This article will review and summarize some opinions based on the SocialFi track of X To Earn. While outputting opinions, it will list 3 projects to make the past, present and future development of X To Earn clear to you.
Because X To Earn is one of the few tracks that I am familiar with besides infrastructure, some of the projects also include my subjective views on my past participation in this track and the construction process~
Title of this article:
The rise of X To Earn丨TipCoin
X To Earn’s business model: Mferc DAO
X To Earn's future tense丨Popp
1. The rise of X To Earn丨Tip Coin review🔻
Before the inscription market appeared last year, there was a very popular social market. During this period, two extremely impressive projects emerged: Tip Coin and Friend.Tech.
They each represent two new paradigms of social tracks at the time: X To Earn and private domain creator economy. Now it seems that the latter is more sustainable and has more staying power, while the X To Earn track is like a higher wave than usual before the tsunami appeared.
Note: The rise of Friend.Tech was based on the premise that the BASE chain attracted a lot of attention from the market at that time.
However, the X To Earn model is still being used as a reference by many projects at present, because its model is a successful case of quickly gathering brand influence for Web3 projects in the market.
(1) Let me briefly review how Tip Coin was spread. This project was divided into two stages. The first stage was a relatively wild diffusion period. Generally, people just posted and replied with the hashtag. Later, the requirement of @Project Official was added;
(2) Then a set of points rules was introduced to quantify the user's behavior on X. This gave it a bit of a POW flavor (the originator of the points game???)
Tip Coin's model of accumulating profits by posting tweets with tags was not the first to appear on the market at the time, but it was indeed the most famous. Putting aside some possible interpretations afterwards, such as big V promoters and joint schemes, it can really be called a model of viral spread (Friend.Tech is much more tortuous than it).
It now seems that its biggest problem may be that it met market expectations too early, issued coins too quickly, and released too many circulating shares to the market, causing prices to spiral downward, so that now few people in the market are talking about it (I estimate that few people will mention this project this year, but this is also from the perspective of the entire track)
2. X To Earn’s business model丨Personal practice review: Mferc DAO🔻
After briefly talking about Tip Coin, I would like to share with you some of my practical experiences in similar models and some business model summaries, which are nothing more than calculating the supply and demand relationship, as well as costs and revenues.
(1) Cost: By capturing user social behaviors through tags and running calculations, the developer API call costs of the X platform are currently divided into two levels: $100/month and $5,000/month. If you want to build a platform, you must choose the latter level. This is the basic cost. If the scale is larger, you can negotiate with the X team, but the specific cost is difficult to quantify;
Here alone, the basic cost per year is US$60,000. This is just the basic expenditure and does not include platform construction and statistics. The actual cost is definitely higher than this.
(2) Benefits: To be honest, I am not very clear about the current benefits of doing this in Web3, that is, the question of how to monetize attention, but the indirect benefits of doing this are quite large 👇🏻
🔻First, accumulate market attention to expand industry influence, refer to Tipcoin;
🔻Secondly, based on the first point, institutional fundraising + coin listing, this is the income that can be easily thought of. Tip Coin also uses this set of indirect benefits. It has not done much work on the direct realization of attention, but the project I participated in at the time gave priority to direct realization of attention;
How did we do it at that time? At least in terms of the needs of token design, we wanted to use the accumulated attention to serve the project party to do marketing activities, and then the profits obtained were divided among the community according to the points algorithm. This model was considered to be a very complete economic design closed loop at the time, but we found problems after reviewing it 👇🏻
🔺First, the marketing demand of market project parties at that time was generally not great;
🔺Secondly, due to the scale of the company, we need a certain number of people to find projects and discuss business matters. However, we can generate electricity for love temporarily for business issues, but we cannot generate electricity for love all the time. The economic incentives of tokens are all real cost expenditures in the short term (don’t say there is no cost, the money in the pool must be paid out).
In summary, we use the algorithm of social tags to build a community within the platform, and then the influence of the community continues to expand, serving the B-side based on the influence, and then feeding back the benefits to the community, a complete closed loop~
Note: The platform that provided us with community support was earlier than TipCoin. We were also wondering why it was later than us, but it worked while we couldn’t.
Let me introduce how we acquire tokens: The closed-loop design of the model is ideal and simple, but Web3 not only has a model, but also a secondary market. Market value management and token FOMO attributes are issues that all projects must consider, that is: you are doing well, but why should I buy your tokens?
Otherwise, it might as well turn into a pure meme, so that there is still a story to hype. The rise of the secondary market depends on fate and whether there are market makers who are interested in entering the market.
In the context of token decentralization, there is no hard demand. If you can’t make a living from the product, how can you continue to create FOMO sentiment in the market? In addition to the secondary market, there are still some problems in the scale expansion of the product itself, which are difficult to solve at once, such as:
(1) How can we convince Twitter celebrities to use it? After all, this method involves account authorization and wallet linking. Wallet linking can be solved by using a new wallet, but how do we solve the authorization of social accounts?
Later, I thought about it and decided that the only way to eliminate the basic doubts of these big users was through authoritative endorsement, but authoritative endorsement itself was also a new problem.
(2) If there is a multi-economic system such as NFT design (at least my project has it), then it is necessary to make an absolute distinction between the rights and interests of NFT and tokens. This is a problem that all multi-economic models will encounter. There are tracks that focus on products, such as DEX, but SocialFi is definitely a track that focuses on both products and economic models;
(3) Lowering the entry threshold for ordinary users and reducing the number of steps for users to participate is also a problem, because there are still issues such as the accumulation of points and the collection of tokens that need to be resolved. Later, I thought about it and found that using a user abstract wallet is one of the supplementary solutions in the process of token collection and wallet.
3. The future of X To Earn丨Popp’s diverse ecological matrix🔻
This is also a project whose main product line is X To Earn. Although the scale effect of the product has not yet taken off, the basics have been laid out quite well, and its products have also solved some of the problems I listed.👇🏻
(1) In terms of content quality, the product itself is embedded with AI to summarize and refine the captured content. This is a relatively novel design that is different from similar projects I have come across before (although it only did Chat GPT integration), and as far as I know, the content captured by this creator does not need to be labeled, it is captured by their AI (although I don’t know how the principle is implemented, maybe the quantitative indicator is the number of fans?).
It also partitions the content on the platform, which improves the efficiency of information indexing. This is a problem we have encountered before. Later, we used the community to actively select some high-quality content every day, but because the original design required tags to capture, the scope of capturing high-quality content was actually very limited. Popp has solved this problem to a certain extent (but the classification is not detailed enough).
🗝️In addition, in terms of content, I think we can design a scoring mechanism and set up a governance committee to score high-quality content or the quality of creators' content and give priority to push them. This will actually be more beneficial to users, KOLs and platforms.
(2) In terms of channels, this is also related to content. The capture of content is not limited to one platform, but multiple content platforms will capture it. I am very curious about how this is achieved. In this way, the volume and quality of the content will actually be greater, and it will be more difficult to control it. Therefore, I think that putting the current task points into the community in a governance manner may be a better way to deal with this problem.
In the multi-platform content aggregation, including the capture of Mirror, there are actually similar products, such as ChainFeeds.
(3) Token Allocation
1/ I think this part is the most important. Based on the above picture, we can see that the majority of tokens are still controlled by community users, and the issuance is dominated by the user scale, which is positively correlated with the product itself;
I haven’t found detailed information about the mining rate of the community, but it is foreseeable that the share of users in the early circulation will not be the majority. Because if this share is too high at once, the large-scale distribution without cost will encounter the debate of selling pressure and wash trading in the secondary market~
This is the problem faced by Tip Coin
2/ The proportion of the team and investors is within a reasonable range (within 20% each), and there is a lock-up period and linear design after TGE;
There is one point that needs additional expansion here: In fact, if the team and no institutions have shares in it, the distribution of tokens is completely dominated by the community, and the development cycle of the project will be very, very long. This is why I am not optimistic about many fair Mint narratives.
📍The possibility of a project being able to continue to work together is too low, so depending on the different stages of the project, whether there is a main body to guide the development is decisive (this is why I continue to believe that the fair mint of Inscription is not a good way to issue assets, but it will not be a good development route for a project)🔺
3/ Half of the remaining 10% is used for the airdrop activity budget in the development stage, and the other half is for the foundation and KOL rounds;
The overall design of the token can be said to include all parties, and the shares will not be tilted more towards any particular party (the user issuance plan allocated to the community has not been found in detail, so it is difficult to comment)
We compare the token allocation of POPP and Tip Coin and find some similarities and differences👇🏻
(1) Although they all allocated the majority to the community, Tipcoin’s “destructive” allocation allowed a large amount of tokens to enter the market circulation in a short period of time. This move was one of the main reasons for the spiral decline in token prices in the secondary market;
As for the token distribution of POPP, the team may be aware of this, so they avoided large-scale token market circulation in the short term and adopted an issuance design that is positively correlated with the product scale;
(2) In addition, TipCoin did not plan to have a share of investment institutions, which actually surprised me at the time, because according to their qualifications at the time, it would not be a problem to get some institutional financing, even if it was not from a large institution;
Looking back, the development of the entire project was relatively fast. In contrast, another popular application, Friend.Tech, delayed issuing tokens for nearly a year. These are two different strategic moves. Perhaps $TIP wanted to take advantage of the hot social cycle, but it did not expect the social application market to end so quickly.
(3) POPP also allocates a certain amount of tokens to investment institutions, which means that the team has certain financial support to polish the product. One of the main reasons why our previous community project with a similar model ended in failure was insufficient funds;
(4) Token demand side
The token distribution above actually talks about where the bulk of the overall supply of tokens is. However, if the X To Earn track cannot break away from the continuous selling pressure on the market, it will be a dead end for the holders. This is why I said in the title: In the context of the concentration of attention in the social track, we should think more about the utility of the token.
This is not only a problem of market value management. From the perspective of basic needs, we should not give people the feeling: WOC, I have always been taking over for them, so why should I buy it?
At present, on the demand side, we can see that the project is not a planned product line, that is, the creator economy of X To Earn, and the extended products are packaged into a single token ecosystem. This ecosystem is the design of token demand (as for whether the supply and demand links can be turned around, this is a question in the future, but some things can be given up, but they cannot be absent. For the X To Earn track, this is the case);
At present, the ecosystem has already launched three relatively mature products:
1/ One is Popp X, which is a strong Fi-based ecosystem. It allows users to bet on both sides of the voting topic, and the winner will share the prize pool of the loser (ever played coin tossing, right? It is similar to this logic). This type of application logic is very simple, and it is also an event-driven application in Web3.
For example, Binance’s previous report showed that the TVL of the prediction market increased by 68.6% in one year, and the driving force of this growth was based on betting on the results of the US presidential election;
2/The other one is Popp Echo, which is a creator economy application similar to Mirror that empowers content into NFTs, but this product does not integrate user abstract wallets, and the user access threshold is still isolated from ordinary wallets (that is, you need to connect to a wallet to access the platform);
This type of application requires a strong large user background, that is, some excellent creators to promote the demand for content NFT market sales. However, this sector has performed well in the social market. In the non-social market, users' willingness to pay may be more inclined to Web2 platforms with back-end services.
There is no lack of room for content NFT to be hyped, but users’ attention will only be focused on it if it is driven by the market conditions of the sector. It is difficult to maintain order based on demand alone.
3/Finally, there is PoPP-AI BOX, which is an AI plug-in that supports wallet login. Users can add it in the Google plug-in store. Through PoPP AI BOX, users can obtain the latest key information (including token information, financing information, airdrops, project dynamics and important events) when accessing any Web3 project, and there is a real-time group chat for each project.
I think this product is very groundbreaking. There are many websites on the market that aggregate project information, but I don’t know much about the window for building group chats based on projects. At least this model has not been widely used in the market!!!
The above is an introduction to three basic ecosystems, including the future launch of some ecosystems, which are actually centered around the user issuance link, that is, solving the release problem on the supply side, and creating a token demand for the system in the downstream to reduce supply pressure. However, the launch situation of the secondary market needs to be analyzed based on the chips that are about to be launched. Taking the recent IO launch as an example, the community retail investors do not hold many chips, so the performance of the launch is relatively strong (this is also related to the style of the dealer).
