Crowdfunding projects through Social Tokens
How Social Tokens revolutionize the creation and the fundraising process.
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For the past years, the market of social tokens has been correlated to the broader Crypto market. But recently, we've seen this correlation diminish. Indeed, as creators understand more the use cases and the utilities of Social Tokens, they bring in more fans from outside of Crypto. The use cases of Social Tokens are numerous. From allowing fans to invest early in creators, creating premium experiences, or collaborating efficiently with other creators, Social tokens have shown their efficiency to incentivize fans to engage and become Creator's distribution.
It's a complete paradigm shift in the way communities collaborate. It's no more the Creator and its fan, but more a whole community driven by a leader around a joint project. One of the use cases that stood out in the latest months is Crowdfunding through the community. Indeed, we've seen many exciting projects leverage the power of Social Tokens to achieve their goals. Many new possibilities have been made possible thanks to Social tokens and Web3, and Creators are at the forefront of this revolution, leveraging those new technologies to crowdfund their projects and achieve their goals.
This essay will try to understand the advantages of crowdfunding a project thanks to social tokens, understand the differences between crowdfunding a project on Web2 vs. Web3 for Creator and fans, and highlight use cases with concrete examples.
1/ What does that exactly mean to crowdfund a project through social tokens?
In Web2 (centralized Web), creators asked their community to give USD to crowdfund a project. In Web3 (decentralized Web) the mechanisms are a bit different. Creators can mint (create) a Social Token (their personal digital currency) and use it the way they want. Creating a Social Token makes it easier for creators to raise funds as contributors will receive Social Tokens in exchange for their USD. Contributors are part of the project. They own a piece of it.
Let's say a videographer needs to get better video equipment and hire an editor. There weren't many possibilities for the Creator before Social Tokens to crowdfund its project through its community. It was complicated to manage the legal part, deal with the logistic, and rely on a centralized platform. With this new money, the videographer's fans can redeem a slice of it in exchange for USD. They will have access to unique experiences while helping the Creator achieve its goals. While the videographer would have asked in Web2 to its community to "support" his project, he can now in Web3 ask them to be part of it, giving them personalized exchange experiences, a slice of its future income, etc.. The community now has the power to invest in creators to crowdfunding and shape the project's future rather than simply supporting the project from an external position.
In the end, Creators are leveraging new technologies to involve their community in their projects while raising funds to achieve broader goals. That's how powerful Web3 can be.
2/ Why is it great to crowdfund through Social Tokens?
What if you've invested in Taylor Swift early, helping her buy her first studio sessions in exchange for a slice of her future revenues? Chances are, this small investment would have turned in a multi-thousand dollar profit today. Social tokens allow to not simply support an artist but be part of its journey and serve as a way to align incentives. Indeed, by having a share of Taylor Swift's future revenues, its community is incentivized to help her grow and promote her art.
The possibilities are endless for creators. Singers are now able to crowdfund their first album, writers their first book, and filmmakers their first film. By giving communities and fans ownership over the content and, therefore, by aligning incentives, we'll see more and more projects succeed, all thanks to the power of the community and Social Tokens.
As mentioned previously, crowdfunding a project through Social Tokens (Web3) is very different from doing it through traditional Web2 platforms. There are fundamental advantages to using Social tokens to crowdfund your projects, mainly related to three aspects: Financial, Social aspect & Governance aspect.
Let's dig more into the advantages of using Social Tokens to raise funds.
✨ Financial aspect
It allows Creators to raise money for their projects while aligning their upside with key stakeholders.
Creators don't need to use the "all-or-nothing model", in which the money is only passed to project creators when the project reaches its established funding goal.
Overcome the challenges of fundraising through traditional financing methods, which is often complicated for non-well-known projects.
For Community members :
They can buy and trade their tokens without any intermediary taking a cut on each transaction.
It gives supporters of the project ownership over it. They won't simply support the project. They'll possess a piece of it, which means having economic incentives to help the project succeed.
✨ Social aspect
Incentivize fans to engage and promote the Creator's content. Community members have economic & Social incentives to help the project succeed.
Creators have access to the skills of a whole community keen to help grow the project.
For community members:
Be a proud holder of $NAME tokens. Community members will have tokens in their Crypto wallet to prove they were there since the beginning and prove that they helped grow. They'll also have access to special perks and experiences.
✨ Governance & Decisions
Creators have control over the means and the production of their content throughout the process. It enables them to maintain their creative vision.
Everything is decentralized, which means they don't need to ask permission from anyone to crowdfund, and platforms can't ban them. Web3 encourages collaboration and opens access to anyone wanting to build and share the upside without relying on centralized platforms anymore.
For Community members:
Give stakeholders (Community members) the chance to have a voice and influence the project's future. It reinvents the process of creating entirely. Fans can now actively participate in the project, and the biggest fans can pay more to have premium experiences and decision power. It allows creators to granular their pricing while giving the biggest fans the possibility to be part of the creative journey.
You should now clearly see the advantages of creating a Social Token to raise funds for a project instead of crowdfunding it through Web2 platforms. Many exciting projects have already leveraged this new technology to achieve their goals. We're going to explore those examples to better understand why Social Tokens were the best solutions for their use-cases.
3/ Examples of successful Social Token crowdfunding.
Let's dig more into examples of projects that successfully leveraged Social Tokens to crowdfund their project through their community.
Ethereum: The Infinite Garden - $INFINITE - ETHEREUM: THE INFINITE GARDEN is a character-driven documentary film on the challenges and rewards of building a new world. The team exceeded their funding goal of 750ETH and raised 1035ETH(~$2.7M when I'm writing this article). As the team behind the movie explain on their crowdfunding page: "as experienced, independent filmmakers, we understand the challenges of fundraising through traditional film financing methods." Social tokens have allowed the team to ask their community directly, without asking permission from anyone. They will enable them to maintain their creative vision of the film while ramping up production quickly to capture this evolving story in real-time. Furthermore, it allows them to involve the community in making the film by giving them access to the film's private Discord chat and credit them in the film.
Burn Alpha Novel - $NOVEL - As Emily Segal, the author of the Burn Alpha Novel says: "Usually, novelists go to great lengths to fund their own novel-writing process by working other gigs, selling commercial writing, or – in significantly fewer cases – getting an advance from a publishing company. All of these methods have drawbacks in the form of limited time or limited creative freedom for the author. On top of that, the process of creating these works of art goes on behind a veil of secrecy, away from the community that will ultimately enjoy the final product." She has decided to change that and crowdfunded her project through Social Tokens. By helping her achieve her goal to write a novel, contributors will have a mention in the book's acknowledgments, access to periodic supporter-only readings of the manuscript in process, and one-on-one calls with her to chat about writing or whatever is on their mind. Social Tokens helped Emily unlock new experiences with fans while giving her more freedom over her content.
Alex Masmej - $ALEX - Alex Masmej has created the $ALEX token and has decided to sell 10% of the $ALEX token supply against $20,000, claiming to give some of his future income for the next three years. As a 23 years old from France, Alex wouldn't have been able to do it without Social Tokens as it would have been a legal and logistical mess. He achieved his goal to raise $20K and has been able to move to San Francisco with this money. Alex is now the Co-Founder of Showtime, a platform that allows Creators and Collectors to showcase and Collect digital art, and an early investor in Coinvise.
Elektra by Songcamp - $ELEKTRA - Songcamp Elektra is made up of 42 musicians, visual artists, developers and strategists. Together, they are building "Elektra" — an interactive choose-your-own-adventure web3 game with music at its core. As this project evolves, the lines between Creator and audience will blur. Game builders will play the game they are building, and game players will build the game they are playing. The funds raised through this crowdfunding campaign go entirely towards bringing this project to life. The project raised 80k thanks to newly wealthy crypto-natives reinvesting in the next generation of creatives on the internet. This kind of project would have had a hard time being funded through the classic path and would have lost total control over the project.
Creator Cabin - $CABIN - The Creator Cabin DAO has built a new cabin designed as a collaborative co-living and working space for independent online creators. Their goal is to find ways to sustainably fund independent online creators and develop DAO-based governance models for physical spaces. Thanks to Social Tokens, they've crowdfunded their projects, and they collected $42k to experiment with their idea. It's an experiment in universal creator income, tech stacks for decentralized cities, and the physical manifestation of DAOs that has been made possible thanks to their community.\
Crypto and Social Tokens allowed revolutionizing the fundraising processes. It will enable more projects to come to life, rewarding community leaders and community members to collaborate. More and more projects will use Social Tokens to align incentives with their community and achieve bigger goals together. In the end, every project will be tokenized as tokenization changes the equation and greatly facilitate the crowdfunding process.