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How will social tokens reshape the creator economy

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Creator economies built on top of bugs need social tokens as an antidote

Social tokens, with the rise of the Creator Economy, have gained a lot of attention in crypto circles. However, most users simply understand it as "it's a coin", not much different from other coins, without thinking about what problems social tokens solve and the underlying logic. To fully understand the underlying logic of social tokens, we need to start with the closed-loop realization of value.

EVER since goods could be traded in money, economists have pondered the mysteries of pricing. And "value" is generally referred to as a general expression of the relative prices of goods and services.

Economists have different theories about how to define value. Starting from the objective object itself value of "intrinsic value" to social labor input to identify the required amount of "labor theory of value", and the marxist recommended based on the subjective consciousness of "exchange value" and prices as the only value judgment standard "monetary value theory", from theoretical and practical value to the labor value theory of rights, There are also the "subjective value theory" which takes the customer demand as the subjective judgment criterion and the "marginal theory" which takes the marginal effect as the dominant theory. Different theories define "value" from different dimensions.

In order to realize the closed loop of value, all things need to go through three steps: creation, transmission and capture of value.

Value creation, transmission and capture

The creation of value means that the ontology of value generation inputs the corresponding production capital to generate and produce value through different interactive activities, while value transmission means that the value is transferred from the production end to the receiving end through the carrier, and the final value capture determines the distribution of the final value effect.

From the perspective of value creation, individual value creation can be divided into two categories. One is to realize value creation independently by taking individuals as operating entities through their own resources. The second type is to join the organization, give play to one's comparative advantages, and cooperate with other individuals to aggregate resources to maximize efficiency.

With the progress of science and technology, the isolated island of information and resources has been gradually opened up, and the utilization rate of resources has been greatly improved, which also makes the value creation based on individuals more feasible. The Internet platform aggregates attention, the scarcest resource of human beings, and provides a platform for individuals to create personal value no longer limited to realizable skills in the traditional sense, which also opens up a new economic market: creator economy.

From the perspective of value transmission, the value producing end will price according to the market as the value carrier, while the receiving end will judge the value of the carrier subjectively and decide whether to conduct value exchange. Similarly, taking the creator economy market as an example, the carrier of value is no longer limited to physical objects and face-to-face interaction. With the help of technology, the carrier of value endowed by the creator has more and more choices.

From the perspective of value capture, each exchange of value contains different participants, which are generally divided into production end, middlemen and receivers, and each party captures different values in each exchange process. In the creator economy, the production end is the value creator, the middlemen deliver value for all kinds of platforms and service providers, and the receiver end is the end of the final value exchange. All the three parties will eventually capture value to varying degrees.

The value creator needs to transfer the value to the receiver through the value carrier and finally carry out value exchange to cover the cost of value creation. All parties involved in the process complete value capture.

In the world of Web2.0, however, this closed loop is limited to varying degrees. As Naval said in his Twitter post, the Internet used to be a temporary bug before we knew how to build open social protocols. What are the problems with the creator economy built on top of this vulnerability?

Creator economy built on vulnerabilities

From the perspective of value creation, the current value creation mode has great limitations. Creators can only output the value created within a fixed period of time in a specific way, and value receivers can only exchange value in a specific way. For example, fans can reward anchors in a specific way only when they start broadcasting. For another example, creators of short videos or texts can only create value with a specific output carrier, while recipients decide whether to exchange value according to the value produced in a single broadcast. Therefore, value creation individuals can not fully release value, and the market can not carry out continuous value discovery and capture of value.

From the perspective of value delivery, first of all, the content created will be subject to official review and supervision, and not all the value can be completely delivered. Secondly, most value transmission needs to be attached to another carrier. According to CBInsights, most creators rely on the brand to deliver value and capture value, which increases the resistance to value discovery, and the initial cold startup costs for creators are extremely high. At the same time, under the influence of the value delivery platform, value creators need to cater to the tonality of the platform to maximize their value delivery efficiency.

Image credit: CBInsights

From the perspective of value capture dimension, the centralized middlemen capture the most excess value. Take Douyin as an example. The share taken by Douyin platform is as high as 30%-45%, plus other middlemen, and ultimately the value captured by the creators is extracted by various parties. Only the direct value exchange between value creators and value receivers can ensure the optimization of value capture for both sides.

The application of blockchain technology, the protocol of the platform, and the token of the individual value creation may solve these problems.

Social tokens will reshape the value of the creator economy to achieve a closed loop

The advantages of implementing intermediaries in a permission-free format in a decentralized network should be understated for those who know blockchain technology. In a permission-free environment, value can be completely transmitted, and value creators and users do not face the risk of rent-seeking, the domain information of all participants can be used between different agreements without resistance, and the agreements can be fully democratically iterated according to the changes in the needs of participants.

The essence of the individual Token of value creation is actually the issue of individual coinage or issuance of personal credit, which we call Social tokens for the moment. First social tokens for value creation individually created the value of sustainability can be market pricing, which means the value creators according to social tokens, determine whether the value of his creating effective price (if accepted by the market value), the market for the creator to create value creator subjective judgment to the optimal allocation of resources. Second, social tokens add liquidity to value, which makes the individual value creator an investable object, and since the individual value creator continues to create value, which also makes social tokens an equity asset. When social tokens represent individual rights, the possibilities for their usefulness are limitless. At the same time, social tokens enable value creators to access early capital, the early cold start-up costs can be perfectly solved by issuing social tokens, and the market will make a preliminary judgment on the value of the value created, and select the best targets. Finally, social tokens can extend the audience to the whole world. Compared with the geographical fragmentation of Web2.0 platforms, social tokens can integrate global resources and capture value across regions.

So why do social tokens use blockchain technology? As Haseeb, a partner at Dragonfly Capital, said, for Satoshi, Bitcoin had no choice but to use a decentralized technology to implement Bitcoin, hence the blockchain technology. Before Bitcoin, there have been numerous attempts at non-sovereign digital currency offerings (DigiCash, e-Gold, Liberty Reserve), only to be stopped by the authorities. For the authorities, the stability of the financial system is what matters most.

For the Web3.0 open economy, the rapid development and iteration of technology will gradually make up for the loopholes of the past Internet era. Naval predicts in the same tweet that first the Internet will be used to transfer data, then to transfer scarcity (Bitcoin), and then computing resources (Ethereum and other public chains), followed by the transfer of social identities and social graphs.

Social Token Track

There are already a number of on-chain protocols experimenting with social token offerings, for example,Roll,Rally,Fyooz,MeTokens,Zora,Coinvise,Calaxy,Wum.bo, as well as27s. However, the issuance of social tokens is only the first step. It only completes the capitalization of value, and its usefulness needs to be realized in different application scenarios. Ultimately, social tokens may become utilitarian goods, investment capital assets, and a medium of exchange with monetary value.

References:

Theory of value (economics)

Why Decentralization Isn't as Important as You Think

Self-Issued Credit: A Monetary Solution

The Creator Economy Explained: How Companies Are Transforming The Self-Monetization Boom

The Personal Token Revolution

Naval Twitter

What's New in 2021: A look at 7 social token offerings