---
title: 4.3 Social Tokens
description: Understanding the social value of Non-Fungible tokens
---

# 4.3 Social Tokens

The focus of this lecture centers on the social value of Non-Fungible tokens, as already achieved across the crypto verse through token-gated communities (social tokens) and Profile Picture communities (PFPs). However, in order to thoroughly understand the relationship between NFT’s and communities, we need to also understand the indirect effects generated by such communities. This leaves us with an interesting question we will try to answer at the end: _Are token gated communities necessary for the development of a non-fungible token market in an L1 ecosystem?_

## What is a Token-Gated Community?

To start, let’s define what is a ‘social token’: Technically, a social token could be a fungible token or a non-fungible token, that provides special access to specific benefits in which other owners of the token or NFT are also entitled to. Originally, social tokens began as being for a specific artist or creator, then they morphed into more general communities like _Seed Club_ or _Friends with Benefits._ Then they caught hold with the launch of Non-Fungible Token Profile Picture Collections (PFPs) to provide exclusive access to a specific community server - discord, telegram, or something launched by the project itself.  

_Token Gated Community, are an encompassing term referring to both social tokens and non-fungible tokens. The premise of a token gated community is that it ‘gates’ access to a community or individual, such that only someone in possession of the token would be able to access and participate in the community._

Two well known and highly successful token-gated communities include: 


![](@site/static/img/bootcamp/mod-em-4.3.1.png)




* **[Seed Club:](https://www.seedclub.xyz/)** Seed club is one of the OG token gated communities designed to create a network of builders, DAOs, and crypto-natives. It is rooted in offering builders a 12 week accelerators on the fundamentals of community building and capital formation.

_“We work intensively with you over the 12 week program to refine your plans and prepare you for your capital and community formation milestones. The program culminates with Demo Day, where you get to present your project to 1,000+ prospective contributors and community members._

_We’ve run four successful cohorts to date, and currently support 60+ alumni DAOs. Our next cohort SC05 kicks off mid-September.” ([Seed Club](https://www.seedclub.xyz/))_

The interesting nature of seed club, lies in its ability to connect capital allocators (VC’s) with fresh crypto-native talent, all beneath the umbrella of its token gated community. 



* **[Friends with Benefits DAO: ](https://www.fwb.help/)** Friends with Benefits is one of the most successful social tokens and DAO communities. While FWB is not built around an NFT collection, they are a token gated community [providing business, lifestyle, and networking opportunities to their members](https://www.youtube.com/watch?v=38C5-9RZE7w). 



![](@site/static/img/bootcamp/mod-em-4.3.2.png)

FwB has grown to over 2,000 members, and 8 full time managers. As CoinDesk Reports, it is pushing the boundaries of what a ‘token gated community’ is able to offer: 

_“It’s still also a group chat, but its ambit is much broader: FWB is a music discovery platform, an online publication, a startup incubator and a kind of Bloomberg terminal for crypto investors. It’s setting up community hubs in major cities across the globe; it throws parties with [Yves Tumor](https://www.youtube.com/watch?v=YnZLqtNXbAM) and [Erykah Badu](https://youtu.be/YY2-mrsXgMM). And maybe most crucially, it raised $10 million in financing from the powerhouse venture capital firm Andreessen Horowitz, cementing its position as one of today’s most powerful online crypto communities. Also, it’ll cost you anywhere between $5,000 and $10,000 to join.”_


* **[VeeFriends: ](https://veefriends.com/)** Gary V’s very own NFT community build around experimenting with and understanding business models and opportunities surrounding Non-Fungible Tokens. 

The evolution of token gated communities has been much discussed in crypto, especially when considering how they will most likely evolve over time. In line with Balaji’s thesis on Network States discussed in Module 5, it is highly likely that the most valuable and popular token gated communities are in position to grow beyond their discord server or telegram group into a physical location somewhere (or in many parts of the world), from which they would eventually morph into entire towns or cities. 

## PFP communities: Tools of Speculation or the First Step in Unlocking Non-fungible Value?

Profile Picture communities (PFP) refer to communities that have all purchased the same NFT (usually art, and the size of a profile picture). Ownership of the NFT is the access key into the community discord, office space, or special events. Importantly, PFP’s differ radically from social tokens insofar as they are far more representative and public facing and to date, far less focused on special perks or enhanced benefits from being inside of the community. 

This has led many to take divergent opinions on PFP communities. 

* _Are PFPs hyped speculation on value less assets?_
* _Is there any value in PFP communities?_
* _How do PFP Communities fit into the development of an ecosystem?_
* _Can an ecosystem succeed without PFP communities?_

Below are three interesting examples of different PFP gated communities and the value inherent to them: 

**Bored Ape Yacht Club (BAYC)** - The Bored Ape Yacht club was originally incubated by Yuga Labs on Ethereum. As a community designed for rich people to simply hangout it has attracted interest from the highest order of celebrities including: Stephen Curry, Pipa Malmgren, Jimmy Kimmel and Justin Beiber. Notably, BAYC has an all-time sales volume of close [to $2 billion dollars](https://beincrypto.com/bored-ape-yacht-club-2-billion-sales/). 




![](@site/static/img/bootcamp/mod-em-4.3.3.png)


**CryptoPunks** - ETH OG’s. CryptoPunks are the oldest NFT project on Ethereum, and have been used as a status signal from other crypto OG’s. With [more than $200 million in volume from sales](https://techcrunch.com/2021/04/08/the-cult-of-cryptopunks/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAEkzFXhp4OVpKbOCJzLwkDiqNy1DUjl35jRZAmLCna8itK95eyCMlWdae91szbOYrS7SDvmlyjtMbovtC6oWKDTXHf5vQ90NLvMGfe_I6nsZ1cJPTgy9GcxI2HCkiObX85RRir7ErvspJu40By8h-UF9sZSzMBWj9E7MGf4Xw5ux), CryptoPunks are established as a lasting and blue-chip sub-culture on Ethereum.  



![](@site/static/img/bootcamp/mod-em-4.3.4.png)


**Full-Send MetaCard Collection:** While not an official profile picture, the Nelk boys collection deserves special attention as one of the most successful value creation and community building transitions from Web2 into Web3. Founders of the Full Send Podcast launched the MetaCard collection as a way of providing fans with exclusive access to their platform and themselves - and to have a say in who gets interviewed on the podcast. According to [NFT Now](https://nftnow.com/podcasts/how-the-nelk-boys-made-nearly-25m-on-their-first-nft-drop/) this has been one of the most successful Web2 influencer transitions into Web3 to date: 

_“They explained that the purpose of the project was to launch a number of branded ventures in both the physical world and metaverse, with the ultimate aim of creating a multi-faceted Full Send brand. Some of the ventures they outlined for Full Send include lounges, gyms, festivals, casinos, and restaurants. The Discord server for the collection quickly gained a massive following, bringing in [121,000 members in just about 12 hours](https://www.dexerto.com/entertainment/nelk-boys-are-making-their-own-nft-and-its-already-doing-crazy-numbers-1743039/). The project went live on January 19, and the collection sold out in minutes. The Full Send NFT was available for mint for 0.75 ETH, which was roughly equivalent to $2300 at the time of launch. With 10,000 Full Send Metacards available, the project sold for close to $25 million in total value.”_

## How Should We Think of Communities? 

### Tools for Network development, Culture Creation, and Indirect Capital Flows Into An Ecosystem

One of the most important and least understood facets of token-gated communities, is their indirect and often-times unquantifiable impacts on the growth of the ecosystems they launch within. Many crypto-natives, originally turned off by the loose and unclear value proposition of profile picture NFTs, have taken significant amounts of time to realize that PFP and other forms of token gated communities can bring the following to their mothership L1 ecosystem: 

**Identity:** Membership in a community provides a notion of being a part of an in-group, during a time when many are isolated and lacking in community. It is a way of ‘paying your way’ into a group of people who are interested in connecting with you. 

**Culture:** Collaboration across a community creates a specific culture that is not only present inside of the community but also outside of the community in the surrounding ecosystem. This refers to events hosted in person, projects created by core members, and high level visibility into the community from mainstream media. 

**Network:** A well designed community is a combination of an alumni network, a group of like minded friends, and a group of aligned and talented individuals looking to collaborate on a vision of the future. PFP communities and token-gated social tokens - with proper management - can offer exclusive and life-changing networking opportunities - especially in an emergent industry with lots of money floating around. 

**Signaling:** The belief that a certain community is ‘special’ or bringing together some of the best minds, signals to the larger industry and to other like-minded individuals that there is an incentive and opportunity to benefit from joining the community. This then creates a network effect that can often translate into _a migration_ into an ecosystem - from builders to socialites. In many ways this is a kin to the _brain drain_ discussed in geopolitics. 

**Capital Inflows:** Last but not least, a highly successful PFP or token gated community brings significant amounts of value into the ecosystem it was launched in. This may be because membership is a coveted social symbol, or it may be over-hyped FOMO leading to significant price appreciation. Yet as BAYC has demonstrated, it has been largely new and old money that contributed to its peak volume of 500mm traded for the collection since its inception. In this sense a successful collection can put an entire ecosystem on the map. 

## PFPs as the first step in the evolution of NFTs VS. The Same Problem As Governance Tokens

To conclude this lecture, I would like to leave everyone with an interesting dilemma. We have said in prior lectures on the nature of governance tokens the following:

_The inherent problems with governance tokens, is that they seek to tokenize a value proposition, that usually does not exist on a protocol due to its early nature, and lack of product market fit, or revenue. In short, governance tokens put the cart before the horse, insofar as they seek to offer the value of governance up to the public, for a system that has not accrued any value and by extension has no value to be governed!_

The question can now be applied to PFP and token gated communities: 

_Does the value of a PFP or token gated community come from the creation of the community itself? Or should the community already exist in order for a PFP or token-gated community to be successful?_

Most likely, the answer resides somewhere in the middle. Whereby the prospect of a new community with speculation attached, has the attention to increase interest and value, yet an existent base of talented and involved people who are not only in it for the speculation can ground it and keep members entertained in order for the community to grow over time.