can start to port your audiences from these existing platforms into a token community, and from there, coordinate them. It’s a really cool concept, and excited to see how all that stuff evolves.

Jess (13:55):

[crosstalk 00:13:55]. Alex and those guys are great. You think about big promise or excitement around social tokens, it’s this idea that there’s a whole bunch of people out there that have a lot of authority and influence that can start to introduce crypto or tokens to a more mainstream user base. And the idea of a vampire attack, whether that’s done through a tool like Unite. Today, we saw Portugal. The Man, which is an indie band, I guess, out of the U.S., launch a token on Rally, and it was as simple as posting a video on their YouTube channel and on their Twitter account and on their Instagram. All of a sudden, there’s this very active Discord community that has popped up overnight, essentially.

Jess (14:36):

I think it just shows the absolute power, both of the frustration these creators are feeling with being locked into creating value for platforms like Facebook and Instagram and really not being able to capture any of that value within the platforms, which I think is the spark for many of these folks. But then also, just the ability to pull their network into a new place that’s owned by them. I think that’s the thing I’m watching really closely, especially this week. What do those members look like, what impact does that have on other token prices, how are people responding to the narrative that these artists are putting out there? I think it’s just an absolutely huge opportunity.

Tom (15:16):

Yeah. Cooper, you wrote up a really good point before, too, about community management and rewarding people. Do you think that we’ll get to a point where… Community management’s really hard in crypto. You have the founder spending 70% of their time on Discord and responding to things. Is there a way that we can use social tokens to reward people for automating those tasks, and then if they have a certain amount, that they unlock new features? Can’t throw a WIFI governance proposal unless you’re X level. Is that a dumb way to think about it, or do you think a lot of that could be automated?

Cooper (15:45):

I think this is exactly where it’s headed. I think the way that I think about social tokens is, how do you create social grasp where people are more empowered to do specific things in that community? To the testament of community managers, this is similar to what moderators are on Twitch, right? It’s basically an overly active community member. They’re doing a great job. The creator recognizes them and they lift them up to steward that conversation. What’s cool about social tokens is that community managers can have a more direct role in the distribution of tokens. They can have a more direct role in stewarding and pointing conversations in the way that they see fit. And most importantly, they can feel like they’re actually part of the core team.

Cooper (16:20):

And I think that this is something that shares a lot of values with DeFi right now. With community tokens, there is no team and community. It’s one and the same. A community manager is a part of the core team, and they’re also an active member in that community. And the more that you lean into that and the more power that you give those managers, I think this is where I’ve seen it be successful, because it’s people other than the creator that actually feel like they have the power to make a meaningful change.

Tom (16:45):

Yeah, that’s awesome. If I was on the outside just looking at WIFI for the first time, I wouldn’t know the difference between [inaudible 00:16:54] and contributor 13. But if they had some reputation or social token included there, it might be easier to judge that from the outside.

Cooper (17:03):

Totally.

Tom (17:05):

Yeah. Piers, it would be interesting to get your thoughts on gaming. You’re so in the mist there. Do you think that this is viable from a gaming perspective for creators and popular gamers? What are your thoughts there?

Piers (17:18):

Yeah, I actually do, and I’m looking forward to some big in-game guilds. Perhaps some traditional games, not necessarily blockchain games. Big World of Warcraft or RuneScape clan or something trying to take advantage of this, because again, it’s just a really cool way to A, bind, and then B, coordinate a community in an interesting way. Whether there’s an upcoming raid and whoever’s fulfilled a certain function in the week, or whoever’s been performing desirable activities amongst the community, they might qualify to be lent, out of the clan war chest, some special sword, some nondescript sword. But yeah, I’m really excited to see where it goes with that. I haven’t seen too much activity around that side of things just yet. Despite what a crazy year last year was for all of this stuff, we are obviously still right at the front of it. Still super early days, but yeah, that’s definitely a use case that I’m keeping an eye on.

Cooper (18:17):

Mm-hmm (affirmative).

Tom (18:18):

That’s awesome, man. It’ll be exciting. Sorry, Cooper.

Cooper (18:21):

I call out… There’s a project called Vanish. They’re an eSports community that launched a Creator Coin on Rally. I think that using a social token to align an organization is really interesting. And something that Piers pointed out that I think is fascinating. Last year, we ran this experiment called MetaClan, which was an eSports gaming DAO, and I think that the relationship between a DAO and a social token is more or less one and the same. I think that we were almost too early in the sense of trying to make everything really Web3 and making it a DAO and pulling capital, whereas I actually think that just having a token that’s fungible and people can align with one another serves most of the purposes that a DAO does without a lot of the overhead of having to do proposals and voting on change. It’s definitely evolved my thinking around, how do you get people to coordinate in a way that doesn’t feel too heavy on a technical side of things?

Piers (19:09):

Yeah, I think that’s an excellent point. I think we both agree that, upon reflection with MetaClan, we were perhaps over-equipped to begin with there for what we were trying to do. Yeah, I definitely think there’s that middle ground, that sweet spot that these social tokens could occupy.

Tom (19:24):

Jess, you mentioned before, just hitting the traditional world with this, and any artist, any creator being able to use their likeness outside of a brand. It’s right up Cooper’s alley with what he’s doing at Audius, but I’d love to hear your thoughts as well on this. Do you think that this will actually be used en masse by the traditional world, artists, gamers, pro athletes, things like that? Or is that maybe too much of a stretch for social tokens?

Jess (19:49):

I think it’s inevitable in some way, and probably just a matter of time. I think we’re in the middle beginnings of the shift away from Web2. The idea of all of us yelling in the middle of the street on Facebook or on Twitter is kind of a weird thing, or will look like a weird thing in the future. We’re seeing this coalescing around smaller groups. Seed Club is an example of that. All these social tokens we’re talking about is an example of this. These influencer communities are examples of that as well. I think this idea of smaller groups of people coming together and being able to leverage a financial asset to invest in the growth, to align efforts is just going to be a fundamental shift in the types of businesses we build online and the ways that creators create and capture value.

Jess (20:42):

Do I think that’s going to happen soon? No. I think the biggest names that have come in to do social tokens are so far probably the worst examples of good social tokens, at least in the early days. Our focus at Seed Club is really on trying to work with crypto-focused creator communities, figure out the more challenging parts, so that we don’t have to spend the time worrying about onboarding and MetaMask and all these other things that are just the general barriers to adoption of crypto.

Jess (21:11):

We’ve been focusing on figuring out the templates that will eventually make it really easy for a creator to come in and launch a social token. There’s where most things are done on specific platforms, perhaps. You can really see an OnlyFans-esque platform developing and having tokens built in, a Substack-style platform with tokens built in. But I think there’s also a really unique opportunity here for creators to really own the thing that their fans congregate around, and that being an ERC-20 token that can be used and plugged into various different platforms. We’re going to see an interesting dance between platforms and more open use cases.

Cooper (21:59):

Mm-hmm (affirmative). I totally agree with that. I think this year, we’re going to see the first wave of viral creators issuing social tokens. I think Jess’s point is really important, that so far, we’ve seen Lil Yachty and Lil Pump make a social token, but I think that’s about the opposite of what we personally feel like is valuable about social tokens. I think there’s an important difference between notoriety. Like I said before, there’s going to be big names that do this. I think there’s going to be a small fraction of them that are actually doing it in a meaningful way. I know what Jess and I are both concerned about is, what are the standards to do this effectively, and how do you do everything to show there’s value beyond this community, outside of the price tag? I think when you start looking at success as a metric of funds raised or as the price of a token, you get into some really dangerous territory.

Tom (22:41):

Yeah. No, that’s a fair point. You definitely don’t want to be too cognizant of price as the deciding factor, because it might just be awkward and biased.

Tom (22:49):

You guys have a social tokens map on your post, and there’s a lot of different ways you can create social tokens. You have personal, music, art tokens, et cetera. One of the interesting ones you guys have is culture. SWAG token, FWB, ROBOT, 13 through seven. It’s kind of weird, because when we interact with main brands today, if I get a Supreme thing, I’m just using what they’re giving me. The culture that they put out, I’m wearing. In this aspect, it seems like people will instead be able to shape brands themselves. Do you think we’re ready for that? Is that the goal?

Cooper (23:24):

Totally. I think we’re ready for it. I think collective collaboration is really, really fascinating. I think, for the first time in history, we can actually create products and services in a group manner and not have to worry about a small subset of two people making all the decisions. Yeah, I think culture’s incredibly valuable. Up until now, we haven’t really had a way to capture its upside or to place a financial value on it, so I think that this idea of social tokens is the first step in that direction.

Jess (23:51):

We’re going to be this new emergent type of culture and brand, right? I think within the social token space, it’s really easy to look at what’s happening already and see how you can plug a token into it. But I think, really, the biggest wins and most interesting products are going to be ones that emerge from the primitives and templates and communities that are native to crypto.

Jess (24:14):

What do we create when we give people the opportunity to both participate, own, and have a variety of credibility or say within a community, as recruiting merch or recruiting new fashion items? Even if you think of something like Async Art, where you have multiple layers of art, and there’s this dynamic where the artist is creating something, but how the community and individuals interact with it also has an impact on it. That’s what I’m paying attention to, is not plugging tokens into existing brands, so I think we’ll see that as well, but more what interesting brands emerge from these token interactions.

Piers (24:54):

I completely agree with the angle of attack there, the focus on trying to define and stress-test some of these cooler models closer to the crypto space to begin with. What are some of the perhaps non-obvious or a little bit unique examples of this that maybe don’t have so much light cast on them yet, or you think are maybe coming in the pipeline?

Cooper (25:19):

Yeah. I would love to shine some light on this project called MetaFactory. In the culture section, it’s the token ROBOT. They’re basically using this token to allow holders to signal to different merchandise they want to have produced. It’s called a curation game, where you take the tokens, an artist presents an idea, and once it reaches a certain threshold of people’s stake into it, that item actually gets produced and put into the world. And I think these notions of being able to allow people to be very signal-oriented to what they want to see built and sharing the upside of those products feels like a really positive flywheel that I’m really excited to watch pan out.

Tom (25:51):

I think you took me to the WIFI [inaudible 00:25:56], Cooper. I think that was MetaFactory, right?

Cooper (26:00):

Yeah. And I’m not sure if you knew, but you got a retroactive airdrop for buying that. It ended up being pretty favorable for the purchase of that [inaudible 00:26:06].

Tom (26:06):

That’s cool, man. No, it’s interesting. For you guys, what was the biggest social token that you guys have aped into? If it’s just to support your friends and creators, that’s also fine. We’re early. But was there one that stood out that you said, “Damn, I’m buying as much of this as I can right now?”

Cooper (26:26):

Jess, go first? I’m happy to take it first if you’d like to.

Jess (26:29):

Sure, go for it.

Cooper (26:31):

Yeah. I think it’s important that Jess and I are both in service roles in some degree, so there’s a separation between us getting compensated for our work we’re doing in these communities and us aping into them as an investment perspective. I think for me, the ones that I would say I’ve aped into the hardest would probably be FWB before I joined in a formal capacity, some of the early examples of personal tokens, so both Alex and [Kermin’s 00:26:53] tokens when it was a really new thing, the early days of JAMM when there was a lot of conversation around community, collective contributions. Honestly, all of these. I remember, for the WHALE Discord, reacting to an emote in WHALE’s Discord and getting $100 worth of tokens, being like, “Okay, wow, this is fucking incredible,” and then just eating in multiple ETH into the project before I even looked any further than that. I think that launch event and getting people to just make some buzz around it was enough for me to just be like, “YOLO. I’m doubling down on this. Let’s see what happens.”

Piers (27:26):

There was something about those drops, too, where you have 60 seconds to click this emote, and just seeing an entire server with a few thousand people spamming a button in front of you is pretty entertaining. That was pretty good fun.

Cooper (27:39):

Was fun.

Jess (27:40):

Yeah, the RNG Discord was like that as well in some of the early airdrops. And something like Connie, who has the HUE token we talked about, in his early days, he would launch new NFTs within his Cryptovoxels parcel, and you just see Cryptovoxels being dead, and then all of a sudden, thousands of people rushing in and this token being a driving factor behind it.

Jess (28:04):

To answer your question, Tom, I think the way that I’ve aped in is into the space generally, and I think it’s with my time and effort more than anything, though I definitely do hold a wide selection of these tokens. I think that we’re just so early that the early projects are great examples, and yet, the best is still to come. The whole idea behind Seed Club was just, how do we… Seed Club’s a social token incubator, so we’re looking to start with this idea that there are many more questions than there are answers on how to do this right. The way that we get to clarity there is by bringing a whole bunch of smart people together, so Cooper is one of those, and creators who are looking to launch these tokens and learn alongside them.

Jess (28:46):

To me, Seed Club is the thing I’ve aped into, which is in many ways an index on the space, I think. We’re really just trying to create a way for other creators to come in and to expand. To reduce WHALE dominance in some way, maybe, right? There’s just so many more opportunities here than what we have on the table right now.

Cooper (29:10):

Yeah, and also call out… Rally’s doing this really interesting program called Creator Mining, I believe is how they’re defining it. But basically, the creators on their platform are getting weekly rewards for the amount of volume they drive back to their tokens. I wouldn’t call it aping as much as it is just watching that game and participating in the way that I can. But there’re some really cool APY DeFi-like instruments being applied to the expansion in distribution of creators. I know Jess and I have been spending some time being like, “Who are the best creators on this Rally platform? Who’s actually taking this coin seriously, and how do we put our tokens to work to further empower them and participate in this nice incentive program they’ve designed?”

Tom (29:49):

That’s awesome. Are you guys at all concerned that… Everything we have in crypto today, you have a token, it’s on a protocol. Anybody can step in from the community and pick up the slack if somebody leaves. Is there any concern that you might get some popular social tokens, then the human person might just say, “Screw it, I’m done. I’m going to an island somewhere, and I don’t care about the value and the token crash?” The risk here is really human in nature, if that makes sense.

Cooper (30:15):

Totally. Yeah. I think this is really, really important, and I totally think that, more so than DeFi project, if the creator leaves the project, that’s going to be very difficult for it to remain sustainable. I think there’s a big reliance on someone that launched a social token to recognize this isn’t an ephemeral event. This is a long-term thing. That’s why I’ve been delicate about who I tell to launch these. It’s fascinating and it’s really cool and exciting, but I think that people sometimes underestimate the scope and nature at which they need to be ready to participate for long periods of time if they want this to be remotely viable in the long term.

Jess (30:47):

Universally, people underestimate that point, how weird it is to have a token that represents your creative output. Across the board, if you talk to people who’ve launched social tokens, the emotional aspect of having a price related to your creation, they always undervalue the impact that will have. Yeah, I think one of the first conversations I have with anybody who wants to launch a token is like, “Do you really want to launch a token?”

Jess (31:14):

There’s also going to be interesting norms that I think emerge from this, and I think you can see it in what Alex is doing, or even what Kermin has done in some of their earliest social tokens. Ultimately, what that’s turned into, it’s a bet on them as human beings and any future project they do, because there’s this assumption that token-holders will get some sort of access to future token drops that they do for new projects, et cetera. It turned to, I’m betting on the individual versus I’m betting of a specific company. I think that’s the way to look at the relationship between most creators and their token-holders, or how token-holders look at creators like, “Are they committed to this work? Are they going to continue to create this work?” The incentives really align for Alex to do something like that, because he has this really hardcore community of people who just want to see him succeed, and of course, he’d want to bring them along to this next thing.

Jess (32:06):

I also think there’re interesting ideas. Friends With Benefits, for example, is playing around with this idea of seasons, so you can imagine there being tokens that exist for a specific reason, and then there’s sunset, and they’ll be transferred into some other project or next version. I think we’re going to see some unfortunate situations where people leave a project, and that project goes dormant or disappears. But I also think, on the flip side, some of the more interesting projects that I would love to see launch are fan club tokens that are based around a creator where the creator’s not even involved in the project. I think there’s a huge design space that’s going to emerge here.

Piers (32:45):

I’m curious how you guys think about the whole securities aspect of these things as well. Obviously, in a lot of these instances, one might argue that there’s a fine line being walked. I know there are ways to mitigate liability there around what exactly the token’s used for and also how you acquire it, earn versus bought and whatnot. But yeah, I’d be curious to get your thoughts around that component, because that strikes me as a material friction point that some mainstream creators would likely have to pay attention to.

Cooper (33:16):

Totally. I think you hit the nail on the head when you said earn versus bought. When you issue a token, are you doing a sale around it? Short answer, don’t do a sale around your social token. It’s obvious you’re not going to raise meaningful amounts of capital. I think there’s opportunity to bring capital on board once you’ve established the utility and the centralization of the project, but if you lean into your social token with the sale as the primary thing that’s interesting, on a legal side, you’re setting yourself up for disaster.

Cooper (33:42):

And on a more important side, the precedent you’re setting by selling the token as the launch thing, it’s going to invite speculators. I think there’s a lot to be said about… Just don’t sell your social token. Get it out there in the ways that you can and create value meaningfully instead of trying to assign a price tag out of the gate.

Tom (34:01):

Is there anyone in crypto that you guys would like to see launch a token? Like Andre or Metallics of the world, is there anyone specific who you think would be a really good fit in crypto right now to launch token that hasn’t?

Cooper (34:14):

I think for me, it’s these NFT artists, honestly. I think that there’s unique creators that are coming about that are shining in a digital world, and I think that the obvious answer for social tokens is musicians and DJs and people who have all this clout on Instagram. But I’m starting to look more into these more niche-specific creators, like Corpse Husband of the world, YouTube people that have huge communities but don’t have any public presence, and I think that creators that have increasingly bigger digital brands, Mr. Beast being a great example. These are the type of people I think that would do really, really well with a social token if done right.

Jess (34:49):

For me, it’s the pooling of social capital from multiple influencers that’d be the most interesting thing. I think this idea of creating a collective or a cooperative around… Whether it’s the emergence of a new type of music label, or it’s a series of YouTube influencers that are coming together, this pooling of social capital from those who have it, that’s the most interesting. And I think Seed Club is an example of that as well, where a bunch of people just came together and led credence to the project, and we had something emerge from that.

Jess (35:21):

And I think we’re going to see that across the spectrum from OnlyFans creators or adult entertainers to gamers to YouTubers. And even to people who maybe don’t have a whole lot of social capital to start with, but who are able to come together to launch something. I think the post from the other internet guys around squad wealth is just the guiding light here. If you see the power of small groups collaborating and throwing an asset in the middle of that, that can be held and you incentivize a broader group of people to work towards a goal. I think that’s probably where we’re going to see the biggest win launch from success, in my opinion.

Cooper (36:01):

Totally.

Tom (36:03):

How do you guys envision tracking that? I’ll give you an example. Let’s say Erik Voorhees had a social token for some reason. I don’t really care if Erik Voorhees tweets about my project to help you out, but I really want his advice for 30 minutes on a Friday night where nobody really knows the value of that, but I do. Is there an issue with attributing value from other people to these tokens when a lot of the value is more qualitative than trackable metric-wise?

Cooper (36:33):

That’s a good point. That’s something I put a lot of thought into, because there’s a project I was working on to design time tokens, where basically it was a social token, but the only utility is to redeem it for time. And I think there’s a big difference between service-based tokens, like you mentioned, redeeming for an hour of time, versus a more broad-set community token. I don’t think that there’s any reason a community token couldn’t be used for time, but as we see with anything, when you try and peg a volatile currency to a stable value, it becomes increasingly difficult, and I think that you invite speculators to basically assign insane values to these things. A 30-minute call shouldn’t cost $1,000, but if Erik Voorhees had a token and he tried to peg 30 minutes of his time to a token, it would very quickly become that. I think that’s why it’s interesting to consider the separation between a fungible community token versus something that may be non-fungible and you can burn it to redeem an hour of time, but isn’t on a secondary market and tradable amongst other people.

Tom (37:30):

Yeah, that’s an awesome answer. That’s cool. Piers, what else are you thinking? I’m just thinking through ideas. There’s a lot to unpack here.

Piers (37:39):

You touched upon Mr. Beast earlier, but he put out that tweet recently being, “Damn, I wish there was a way to invest in creators.” He said, “The stock market sucks, and I don’t know anything about it.” Whatever. And clearly, that sentiment was shared by a crazy amount of people, so we know that the demand for this kind of stuff is there. But yeah, I did want to ask you guys, if Mr. Beast turns around in two months and says, “Screw it, let’s do this,” where does he go? What does he do? I know you said you’re trying to stress-test these models and figure out the right formulas. Is it still too early, or do you think, between you two, you could accommodate him?

Jess (38:15):

Mr. Beast, if you want to launch a social token, Cooper and I are here for you. We have the network and the tools that’ll make that a great success. Yeah, and I think the template that works right now… Generally, people come to the table, when I have conversations with creators who are at least turned onto social tokens, they have all these ideas of what they want to do and complex incentive mechanisms. The first advice I give is just, “Chill. Chill out of here a little bit.” The reality is, starting small and growing from there, or as Brian Flynn calls it, this idea of lean token design, I think is essential in this space.

Jess (38:51):

I think the example to look at is what, again, Portugal. The Man is doing with the Rally community today. It’s creating gated access to some community and allowing people to choose to be a part of it or to not be a part of it, and then looking at interesting ways of distributing tokens to that existing community in a way that’s relevant and sets the community up for success, and all of the other interesting things I think should be in emergent properties of the initial dynamics that you set within these communities.

Cooper (39:23):

Yeah, I’ll probably add into there that if someone like Mr. Beast were to launch a social token, I probably wouldn’t point them to an existing platform today. I’d tell them to build a development team and to do everything in-house themselves. I think that a lot of these platforms are set up to be really generalized, which is great for a new creator that’s just trying to test the waters, but it’s not set up well to cater for someone like Mr. Beast that has the caliber and momentum to create literally a whole universe around their brand.

Piers (39:47):

Yeah, I think that’s a great point. Kind of observed parallels across different verticals in crypto. We sit around and get on some generalized governance platforms, where a lot of teams think it’s such a critical piece of infrastructure, they’d rather build it themselves. In Axion, the game space with their layer-two scaling thing, there is this tension between generalized versus specialized. And I definitely think, when companies or creators or brands or whatever come in that do have the firepower to build that custom stack, I think it does make sense. Yeah. We’ll see. We’ll see. Maybe that’s next after Mr. Beast Burger, or whatever it was.

Cooper (40:21):

Yeah.

Jess (40:22):

I think that’s so important that we’re… If you look at existing communities, they were… Platforms and tools came first, and then these communities hopped onto them, and I think right now, we’re in this place where these communities and creators are actually pulling platforms forward. In my mind, the best things that we can see, like what RAC and ZORA did there, they built some really interesting tooling around how to retroactively reward community members. That’s big. Those use cases are what are going to lead to the more generalized tools that’ll then make these templates accessible to much more low-capitalized creators, which I think is where a lot of this growth is going to come from.

Jess (41:02):

I think, to me, maybe that would be the most exciting thing. It’s not the price that Mr. Beast would be able to get from being able to buy his token, but really, what are the tools? That guy’s just a genius in engaging his audience, so you can just imagine the types of things that could come out from that if you put a bit of a DeFi lens and an interesting NFT lens and mix it with a big community. It’d be pretty awesome.

Tom (41:24):

Yeah, that’ll be really cool. Guys, one closing question from me, and Piers, I’ll leave it to you after. When we get the crypto people to have their own social tokens, like the top developers, the top community managers, BusDev people, do you think that that will lead to more collaboration or more competition in this space? I’m wondering, if I’m a top-tier Ethereum dev but I’m not really in Ethereum, I’m Tom, does that mean that I work on more projects and I’m not married to one, or does that mean I’m more competitive and I stick to my Ethereum roots? I’m just wondering where social tokens fit in on a work level for crypto people.

Cooper (42:03):

Fascinating question. My immediate answer here would be that I think it makes sense that top talented people eventually become their own brand and ecosystem. I think that it’s going to be a transition between when it becomes competitive and when it just is a natural fit in the world. I think these early adopters will naturally get a lot more attention to themselves, so they’ll at least have the flexibility to go where they want. But I’m hoping, and this is what we’re seeing with social tokens today, the early adopters are really collaborative.

Cooper (42:27):

In FWB, we’re constantly talking with people in JAMM. We’re constantly working across other projects and sharing ideas and whatnot, so I really hope that, as a space, we can hold this composability notion that makes DeFi so powerful and build with that lens, where everything we build as far as tools, as products get shared with other people. And then, you offer ways for members of other communities to come into yours and be invited and welcomed rather than shunned and there being all this infighting that makes crypto toxic at times.

Tom (42:58):

I love that.

Piers (43:02):

Yeah, I was then going to ask around. Your report touches upon Marguerite and her project COIN, which is really cool in that it lies at the intersection of DeFi, NFTs, and social tokens. How do you guys think about the synergy of all of those components? Obviously, for some use cases, some creators like just one of the three. It’s probably more appropriate. But again, just elaborating on your point there around the composability, making sure these Lego pieces can be played with. Do you think that some really exciting stuff lies in the fusion of all three, or do you think it’s unnecessary to try and force the overlap between those things? Some people aren’t that crazy about the idea of NFT farming, for example. They think it’s unnecessary friction. Curious to get your thoughts there.

Jess (43:53):

I think-

Cooper (43:55):

Yeah, this was in… Go ahead, Jess.

Jess (43:59):

I think the answer to both of your questions is yes. There’s a ton of really interesting things that have emerged there, and also, it’s really important not to force it. The big win for social tokens is when these communities are actually able to really collaborate and create some sort of on-chain value, so cash flow. Mina’s probably a really great example of this, where they’ve designed an economy where there’s a ton of value and curation, and your stake in tokens to earn the points that give you access to these really interesting NFTs.

Jess (44:32):

I’m really, really, really focused and interested in figuring out how these templates emerge and making those templates accessible or at least known to creators so they have these building blocks to play around with. I think the idea of how you reward value within a community or how you create value within a community are these huge boxes that are just fascinating to get into when you start thinking about where we’re at today and where we might go, even just given the tools that exist in DeFi or in NFTs right now. Really, really exciting, I think, to watch.

Cooper (45:02):

Totally. I think this notion of putting your capital to work to earn something in return is synonymous across all community tokens. You stake a token somewhere, you get something that’s unique to that community. Fantastic premise. I think that everyone will build on that.

Cooper (45:14):

What I learned from the COIN experiment was, the more building blocks you tie together, the deeper the education that’s required for people to participate. I think we had some really amazing ideas there for NFT farming, fractionalized ownership, stuff that’s really ahead of its time. But the complexity that comes with the tools that are out there today and tying them together in a very intuitive way is really difficult.

Cooper (45:36):

Back to the Mr. Beast point. I think that where this becomes successful is when people design ecosystems that have very niche-specific programs and use cases that are very, very easy to grasp. I don’t think that it’s the typical deposit liquidity on Uniswap, stake that liquidity position into an NFT farm, and then fractionalize ownership of that NFT to bid and win that piece. All those ideas are really cool in and of itself, but we need to take a step back and be like, “What is someone who has $10 of these tokens able to do that feels unique to them and also highlights what’s cool about crypto?”

Piers (46:10):

Yeah, I think that’s a great answer. Definitely think some of that stuff could probably be pretty alienating as it stands. Tom, did you want to jump in?

Tom (46:19):

No, no, just cognizant on time, guys. This was an incredible podcast. Jess, let’s start with you. Plug what you’re working on, and then after that, Cooper, you’re up.

Jess (46:32):

Yeah. Seed Club is a social token incubator. As I said, we brought some of the smartest people in the social token space, along with some of these early traders that we’ve talked about here today, together to help other creators and communities launch successful social tokens. We run on a cohort-based model. Applications for that cohort are closing really, really soon. I don’t know when this is published, but ultimately, we start again at the end of January.

Jess (46:57):

The best place, I guess, to stay up-to-date with us is seedclub.xyz, or @seedclubhq on Twitter. You’ll also be able to find our Discord there, which is the place to go if you have specific questions if you’re a creator and thinking about how to take a first step into this space. If you land there, you will be in good company, and we’ll be able to direct you to the best resources and people that can help you do that. And yeah, guys, I really appreciate you leading this conversation. It’s great, and I’m really, really looking forward to the Tom and Piers token. I think we should make that happen, and would encourage you both to apply to Seed Club.

Cooper (47:28):

Plus one. I’d say that anyone looking to make a social token, there’s no better place to get started than Seed Club, so definitely check that out. For me personally, Web3 creator economies are where I’m spending all my time this year. My main gig’s at Audius right now, which is a decentralized streaming protocol, working with a lot of social token communities and now getting into NFT collection. If there’s anything in the realm of consumer-facing crypto that you think is interesting, please reach out on Twitter. It’s where I’m most active, and I’d be happy to work together to figure out what works.

Jess (47:53):

I’ll give a plus one [crosstalk 00:47:55].

Tom (47:55):

That’s awesome, guys.

Jess (47:58):

[crosstalk 00:47:58]. Seriously, for sure.

Tom (48:01):

Yeah, no, super amped for Seed Club. Cooper, if you guys listening haven’t checked out the episode with Cooper with Audius [inaudible 00:48:08], check it out. And Piers, thanks so much for cohosting. Obviously, I’m biased. I’m a huge fan of your own podcast on here. This has been awesome, guys. Thanks for coming on.

Piers (48:16):

Thanks.

Cooper (48:16):

Likewise. Thanks for having us.

Jess (48:16):

Thanks, guys.

Jess Sloss and Cooper Turley: Social Tokens Are Rearchitecting Community and Social Engagement

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