...dropping breadcrumbs as I go further down the rabbit hole.
Every day I spent interacting in the web3 space I uncover another layer of things that make me feel like I have no idea what’s happening in this space. But when it comes to community, the truth I keep learning is that no one knows what they’re doing in this space. Everyone’s figuring it out together.
As I’ve gone deeper I’ve begun to suss out some impressions. Thought I’d share what I’m seeing so far with you all.
Each Web3 Community is a Unique Flower
When I first starting playing in this space, I viewed web3 as one big bucket, and web3 community building as a singular practice. Turns out that’s way off.
A DAO community is very different from an NFT community which is very different from a DeFi community.
(DAO = Decentralized Autonomous Organization)
(NFT = Non-Fungible Token)
(DeFi = Decentralized Finance)
I’ll do my best to always define acronyms and terminology in this newsletter so that you don’t have to be an insider to pick up what I’m putting down.
Each type of web3 community comes with a range of current examples, some low quality and some high quality. And there are many layers within those types. For example, there are many different kinds of DAOs each with a unique set of community dynamics.
So when people pass broad judgments about web3 communities as a whole, they might be right, but they’re probably over-generalizing.
Some NFT communities are noisy as all hell and only talk about the floor price (the lowest price that the NFT is currently selling for).
Other NFT communities are slower, more thoughtful, filled with creative people who love the art and price is rarely mentioned.
I’m a part of DAOs with 100 channels and no actual product and I’m a part of DAOs with clear direction and a relatively small community of contributors.
I’m a part of a number of DeFi protocol communities but if I’m being honest I’m still completely lost in them so I won’t be commenting on that just yet.
Current NFT Communities Might All Be Bullshit, but Long Term Legit
Make no mistake, NFTs today are a gold rush. And I’d be lying if I said they aren’t fun to be a part of when you’re on the right side of the rush.
Sure there’s the art. And the art can sometimes be great. GREAT art. But at the end of the day every NFT community I’ve experienced, even the most thoughtful one, have money embedded in the culture.
I think the NFT as a technology is here to stay. I think there’s going to be a lot of interesting use cases of NFTs for membership organizations, as a system of record for contracts, for fanbase communities, and lots of new formats we can’t quite see yet.
But the current state of NFT communities is madness and driven primarily by a belief that more people will buy after you do. It’s a financial investment with “community” on the side.
But hey, if there’s one thing I’ve learned from web3 so far it’s that you can still form friendships through social investing. Just because it’s about money doesn’t mean you can’t get to know other people while you’re buying and selling. I’ve definitely formed relationships in this space that will last beyond the communities. But the staying power of the communities themselves is very low, in my opinion. Most of these communities will be ghost towns in a year. A few will continue on, but primarily because people have invested so much into them already.
I’m still buying NFTs and enjoying the experience. The Toy Boogers community I wrote about previously is still the one NFT community I genuinely enjoy coming back to every day. It’s the one NFT community I’m in that keeps price-talk to a minimum and has a really thoughtful group of regulars in it. Every other community I’ve joined has mostly been noise and “wen?” (asking when the next launch is) and “floor?” (talking about price)
DAOs are Exciting AND Way More Complex than I Imagined
Moving into the world of Decentralized Autonomous Organizations… the concept has been simple enough: What if a community owned and operated a business rather than it being a centralized entity like today’s corporations.
But boy do they have a lot of complexity.
I’ve spent my entire career studying and building communities. When I advise DAOs, I can pretty much always help them with their community engagement strategies, moderation systems, measurement and metrics, etc. But all of that is just one side of DAOs.
The other side involves organizing that community to contribute to the DAO much like employees contribute to a company. Of course that’s not very easy when all of the “employees” are part-time, passive, sometimes anonymous, at varying levels of experience in their profession and in web3.
The community also makes decisions for the company via proposals which are submitted and voted on by the community.
It brings up so many questions like…
What decisions should be made by the core team vs the community?
What contributions should be rewarded with tokens vs volunteer?
How do you compensate people for their contributions fairly?
How do you manage a project with a group of contributors who can disappear at any moment?
How can you feel comfortable working side-by-side with people who are anonymous and could be *literally anyone*?
How do you motivate token holders to vote?
This list goes on. It’s like extreme community building. If you thought growing engagement was hard, wait until you add governance and distributed project management.
A lot of this stuff isn’t new. It’s been tested thoroughly in community management, open-source, government, and co-ops. The introduction of the blockchain shouldn’t, in theory, change how this work is done. And yet it seems like a lot of people in web3 are starting from scratch.
I’m really happy to see articles like this one comparing co-ops to DAOs, being written. We need more of this to avoid reinventing the wheel.
The Financial Incentive Problem Might be Solvable
One of the biggest question marks for me has been whether or not the financial incentive problem is a fundamental flaw in the web3 model, or a solvable problem.
The problem is that historically, communities are driven by social norms. People helping people for the sake of helping people. Reputation. Social capital. Not money.
We know from behavioral economics that the introduction of money, or “market norms”, into social contracts can replace the intrinsic motivation that drove people to contribute in the first place.
So when you introduce tradable tokens to a community, no matter how intentional you are about focusing on authentic community, dollar signs will always be floating around members’ heads.
As an example, I paid $8,000 to buy enough tokens to join FWB, a really well-known DAO. I didn’t look at it as a financial investment. I did it because I wanted to learn and because I heard great things about the community. Well… since I joined the token has decreased in price by more than 50% and I’m down over $4,000. No matter how well-intentioned I am, the fact remains that I’m down that money, and it’s a hard amount of money to ignore. I can’t just be a member of this community without thinking about the financial impact. Membership and investment are inextricable.
If all web3 communities are driven by tokens, it’s unavoidable right?
One example of a potential solution I learned is to offer two tokens:
One token that can only be earned by contributing to the community and can’t be traded on the open market
A second token that can be traded on the open market and has financial value
When someone contributes to the community, they get both. This way, they have a token that’s a stable representation of their reputation in the community, and they can liquidate the other token to reap the financial rewards, without sacrificing that reputation.
Then people can also buy and sell the second token to speculate on price, but they can’t buy their way into reputation in the community.
I haven’t seen this put into practice yet, but in theory it makes sense. In FWB’s example, I could have contributed to earn tokens and reputation in the community to get access rather than just having to buy the token. And I’d still be able to sell the secondary token I earned later without losing my membership.
It made me excited to see that the financial incentive problem might be solvable. If true, then we can much more effectively reward the core contributors of our communities using tokens, while still ensuring that there are reputation-based incentives.
I’m Not Sold On “Play-to-Earn”
There’s a concept in web3 that basically says members can earn tokens simply by participating in the community, or playing the game.
For reasons similar to what I laid out above around financial incentives, I think this is a bad idea.
People already get value from participating in a community or playing a game. I don’t want to earn tokens for reading a blog post, or commenting on a question. I don’t want to be paid just for my attention. Because that will incentivize me, and all other members, to spend my attention on the platform with the highest financial upside.
I get excited when I think about using tokens to reward core contributors to a community. The moderators, event organizers, builders, creators, power users… the people creating significant value in the community. But the idea of rewarding every tiny action in a community feels like overkill.
I don’t know… maybe micro-rewards for micro-actions are a good way to get people engaged in the community or game. And it’ll make it easier for them to move into bigger contributor roles.
But I worry that we’re going to over-financialize everything. As Jeremiah Owyang said in our interview, “Web3 converts communities into economies.”
One day it might seem novel to launch a community that you don’t get paid to participate in.
Anonymity + Finance = Oh No… Bad… Very Very Bad
I’ve always been a fan of anonymity in online communities because I had really positive experiences with it in my childhood. Playing video games at a young age, I loved that I could be whoever I wanted to be online and I wouldn’t be judged for my awkward, pimple-faced existence I was tied to in the real world.
I formed real friends, even though I never knew their name, gender, or age. I knew them by their gamer tag and how they showed up in the game.
So when I saw that anonymity was prevalent in the culture of web3, I didn’t immediately see it as a bad thing.
But what I’m learning is that when you start mixing business and money with anonymity, shit can go off the rails real quick.
There’s the stuff you see regularly like “rugs” (scam projects where the anonymous founders launch, take all the money, and *poof* into thin air). Scams are rampant in web3. But scams didn’t scare me too much. If you’re careful, and know the signs to look for, you can avoid most scams (even though I’ve still fallen victim).
What’s scarier to me is that there are people who are becoming highly influential leaders in web3, who are cultivating massive wealth and influence, and we have zero fucking clue who they are. They could be scammers, racists, criminals… they can be ANYONE. And as web3 is becoming more mainstream, more of these people are getting “doxxed” (when your identity is revealed, often against your will), and it’s turning out that YES, sometimes they are terrible people that we’ve all been following and praising.
At this point, I am no longer engaging with and advising projects unless the founders are doxxed (also used as a general term in web3 for people who use their real identities…I know it’s confusing). If I’m going to work with someone, I need to know who I’m working with.
All in all, I’m having a lot of fun learning about web3. It’s tickling my brain in a way that I haven’t felt in a long time. There are so many interesting community dynamics at play, and lots of opportunity for experienced community builders. If you’re reading this and you know your way around community, trust me when I say that your expertise are strongly needed in web3. Most projects are just figuring out the basic community and moderation stuff as they go.
I’m excited to keep going down the rabbit hole, as long as I can keep finding thoughtful people with the right motivations and ethics to jump in with.
NOTES - What I’ve been reading, creating, and thinking about:
This interview I did with Jeremiah Owyang helped me wrap around the concept of social and community tokens in a big way.
Observation: many web2 community builders have taken issue with the lack of proper compensation of contributors in web2 in recent years, but also take issue with over financializing communities in web3. We can’t have it both ways. Either we need to pay contributors, or be happy with it being volunteer-driven.
My long-time friend and mentor in the community space, Nish Nadaraja, does Proust-like interviews on his blog, and I had the opportunity to be an interviewee this week.
If you’re interested to learn more about DeFi, this podcast interview with my friends Jason Hitchcock and Eric Jorgenson does a really good job of breaking it down. I had to play it on normal speed and regularly go back to relisten to parts before I could understand it.
Interviewing people is an artform, and Andrew Warner is the interview artist I’ve learned the most from.
This article made the rounds around the web3 community last week, and it does a really good job of speaking to some of the challenges that web3 faces.
DAOs are complex, with many layers of community. But most are still treating all the layers as one community in a single shared space, and have one community manager or community team running it all.
On the ongoing debate about whether web3 is truly decentralized, Packy does a great job breaking down the arguments here.
The simplest metric I’ve seen for measuring community health.
We’re going to see a big wave of web3 native community tools being built. Just this week I learned about Bonfire and Scenes. With so much capital and focus on community in web3, I expect there to be a ton of innovation in community technology that will likely outpace web2 community tech in a fraction of the time. The question is how will web3 and web2 tools interact since I don’t think one will replace the other.
We’re announcing the winners of the Community Industry Awards next week. Join us on the blue carpet!
I’m asked every day by companies for recommendations for community professionals to hire and asked by community professionals to keep an eye out for opportunities to send them. Airtable only gets me so far before it breaks… I wish there was a tool to help me manage this.
That’s all for now. Hope this brain dump was worth the read. I’ll continue to use this newsletter as an unfiltered channel to share my thoughts and learnings in the world of community, business, and apparently web3. I intentionally don’t spend much time editing or refining to keep it as low lift and raw as possible.
Hit reply and let me know what your thoughts are on the newsletter or anything that I’ve shared. I love hearing from you!