Seasons & Longevity of Community Tokens
Recently, there's been quite an interesting exploration of social/community/creator tokens. $JAMM, $RAC, $ALEX, $JOON, etc, all tokens either resolving around people, a brand, or a specific community. I've written on personal tokens since 2013, and have recently penned some design ideas earlier this year.
Teams like Zora, Foundation, Rally, Roll, StakeOnMe, etc, are helping tackling the problem of empowering creators through these new novel economic systems. Recently, Zora helped the musician, RAC, launch his own community token. Particularly interesting, was how RAC launched the token by retroactively rewarding fans and contributors.
For being a $RAC holder, you get access to the following:
After listening to the Zora team speak with Mat Dryhurst and Holly Herndon on the Interdependence podcast (subscribe!, it's amazing), one discussion in particular sparked some ideas: the concept of productive vs parasitic speculation.
I entirely agree, that speculation can be manipulative and parasitic to the goals of an economic system, but, if done right, it's more than zero-sum, resulting in productive outcomes and externalities. Finding that middle-ground isn't easy, but we can try to head in the right direction.
Examples of parasitic speculation:
An investor buys up a larger portion of the tokens and hikes the price such that on net, fans aren't able to meaningfully participate in the community.
An investor pumps and dumps the token, fleecing new community members of their value.
An investor buys up a large portion of the supply and actively chooses to suppress more natural price discovery in order to boost an adjacent community that they are also invested in.
Example ideals of productive speculation:
Investors want to make money, but through their actions also cause the rise in value of existing community stakes (rising tide lifts all boats).
Takes risks alongside the community.
Provide liquidity for members who want to de-risk their involvement in the community.
A example of avoiding parasitic speculation is that the tokens aren't sold directly to speculators/investors. It's only distributed to fans and actual pro-social contributors. This is what RAC and Zora did with the $RAC token.
They created 10 million tokens and gave away an initial distribution. The rest of the 10 million is reserved for future distributions. This is, in part to continue rewarding pro-social community behaviour into the future, but also to, as I suspect, to curb predatory speculation.
What happens if all 10 million is issued? What happens if a speculator captures the community? The longevity of community tokens could potentially result in dead carcasses of communities where speculators came in, expected things to go their way, and in turn, killed the community, before shuffling it off and proceeding to attach itself to a new community.
I want to propose a solution for indefinitely longevity, taking cues from gaming: seasons.
Seasons In Community Tokens
Instead of only issuing a set amount of 10 million, hoping that it would be a systemically efficient way to reward future pro-social behaviour, over time, communities move onto new seasons of tokens.
Every year (or any chosen timeframe), the expectation is created that a community token will move into a new season. Using $RAC for example, $RAC Season 1 will give way to $RAC Season 2.
The distribution event will be similar to $RAC's initial distribution, but it will also reward the previous season token holders.
For example, $RAC Season 2, will have the following distribution:
1) 50% of $RAC Season 2 issuance will be directly given to $RAC Season 1 holders.
2) The other 50% will be doled out like in $RAC Season 1: given to active, pro-social contributors.
Thus: if you were only a speculator in $RAC Season 1, you would effectively be diluted. However, if you were an $RAC Season 1 holder AND an active contributor, not much would change. You would receive $RAC Season 2 tokens for holding $RAC Season 1 tokens and for having actively contributed during season 1. Contributors that did NOT have $RAC Season 1 tokens can now also form a part of Season 2, by having done things like: attended a gig, bought an album, bought an artwork, etc.
There are additional benefits of doing community tokens in seasons.
1) New branding opportunities (like seasons in gaming). What if $RAC had a season for each of his album releases, signifying a unique era of the $RAC token? If you were around during each season, you could perhaps have a unique badge showing your long-term commitment to the community.
2) Experimenting. A community token can commit to an experiment in a season and if it doesn't work out, get rid of the feature/benefit. $RAC could do VR music making sessions in one session, or do Minecraft Twitch streaming in the other. The community could also collectively experiment: use a new chat platform, a weekly meetup, or even economic experiments. $JAMM for example, has a community treasury.
3) Exits. You can also more readily off-ramp the community if it's not working. Sometimes, things end, and ending it after a season is a way for a community to more gracefully exit from an experiment.
How you choose to distribute/reward tokens in new seasons can also be diverse: either top-down, or voted by a community, or both. Panvala also comes to mind as an issuance system.
Conclusion
Community tokens provide novel ways to coordinate. By using the metaphor of seasons, it could ideally remain in the hands of pro-social contributors indefinitely, while simultaneously providing novel ways to experiment.
My gut feeling is that there's more value in seasons, and it remains to be seen what people can come up with. I hope others experiment with it!
May the community tokens flourish!
Disclaimer: I hold $RAC & $JAMM.
PS. Nichanan wrote a great article on the creator communities and the gray space.
