Friends With Benefits: A New Model for Social Tokens on Ethereum
This is part of a series of articles from ConsenSys Codefi’s Q4 2020 Ethereum DeFi Report. Download the full report to learn more about token standards for assets and payments, NFT marketplaces, social and community tokens, flash loans, wrapped Bitcoin and Filecoin, lending projects and more.
The Ethereum community gets to ask itself everyday, “what is money?” Before cryptocurrencies and tokens even emerged, a rich intellectual history has been written on the anthropology and sociology of money. Nigel Dodd in The Social Life of Money (2014) argues that money is a “claim upon society” since it expresses a form of debt between an individual and society as a whole. Society might be a nation, but it also might refer to a particular community of users.
This intellectual movement has included the likes of C.H. Douglas in the 19th century, who observed that the lack of finance was a consistent impediment to the development of the arts and literature, and introduced the concept of “economic democracy” through a type of social credit, which had immediate appeal among performers like Charlie Chaplin and the literary circles of Ezra Pound, T. S. Eliot, and Aldous Huxley. This movement claimed that money is never independent of social and political relations, nor independent of culture. Rather, money is based on trust and social values. Money might be represented in shells, precious metal, paper notes, book entries, bytes – yet it still derives its value and its meaning from the social relations among its users.
In 2021, we now have Ethereum, a new materialization of programmable money that can be sent anywhere with an internet connection, but also also is a Turing complete virtual machine that allows for the creation of tokens — value — that can represent nearly anything. We’ve discussed how tokens now represent more than $20 billion in USD-pegged stablecoins, over $50 million in unique art, $5.5 billion in Bitcoin, or voting rights in a decentralized autonomous organization.
Enter Social and Community Tokens
Just like with the growth of digital NFT art marketplaces, COVID-19, and really, the internet, has forced artists and creators to rethink how they can connect with their fans and monetize online. One such platform, Roll, is already beginning to catch on with celebrities like Lil Yachty, Akon, and Ja Rule, all of whom are launching social tokens. Roll uses a link-based system so you can instantly send social money to another user on Roll, or withdraw from your Roll wallet to send to a personal Ethereum wallet like MetaMask. With more than 20 different types, the estimated size of the total social token market cap is $81.2 million.
Tokens that provide access rights to online communities are now possible because of new tools like Collab.Land. Collab.Land acts as a bridge between chat applications like Telegram or Discord and your MetaMask wallet. One such community, Friends With Benefits ($FWB) uses Collab.Land, which to users appears a chatbot that ensures community members are holding enough $FWB tokens in their MetaMask wallet to access various Discord channels. FWB is now also using SourceCred to distribute $FWB tokens commensurate with upvotes on discussions ranging from music production, NFT discussions, breaking news, memes, Substack articles, and trading tips.
I spoke with the founder of the $FWB community, Trevor McFedries, to learn more about his journey, the inspiration behind $FWB, and what’s next for social token communities.
This interview was lightly edited for clarity.
James Beck: Tell me a little about your journey prior to starting $FWB?
Trevor McFedries: I was a software engineer and stumbled into music. I was signed to Interscope and ended up putting out a top 10 album with some friends as the internet was eating the music industry. Because I could write some code I started getting pulled into rooms with executives. That kind of established me at age 22 as this conduit between media and technology. I quit that group, started producing for acts, toured as a solo artist, and long story short, in 2010 got a call from Spotify people saying, “Hey we’re bringing this thing from Scandinavia to the rest of the world. We need someone to translate between a bunch of Swedish geeks and Hollywood suits, that sounds like you.”
So I took a job at Spotify and had my mind blown at how different technology products were from media products. That made me want to think about creating music projects more like software products. I started producing an artist named Banks. In doing so, I built some data scrapers for Last.fm and YouTube and fell in love with some data around the television shows Will & Grace and The Jeffersons changing society.
JB: Will & Grace?
TM: Yeah, there’s all this data that suggests that Will & Grace was largely responsible for gay marriage acceptance in the United States. The public polling of American’s point of view on homosexuality is tied to the ratings of that show. So it became clear to me that media was a great vehicle for creating social change. And there was a new type of media that seemed to be poisoning my peers — you know, the kind of hacker chat, IRC, more reactionary and corrosive places. It seemed like there was an opportunity to create media that could outcompete these damaging narratives and imbue moral — or at least more tolerant — themes.
That was kind of the seeds of building Brud which was like, okay if you could create a Will & Grace that could scale to touch billions, what would that look like? You would need to kind of rethink talent, that could scale like software, that could speak Mandarin, Portugeses, English, Spanish. At the core of all of that is the dream of decentralizing celebrity, and allowing celebrity to be this vehicle for creative people to share their talents through. People call that “headless brands” and Lil Miquela [which Brud is behind] is kind of that. We’ve got teams of writers, animators, stylists all pushing their talents through this character.
JB: How did you get into crypto?
TM: I fell into crypto in 2013, you know, clearly just as a speculative thing as a way to make a quick buck, but then started getting ‘pilled’ by the mechanics and reading whatever I could. I created a pretty tight knit community and have been trading with the same group of seven or eight people. We ‘trauma bonded’ in a way that is pretty special. Along the way some of the homies have gone on to do special things, like Calvin Liu at Compound Finance.
Innovators and creators aren’t necessarily capturing a lot of the value they create. A lot of it is accrued in platforms and fast-follow copycats.
All that is to say, $FWB really stemmed from all those things coalescing from one idea. Every day I wake up trying to build a better future for creative people. We talk about the “Forever 21 economy,” where innovators and creators aren’t necessarily capturing a lot of the value they create. A lot of it is accrued in platforms and fast-follow copycats. This idea that I tossed around with Jesse Walden, another old friend of the music industry, was, “Hey, if this creator economy is really appealing for people and they are looking for different outcomes, is there a world where the kind of the return starts to be more diminishing, where all of the sudden they’re all competing for a fixed pool of paid Substacks, OnlyFans, or Patreons? Is there a more collectivist approach to this, of contributing collectively to a space that also accrues value? What makes social networks valuable? It’s the kind of content we create. Is there a low-touch, MVP way to say, what if people creating all the value, participate in the upside? So I said, let’s mint a token of a fixed amount, and create a community where you need a certain amount of those tokens to join, such that if everyone adds value and demand for those tokens increases, everyone’s bags grow accordingly.
It was a pretty simple thesis, and was one of those things where I could spend a weekend hacking away. I minted tokens with Roll, used Collab.Land to gate the thing, and then built out other connective tissue and bits and bobs for the actual Discord to make it feel like a MVP. The other secret sauce was bringing in great people. The timing was correct because there were a lot of great people that weren’t just interested in pumping their bags, but building a better reality. We’ve had a lot of interesting people like yourself come in and share their thoughts, and as a result the token price has pumped but more importantly we’ve found a space to call home.
JB: I thought it was interesting what you were saying about talking with Jesse Walden about how platforms capture the value of their users. I really like his thesis on the ownership economy, and it’s something we talk about a lot with tokenomics in the Ethereum community. In 2017 it was easier to talk about than to point to sophisticated examples. Here we are in 2021 and there are plenty. When you were hacking on $FWB that weekend, had you heard of any social communities linking MetaMask and Discord? How did you hear about Collab.Land?
TM: Ameen from SpankChain was in one of my groups and he said, “The next OnlyFans will be built with Collab.Land.” I was like, what is this thing? Most people were using it for Telegram — I think there was a Karma DAO. Collab.Land had just rolled out a Discord integration, and I popped into their Telegram, found James [Duncan] who was building it and said, “I love this stuff. If you don’t want to build it, I’ll build it.” He’s now in $FWB and saw the attention to detail we were expressing in building this thing and got excited and helped us put together some pieces and feature requests. I hadn’t seen a lot of people building this type of thing, which is why it felt like the right space to try to build this thing.
JB: There have been attempts at tokenized social communities, like the Pepo App which was really cool, but struggled to scale before shutting down recently. Do you think it helps using Discord, a chat tool people already use regularly and are familiar with?
TM: Yeah certainly. Candidly, I’ve had a lot of experience building communities. I think people assume that if you build a thing, people will come. For me, early on it was trying to figure out where people were looking to learn. Early on it was trading tokens — my buddy Chris was great at that so I gave him some free tokens to come in and contribute insights. That channel was going nuts. I also have a bunch of music friends, so the channel music production took off. Then books, art, NFTs. Like anything else, you listen to the community, figure out how you can improve their lives and figure out how you can give them value for the tokens they’ve traded, and then word of mouth begins the flywheel.
Like anything else, you listen to the community, figure out how you can improve their lives and figure out how you can give them value for the tokens they’ve traded, and then word of mouth begins the flywheel.
It’s definitely an uphill battle, until all of the sudden it grabs hold and people are contributing and feel safe expressing themselves. Creating a value system is important — we were big on real identity in the beginning. Most Discord channels are anonymous. We asked people to put their Twitter handle in their nickname. That allowed people to say, “Hey Holly Herndon is here, cool, you’re a really good person.” That allowed people to feel safe and express themselves being more open. I think that’s a different feel than “XRPpunkboy69” posting in Discord.
JB: It’s great that people are also learning how to use MetaMask.
TM: Yeah but it is still hard because they have to add a custom $FWB token to see it in their wallet.
JB: We need token lists.
TM: I’m going to call Joe and request it [laughter].
JB: How big is the $FWB community?
TM: That’s a good question because it’s one of those things where we don’t really talk about token price. Let me see. It looks like there are about a 1,000 members and a core group of about 400 individuals that are holding the minimum 55 $FWB to access channels.
JB: According to CoinGecko the fully diluted valuation is $139,795,885.
TM: I didn’t realize that. We were in Clubhouse and Cooper Turley was like, “We have a hundred million market cap.” I was like, this community has a bigger market cap than my tech company as of five years ago? Alright, cool [laughter].
JB: Can you tell us about the idea of Seasons and how you plan on distributing tokens for the value they contribute?
TM: One of the major challenges for communities is maintaining that high signal-to-noise ratio. The idea of Seasons was that we would create a new season, let anyone who was active earn the five tokens needed for free to move onto the next season. Anyone who wasn’t checking into the community would be gated out. They would still have their $FWB but can’t post in the community channels. The next Season was born out of us not anticipating that the token price would move as quickly as it did. We wanted to find a way for people to earn tokens. With SourceCred we found a tool we were thinking of building that measures the emotes and reactions that people are using. We have an FWB upvote and a couple others that we are weighting as positive things, and if you are posting content that gets a lot of upvotes, you are going to get a chunk of free FWB. Dexter, on our staff who’s an artist in Houses, has been hanging out in Palm Springs learning to code. He’s been building this stuff and it seems that the tools he’s building is starting to be used by other crypto teams. It’s cool that we are building tooling that will enable communities to grow outside of FWB.
We have an FWB upvote and a couple others that we are weighting as positive things, and if you are posting content that gets a lot of upvotes, you are going to get a chunk of free FWB.
JB: I’m very curious to see how the mechanics of distributing the tokens works. Are you worried about gas prices on Ethereum right now? Are you thinking of batching or using Layer 2 solutions?
TM: I think that we are going to have people claim them, so they can wait for them to accrue before claiming them. One of the people in the group, Matt, the producer known as GIGAMESH, is now working at Optimism, and we are one of the gajillion people waiting for L2 solutions.
JB: Have you noticed a change in the $FWB community’s culture as it’s grown?
TM: I think people are getting more comfortable getting on the video chat and voice chats. It’s sometimes weird to publicly speak in front of three people. It’s almost easier to do it in front of a thousand people than five. We are getting to a place where people feel comfortable speaking into the void.
We are also moving toward a DAO model. Originally, I minted these tokens, but the dream is to have a DAO manage the treasury.