Cutting Through the Hype
A guest post by Autonolas’ Community Manager Thomas Maybrier
I was recently asked to consider the role NFTs might play in growing the Autonolas community. There’s a tremendous amount of overheated discussion surrounding NFTs right now, and this makes it hard to suss out precisely why and how they might be useful for community-focused projects.
As I explored the space, I discovered several very interesting concepts and found plenty of overlap with some of the most common tasks and goals in community management.
In this short piece, I’ll go through some of the ways NFTs provide value, consider how a project might spread and look for alignment with community management best practices. I also wanted to know if an NFT project could be thought of as a way to reduce customer acquisition cost, so I will return to this question throughout.
Utility and Value
From a community management perspective, the most compelling use-cases were the ones that paired the NFT with some kind of utilitarian functionality. Being able to put the NFT to use in an ongoing way makes them more interesting and engaging for members and useful for the project.
NFTs can clearly add functionality, but do they also have the potential to be a driver of community growth too?
The answer here is maybe, and I believe it has a lot to do with the NFT’s value.
The problem here is obvious; there are hundreds, maybe even thousands of new NFT projects launched every day. The higher the perceived value of these NFTS, presumably, the higher the volume of trading, and the larger the spread of the project.
One growth approach is to launch a collection and hope that the NFTs themselves function as advertisements for the project. Each NFT acts as a signpost, building brand awareness and pointing people towards the website and project.
Out of all of the people who see, or maybe even buy one of these NFTs, the hope would be that some percentage of them would be interested enough to join the community.
Working with influencers, or setting up a coordinated buy to generate excitement is a common way of building up an NFT project. Both of those tactics fall outside of the scope of my project, so I won’t explore them in depth here.
To give this “NFTs as ads” concept a fair shake, we need to talk about value. It is, in theory, value that will propel these individual NFTs out into the world. I believe that an NFT’s value, as I currently understand it, comes from one or more of these broad factors.
Speculative value is the least interesting, and, in my opinion, the trickiest to manage. Crypto has an image problem, and I believe that projects aiming for long-term success need to always keep this in mind.
Speculators are a part of this negative image, and that’s relevant to us because most developers and people who might join the community are currently outside of crypto. There are people who don’t see speculation as a negative, and so at least some percentage of potential members would agree. Even so, I think it would benefit us to take a largely neutral stance with regards to the speculative value of any NFTs we release.
While some projects seem to be increasing in value, most are not and thus, appear to have failed as speculative assets, except in the shortest of terms. This seems to me to be a particularly weak value factor, though I acknowledge my limited experience here.
As an aside, one of the content pillars I have chosen for Autonolas is “Crypto Optimism”, the idea that we see real, lasting and transformative power in crypto’s technology stack and values, and are invested in moving the whole industry forward. I see an ambivalent position on speculation as being strongly aligned with this content pillar, and my larger content strategy more generally.
I am heavily indebted to CL at eGirl Capital for this conceptual framing.
Acquisition and ownership of NFT assets can be a performative and expressive gesture. This is the same way the cultural concept of fashion works: to be in fashion means doing what is current, and demonstrating that you “get it”, through your adoption, presentation and curation of what’s available on the market.
Fashion derives a tremendous amount of its value from its use as a kind of social signalling toolkit, allowing us to both communicate with others, and create an outward expression of our sense of self. This is, of course, old news in the social sciences. We have known for a long time that self-expression often takes the form of consumer choices, but it’s still worth putting up for consideration here as we look for parallels between the buying and purchasing NFTs and the existing forms of consumer expression we are already familiar with.
Earlier I said that “to be in fashion means doing what is current”, this entails looking at a kind of scarcity, not of quantity or characteristics, (i.e. rarity, as is taken into account in NFT valuations), but rather scarcity of time, i.e. the time between the birth of a trend and the moment an individual first adopts it. From a consumer point of view, the social signalling utility of an item is directly related to where along this time spectrum it sits. Engagement with a fashionable concept at precisely the right point in its life cycle is what makes an expression of fashion, well, fashion.
Clearly, NFTs can be used for self-expression in much the same way as fashion. In such use cases, their utility, and by extension their value, will be affected by their age and scarcity.
It’s worth noting here, that in fashion, trends begin not with individual designers but manufacturers. Manufacturers conspire to produce certain types of materials, and designers respond to the materials available to them. This presents another interesting opportunity: to design and position our NFT project in the same way that manufacturers do materials.
If a project has multiple uses, there is a chance that the wider ecosystem will adopt and remix it. Without the ability to conspire, however, (see my earlier note about influencers), we may find our reach limited.
One of the more interesting and applicable factors of value is what I’m calling access. This is anywhere, and any way, that an NFT functions as a key or a ticket. NFTs could be used to unlock value in the form of access to people or spaces.
I want to point out here that, if NFTs are used as keys, they can easily end up reproducing many of the same inequalities we see in the real world. I believe that what makes this space interesting and worthwhile is its ability to circumvent or entirely reinvent existing structures. I would be disappointed to see our NFT project function as a wealth gate.
Taking this into consideration, an NFT could be something earned, not bought, tied to a user’s level of engagement or contribution to the community. This format would likely be less useful as an ad than one that could be easily purchased.
As long as we maintain our value proposition by keeping whatever’s unlocked by the NFT key useful, valuable, and importantly, not accessible any other way, NFTs with access value seem relevant for community engagement.
Before we move on, I want to point out that many projects tout the “access to the community” as a part of the value of their NFT. This is usually (but not always) hot air. The community you can access sometimes offers real value, like a party you can attend, or access to a pool of funding for your project.
More often, I observed that there is only room for encouraging others to spend on the project and to invest their time and effort promoting and trying to get friends and family to buy into the project. Making negative or even doubtful comments would result in you being ostracized, accused of spreading FUD.
It’s unclear to me that this leads to anything, other than having CT clogged up with people shilling projects under every tweet that performs well, or makes even passing mention of NFTs. It certainly is not the way I would run any community I was managing.
Now, let’s consider Proof-of-Identity; how do you prove who you are for the purposes of claiming rights or benefits? There’s an interesting use-case for NFTs as proof of ownership, removing the need for trust between us and our community members. NFTs could be used to maintain or provide proof of ownership. That ownership can be linked with benefits like profit sharing and shared custody of appreciating assets.
An analogy: A bridge is built, and people are rewarded for their specific contributions to the construction from the revenue generated by a toll booth. If a person contributed, for example, all of the bolts for the bridge, they could be compensated with a percentage of every toll collected.
If two people each contributed 50% of the bolts, they’d split that percentage of the toll.
In these uses, the NFT acts as the proof of your contribution and its relative value and that since you are who you purport to be, you are allowed to collect on your percentage of the value that contribution provides.
If our community has multiple user classes, the possession of an NFT could represent belonging to a class with the right to push or approve changes. If having or participating in ownership of the community has value, an NFT that connects you with that ownership will also hold value.
Lastly, I want to talk about aesthetics. Some NFTs with an art component derive value from the real or perceived skill required to create the piece of artwork they are paired with. However, NFTs are often associated with low effort, unappealing art and design. Lack of artistic rigour or commitment to craft doesn’t always hinder the spread of an NFT project, but does drag down the overall credibility of the space.
I think it’s fair to say that generally, there is only a weak correlation between an art NFT’s value and the aesthetic quality of the artwork, but the correlation is a logical one with the potential for strength. We have already taken a strong visual stance with our brand, so any NFTs we create should represent a similarly clear aesthetic vision and commitment to beauty.
Taking the design and art that goes into our NFT project seriously is an opportunity to imbue them with value and subvert expectations.
Bringing it all together
There are more considerations and deeper complexity that I haven’t touched on here, like programmable scarcity, the environmental impact and how to address it, the cost/benefits of different chains, the use of influencers, coordinated buys, astroturfing…it’s a complicated space.
However, by looking at these value factors and imagining how they might align with community incentives, I think I can say this much with a fair bit of certainty:
To be an effective and interesting project, community focused NFTs need to offer real utility, like connecting users with value — whether that takes the form of enabling self-expression, access to a space, rights or rewards. The project should strive to meet at least one of these goals. If there’s an artistic component to the NFT, it should be aesthetically pleasing in-and-of-itself. A project that meets this criteria presents real value, and this real value makes the project more likely to spread purely on its own merits.
NFTs that are intended to function as advertisements for the project face a variety of challenges, primarily the difficulty of targeting them to the right audience. It’s anyone’s guess what percentage of the people who discover your community through an NFT project will convert, and the inability to target them in any meaningful way (compared to the advanced targeting currently possible in digital advertising) means the members you acquire could vary wildly in their quality and suitability for building a long term, sustainable community.
Overall, NFTs represent an interesting approach to solving the problem of brand awareness and true community ownership. They also allow us to tie owners to their contributions in a trustless way and create advanced user classes with different rights and abilities.
The space is polluted, so we must proceed with caution and execute at an incredibly high technical and aesthetic standard, but it’s clear to me that there’s real value to be added by pursuing community management goals with this new tech layer.
Interested in what we’re doing? Want to talk NFTs, community management or ask a question? I invite you to join us on the Autonolas Discord. We’re hard at work on the autonomous future of crypto apps, and there’s room for many kinds of contribution, and we’d love to have you with us.