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“An easy way to think about use cases is to evaluate what activities you and your community are currently engaging in that involve traditional forms of payment/rewards/donation and replace that with [a social token].”
There are reasons why social tokens can be hard to define. Crypto is a quick, ever-evolving space; as soon as you think you have a good handle on it, a new innovation or use case emerges and completely disrupts any clear narratives. While this unpredictable dynamic makes naming things difficult, it does make clear that what matters most about social tokens is not what they are, but what they do.
In this section of FF Learn: Social Tokens, you'll learn how social tokens are actually utilized and put into practice.
At their core, social tokens allow for useful utility rather than pure financial speculation. They can be used in many creative ways, such as incentivizing and rewarding activity that helps to support the growth of a community. Each community can develop their own social token economy by first outlining how tokens can be earned by the contributors, fans, or audience. This can be different for each community and can be expressed in a multitude of ways:
Engaging a Community: Social tokens can be used as a tool to encourage active engagement within a network. This could include rewarding labor, promotion, interaction, community management, or any other behaviors or tasks that help build collective value. In this way, social tokens can be used as a tool or an asset that a community can collectively rally around.
Managing a Community: Managing and cultivating online communities can be challenging. It requires consistent collective effort, often across different channels and time zones. Social tokens address this issue by creating simple ways to reward community management, such as moderating a Discord, hosting meetings, helping with social media, or other communication and coordination tasks.
Self-Governing a Community: Social tokens can be used for community governance, allowing token holders to participate in democratic governance decisions by voting using their tokens (on a platform like Snapshot).
Creating Social Value: Conceptually, social tokens may be seen as a way to represent social currency or social signalling within a community. Those who contribute the most will earn more social tokens, and those who decide to hold onto tokens (instead of selling) are aligning themselves with the long-term interests and vision of a community.
Creating Monetary Value: Because social tokens are built using standards, like ERC-20 tokens, they allow for the ability to both be exchanged on a market and unlock abilities to leverage some of the tooling within decentralized finance. This means that social tokens have a unique ability to signify real financial value, which a community can build and share together.
Creating Perks & Access for Token Holders: Social tokens can be used as a kind of social currency within a community that can be used to allow for unique access, experiences, and perks for holders of a particular community’s token. Some perks may include:
To gain an even deeper understanding of what social tokens can do, it's important to delineate what type of crypto it is and what it is not.
By nature, social tokens are fungible, meaning they are not only mutually interchangeable, but also ownable and tradable. This allows social tokens to function as currency, to show equity/ownership, for utility, and for governance. Although the concept of a social token is platform and network agnostic, many follow the Ethereum ERC-20 standard.
On the other hand, NFTs (non-fungible tokens) cannot be exchanged in the same way as fungible tokens, because they are unique to a specific digital asset/virtual item, such as an image, song, essay, or even a list of items. Most NFTs are minted using Ethereum's ERC-721 standard.
Despite their differences, social tokens and NFTs are not mutually exclusive of each other. For instance, both fungible social tokens and NFTs can be used to represent membership within an organization. In fact, many tokenized communities and DAOs use both social tokens and NFTs in symbiotic ways.
As an example, within the Forefront community, $FF is the native social token that is used to reward and coordinate community contributions. But NFTs have also been used for several purposes at Forefront too, such as functioning as a (collectible) fundraising mechanism, signaling proof of attendance for meetings, and being gifted for voting in governance decisions on Snapshot.
The concept of a social token is still being designed today, with plenty of imaginative space to explore. As web3 tooling, infrastructure, and cultural acceptance expands, we’ll undoubtedly witness many new creative implementations of social tokens emerge. Today, we’ve only scratched the surface of how social tokens will be utilized by creators, communities, and brands. While we're still in the early stages of this transformative shift toward new ways of organizing, capturing, and sharing community value, the opportunity is massive.
At Forefront, we believe social tokens will enable the next billion-dollar online communities of tomorrow.
Quiz time: Social Tokens are only used for financial speculation.