Balancing speculation & community-ownership
How can platforms create sustainable user-generated value?
JammSession is a newsletter about the latest trends and stories of crypto & gaming. Each week, I jam on the latest trends and happenings of how the story is unfolding.
I’ve been thinking a lot about user-generated value in networks. User-generated value is defined by the amount of work a user puts in to create value for a network. For example, in Minecraft, user-generated value is created by the mod community.
Creators & influencers usually underestimate their worth to a platform. But what if TikTok creators could calculate how much value they’re providing to TikTok, similarly to how validators could calculate how much value they’re contributing to cryptonetworks? Would TikTok creators still be creating value on TikTok? The platform’s job is to keep creators happy and to make sure they don’t know the exact value they’re providing. They want the value arbitrage to capture the most value from creators.
Platforms are currently fighting over creators. As more competition arises, creators begin to understand their worth. And they’re able to start building their networks as opposed to being dependent on a platform that will extract their worth.
Forte realizes this. That’s why they’re spending their time working on Taki. Creators need to earn from the value that they’re putting in a network. Taki is similar to Cameo - users pay for videos from influencers. Forte doesn’t take any fees from each purchase, but instead, puts it towards staking fees on the Rally network. If Forte can get other creators evangelizing the platform instead of fighting for transactions for the money of existing users, then Taki has a high chance of succeeding.
Creators on Taki can receive guaranteed income with staking fees as opposed to one-off purchases - they have an incentive to be early on in the platform to maximize staking yield on Rally. FWIW, staked tokens are only mentioned in the FAQ. Everything else is abstracted from the user.
So we’re starting to see these community-owned networks appear on the application layer, but the problem will be trying to drive demand because of the lack of speculation.
Blockchain games enable speculators, not community ownership
Many blockchain games aren’t community-owned because they optimize for revenue by selling in-game assets, similar to the free-to-play model of today. This model hasn’t been sustainable because the developers are often making more than players. Here’s a report from Flipside Crypto talking about the disparities between the amount of money developers & players earn in blockchain games.
CryptoKitties is one of the only games in which players made more than the developers themselves. Why? Because the players created the most amount of value for the ecosystem through breeding. Other blockchain games capitalize on speculation over creating user-generated value.
Finding the solution to balancing community-ownership and speculation
Blockchain games are no different than the hype-goods model like Zora & Foundation, both encourage speculation and have some primary utility use. But at least in their current iterations, they don’t fundamentally promote community participation and push towards becoming community-owned.
This begs the question: how can we have speculation in communities to drive demand, while simultaneously encouraging them to be community-owned to drive supply?
I think it might be reputation. If community creators optimize for users who contribute to a community rather than speculate, then perhaps more users will start to add value. If we can have limited speculation targeted at users who have already contributed to the network, then we would spend more time making sure our contributions are meaningful.
What if you could find the best modders in Minecraft and reward them for creating content in your dungeon crawler? What if you could incentivize the best DJs on Audius by having them bid for the DJ slot on your Zoom party? Communities can start to unlock deeper community participation once we have a way to build social capital across an open ecosystem.
What do you think? What is the missing building block for applications to become community-owned while we can still attract users through speculation?
I’m currently working on RabbitHole, a platform for new users to learn and earn by using crypto applications. If you’re interested in jamming on topics I mention in my newsletter or on RabbitHole, hit me up on Twitter @flynnjamm.
Balancing speculation & community-ownership
Compound and Balancer are introducing tokens to incentivize users and decentralize ownerships of their respective protocols-- Blockchain games will also try similar experiments moving forward.