With the creator economy booming, we're seeing more talented individuals sharing content online and gathering tight-knit communities. But there are still two major problems for creators today: Ownership and Collaboration.
How can we give back the power to creators, enable these individuals to build their communities, help them collaborate with other creators to achieve their ambitious goals?
The path that seems the most promising for creators is exit to community. In recent months, we've seen mainstream media talking about NFT (Non-Fungible Tokens) and Social Tokens, and the revolution for more ownership is happening in front of our eyes.
Platforms like Coinvise, offer creators the power to create their virtual currency, also known as Social Tokens. Social Tokens are virtual currencies that are enforced on a blockchain and allow specific advantages in a certain economy.
Creating a Social Token is the easy part. What's more complicated, however, is to get it accepted by a community. How will creators convince anyone to work for them in exchange of a virtual currency they just created? What actions can creators take to start a virtual economy with a digital currency being accepted by their whole community?
The answer is: having strong Token economics for their project. We call Tokenomics (Token + Economics) all the things that enable participants to contributing positively enabled by strong token design. Setting up Tokenomics for a project means "What can a creator put in place to allocate & incentivize a community to participate in the project."
Social tokens have shown their efficiency on incentivizing individuals to share their skills with others. Projects that have succeeded in creating thriving communities all have strong Tokenomics. Tokenomics is a successful community’s superpower.
But setting up Tokenomics is not a small task for creators, specifically for those new to the crypto world. How many tokens should a creator allocate to contributors? How much of the supply should be reserved for the community’s treasury? What will be the total initial supply? Many questions come to mind, and it's not always easy to have the correct answers.
This essay aims to explore further what creators can put in place to create strong Tokenomics around their project, and aims to break it down into an easy-to-read step-by-step guide.
Before deep diving into Tokenomics, it’s important to clarify certain things.
Creators should gather a strong community toward a joint project. A project beyond the creator themselves, a project that requires strong collaboration to be achieved. A singer can gather a large audience, but to turn this audience into a community, they need to have a broader project that requires collaboration. We could think of an album. Any fan could become a contributor by creating designs/posters, spreading the word, organizing crowdfunding and so on. We could also think of a fitness instructor making videos on Youtube, creating the go-to-place for everything related to having a healthy lifestyle. Fans, led by the creator, could create a platform, create challenges, and gather resources to achieve this broader goal. The point is: the project needs to go beyond the creator.
It’s also important to clarify what a creator is. We will consider a creator as anyone pushing ideas, and a vision, through content on the internet.Jeff Kauffman Jr. for example, while maybe not considered as a creator in a traditional sense, has created a thriving community around advertising and marketing in Web3, pushing his ideas and vision through essays and podcasts, gathering a strong community keen to help him achieve his high ambition goals. Dom Hofmann, the founder of Vine, is also a great example of this new wave of creators. Through his project Loot, Dom revolutionized the way we're thinking about collaboration around NFTs, and has gathered a community that collaborate to achieve a large goal.
With a common definition of what we’ll call a creator, and the prerequisites to create a thriving decentralized community, let's dig into the three main aspects of Tokenomics: Token design -Token Distribution -Financial aspects.
Token design is a critical component of creating a thriving community. It's essential as the Token design (aka - all the technical aspects of the token) will serve as a foundation to incentivize a community to participate in the project.
The first question that should come to mind when creating a Token should be "What will be the total initial supply?" or, in other words, "How many tokens should I create?"
There isn't a one-size-fits-all answer to "How much token should I create," but we'll go over the main characteristics that you should take into account to come up with an answer.
First of all, when creating a Token, there are two models, with both pros/cons, that you should be aware of.