How to Build a Strong Community Around Tokenized Assets

Karolina

10 Jul 2023
How to Build a Strong Community Around Tokenized Assets

For any project to succeed, including tokenized assets, it is crucial to establish a solid community. Amidst the advancing realms of blockchain, artificial intelligence, and cryptocurrencies, tokenization has surfaced as an influential means to digitally embody real-world assets. Tokenized assets provide numerous perks like improved liquidity, fractional ownership, and better transferability.

The Significance of Community in Tokenized Asset Success

The importance of community

A tokenized asset's success greatly depends on the vigor and involvement of its community. A dynamic community acts as the main driving element for adoption, liquidity, and overall appreciation of the asset's value. Here are some reasons why community plays a crucial role in the realm of tokenized assets:

The importance of Community
  • Network Effect: An expanding community attracts a greater number of participants, generating a network effect that enhances the asset's visibility and liquidity. As the community increases in size, the asset gains traction and piques the interest of potential investors and users.
  • Trustworthiness and Credibility: A robust community establishes trust and credibility for a tokenized asset. When prospective investors observe an engaged, supportive community, they perceive the asset as legitimate and dependable, resulting in increased investment and adoption.
  • Constructive Feedback: Members of the community deliver valuable feedback, insights, and suggestions regarding enhancements to tokenized assets. They can propose new features, pinpoint possible issues, and contribute to the overall development and progression of the asset.
  • Advocacy and Publicity: An enthusiastic, proactive community serves as a champion for tokenized assets. Community members often become brand promoters who raise awareness and market the asset throughout their networks. Their eagerness to share recommendations through word-of-mouth can greatly impact the growth of assets.

Community-driven projects vs centralized projects

Tokenized assets can emerge from either community-driven or centralized projects. Grasping the distinction between these two types is vital to understanding how communities influence the success of tokenized assets.

Community-driven projects require active involvement from members in decision-making processes. Such projects are generally decentralized and dependent on consensus-based governance models, wherein token holders possess voting rights that exert influence over project decisions. In these settings, communities play an essential part in determining an asset's course and promoting its expansion.

In contrast, centralized projects follow a top-down strategy, with decision-making processes controlled by central authorities or teams. Although these projects can still involve a community, their role in governance and decision-making is usually restricted. Nevertheless, a vibrant and engaged community can still contribute valuable feedback and support to centralized projects, which enhances the chance of success for the asset.

Tactics for Developing a Robust Community Around Tokenized Asset

Tactics for Developing a Robust Community Around Tokenized Asset

Establishing a Comprehensive Vision and Mission

Initiating community-building entails forming an unequivocal vision and mission for your tokenized asset. This covers its reason for existence, value offering, and long-range objectives. By effectively conveying the positives and potential of the asset, you will draw in those who share your project's aims. 

Appealing Content and Communication

Producing and disseminating appealing content is crucial to attracting and retaining community members. Maintain a prominent online presence through a devoted blog and proactive social media channels. 

Token Utility incentives

Ensuring meaningful utility for your token is crucial for increasing community involvement. Design tokenomics that correspond with the asset's purpose while incentivizing active participation from community members. 

Community Events and Undertakings

Coordinating community events and tasks cultivates a sense of inclusion and stimulates interaction among members. Launch opportunities for networking, knowledge exchange, and cooperation. 

Open and Agile Communication

Openness and agile communication are crucial for trust-building and sustaining a robust community. Keep the community well-informed about project advancements, milestones, and potential obstacles. 

Influencers and Partnerships

To substantially expand the reach and influence of your tokenized asset community, it is crucial to collaborate with influencers and forge strategic partnerships. Gaining support from influencers and reputed companies in the blockchain and cryptocurrency realms can boost awareness, establish credibility, and draw a broader audience. Take into account these methods:

Teaming up with influencers and thought leaders

Engaging industry-respected influencers and thought leaders can facilitate promotion of your tokenized asset, as they possess credibility and hold considerable influence over their followers.

Developing strategic partnerships

Mutual benefits and growth can result from strategic partnerships with well-established blockchain projects, businesses, or organizations. Such collaborations can boost your tokenized asset's credibility, enable access to new markets, and generate integration opportunities. Reflect on these strategies:

  1. Pursue partnerships with prominent blockchain projects or companies: Identify projects or firms that compliment your tokenized asset's offering or cater to a similar target group. Look into partnership possibilities that involve cross-promotion, combined marketing endeavors, or service integration.
  2. Work together on joint initiatives or integration options: In collaboration with partner organizations, embark on joint ventures such as co-hosted events, cooperative research projects, or the development of compatible solutions. Integrating services or products can generate added value for both communities.

Regulating Community Interaction and Providing Support

Efficient community moderation and responsive support are essential in maintaining an engaged and healthy community surrounding your tokenized asset. Ensuring that discussions remain focused, polite, and in line with the project's objectives is the goal of community moderation. Support systems play a vital role in promptly addressing community questions, technical concerns, and other issues. Keep these strategies in mind:

Implementing community moderation guidelines

Implementing community moderation guidelines

Setting clear community moderation guidelines fosters effective communication and acceptable behavior within your community. By establishing and upholding these guidelines, an inclusive and amiable atmosphere is created. 

Providing prompt support

Swift and proficient support is crucial in retaining community satisfaction and trust. Establish means for community members to request assistance and guarantee that their inquiries and concerns receive prompt attention. 

Enhancing and Maintaining the Community

The initial stage of constructing a solid community is crucial, but equally vital for your tokenized asset's lasting success is the ability to scale and maintain that community. As your project expands, establish approaches that not only facilitate community growth but also promote continuous engagement. Consider employing these tactics:

Strategies for growing the community

In order to broaden your community, adopt strategies that motivate current members to invite new ones and attract additional participants. This contributes to a broader network effect and increased community diversity. 

Adapting community governance

As your community expands, think about progressively decentralizing decision-making processes to empower members and guarantee the project's long-term viability. Including the community in governance fosters trust and creates a sense of ownership. 

Conclusion

Developing a robust community centered on your tokenized asset is crucial for ensuring its prosperity and enduring stability. By engaging influencers, forging strategic collaborations, and enforcing effective community moderation, you can appeal to and incorporate a lively community. In addition, scaling the community and including its members in decisions guarantees the project's growth and evolution align with their interests.

Be sure to articulate your tokenized asset's vision and mission, offer valuable token utility, and encourage transparent and active communication with the community. By implementing these techniques and adjusting to the changing requirements of your community, you establish a solid basis for your tokenized asset while fostering a thriving ecosystem that benefits all involved parties.

As the fields of blockchain, AI, and cryptocurrency continue to develop, projects driven by communities possess enormous potential to influence the future of tokenized assets. By cultivating a resilient community, your project is well-positioned for growth, innovation, and widespread adoption in this dynamic and revolutionary industry.

Nextrope Tokenization Launchpad Platform

Nextrope Launchpad Platform is a White Label solution in a Software-as-a-Service model that helps you launch your project within a month and fundraise with Initial Coin Offering (ICO) or Security Token Offering (STO).

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Aethir Tokenomics – Case Study

Kajetan Olas

22 Nov 2024
Aethir Tokenomics – Case Study

Authors of the contents are not affiliated to the reviewed project in any way and none of the information presented should be taken as financial advice.

In this article we analyze tokenomics of Aethir - a project providing on-demand cloud compute resources for the AI, Gaming, and virtualized compute sectors.
Aethir aims to aggregate enterprise-grade GPUs from multiple providers into a DePIN (Decentralized Physical Infrastructure Network). Its competitive edge comes from utlizing the GPUs for very specific use-cases, such as low-latency rendering for online games.
Due to decentralized nature of its infrastructure Aethir can meet the demands of online-gaming in any region. This is especially important for some gamer-abundant regions in Asia with underdeveloped cloud infrastructure that causes high latency ("lags").
We will analyze Aethir's tokenomics, give our opinion on what was done well, and provide specific recommendations on how to improve it.

Evaluation Summary

Aethir Tokenomics Structure

The total supply of ATH tokens is capped at 42 billion ATH. This fixed cap provides a predictable supply environment, and the complete emissions schedule is listed here. As of November 2024 there are approximately 5.2 Billion ATH in circulation. In a year from now (November 2025), the circulating supply will almost triple, and will amount to approximately 15 Billion ATH. By November 2028, today's circulating supply will be diluted by around 86%.

From an investor standpoint the rational decision would be to stake their tokens and hope for rewards that will balance the inflation. Currently the estimated APR for 3-year staking is 195% and for 4-year staking APR is 261%. The rewards are paid out weekly. Furthermore, stakers can expect to get additional rewards from partnered AI projects.

Staking Incentives

Rewards are calculated based on the staking duration and staked amount. These factors are equally important and they linearly influence weekly rewards. This means that someone who stakes 100 ATH for 2 weeks will have the same weekly rewards as someone who stakes 200 ATH for 1 week. This mechanism greatly emphasizes long-term holding. That's because holding a token makes sense only if you go for long-term staking. E.g. a whale staking $200k with 1 week lockup. will have the same weekly rewards as person staking $1k with 4 year lockup. Furthermore the ATH staking rewards are fixed and divided among stakers. Therefore Increase of user base is likely to come with decrease in rewards.
We believe the main weak-point of Aethirs staking is the lack of equivalency between rewards paid out to the users and value generated for the protocol as a result of staking.

Token Distribution

The token distribution of $ATH is well designed and comes with long vesting time-frames. 18-month cliff and 36-moths subsequent linear vesting is applied to team's allocation. This is higher than industry standard and is a sign of long-term commitment.

  • Checkers and Compute Providers: 50%
  • Ecosystem: 15%
  • Team: 12.5%
  • Investors: 11.5%
  • Airdrop: 6%
  • Advisors: 5%

Aethir's airdrop is divided into 3 phases to ensure that only loyal users get rewarded. This mechanism is very-well thought and we rate it highly. It fosters high community engagement within the first months of the project and sets the ground for potentially giving more-control to the DAO.

Governance and Community-Led Development

Aethir’s governance model promotes community-led decision-making in a very practical way. Instead of rushing with creation of a DAO for PR and marketing purposes Aethir is trying to make it the right way. They support projects building on their infrastructure and regularly share updates with their community in the most professional manner.

We believe Aethir would benefit from implementing reputation boosted voting. An example of such system is described here. The core assumption is to abandon the simplistic: 1 token = 1 vote and go towards: Votes = tokens * reputation_based_multiplication_factor.

In the attached example, reputation_based_multiplication_factor rises exponentially with the number of standard deviations above norm, with regard to user's rating. For compute compute providers at Aethir, user's rating could be replaced by provider's uptime.

Perspectives for the future

While it's important to analyze aspects such as supply-side tokenomics, or governance, we must keep in mind that 95% of project's success depends on demand-side. In this regard the outlook for Aethir may be very bright. The project declares $36M annual reccuring revenue. Revenue like this is very rare in the web3 space. Many projects are not able to generate any revenue after succesfull ICO event, due to lack fo product-market-fit.

If you're looking to create a robust tokenomics model and go through institutional-grade testing please reach out to contact@nextrope.com. Our team is ready to help you with the token engineering process and ensure your project’s resilience in the long term.

Quadratic Voting in Web3

Kajetan Olas

04 Dec 2024
Quadratic Voting in Web3

Decentralized systems are reshaping how we interact, conduct transactions, and govern online communities. As Web3 continues to advance, the necessity for effective and fair voting mechanisms becomes apparent. Traditional voting systems, such as the one-token-one-vote model, often fall short in capturing the intensity of individual preferences, which can result in centralization. Quadratic Voting (QV) addresses this challenge by enabling individuals to express not only their choices but also the strength of their preferences.

In QV, voters are allocated a budget of credits that they can spend to cast votes on various issues. The cost of casting multiple votes on a single issue increases quadratically, meaning that each additional vote costs more than the last. This system allows for a more precise expression of preferences, as individuals can invest more heavily in issues they care deeply about while conserving credits on matters of lesser importance.

Understanding Quadratic Voting

Quadratic Voting (QV) is a voting system designed to capture not only the choices of individuals but also the strength of their preferences. In most DAO voting mechanisms, each person typically has one vote per token, which limits the ability to express how strongly they feel about a particular matter. Furthermore, QV limits the power of whales and founding team who typically have large token allocations. These problems are adressed by making the cost of each additional vote increase quadratically.

In QV, each voter is given a budget of credits or tokens that they can spend to cast votes on various issues. The key principle is that the cost to cast n votes on a single issue is proportional to the square of n. This quadratic cost function ensures that while voters can express stronger preferences, doing so requires a disproportionately higher expenditure of their voting credits. This mechanism discourages voters from concentrating all their influence on a single issue unless they feel very strongly about it. In the context of DAOs, it means that large holders will have a hard-time pushing through with a proposal if they'll try to do it on their own.

Practical Example

Consider a voter who has been allocated 25 voting credits to spend on several proposals. The voter has varying degrees of interest in three proposals: Proposal A, Proposal B, and Proposal C.

  • Proposal A: High interest.
  • Proposal B: Moderate interest.
  • Proposal C: Low interest.

The voter might allocate their credits as follows:

Proposal A:

  • Votes cast: 3
  • Cost: 9 delegated tokens

Proposal B:

  • Votes cast: 2
  • Cost: 4 delegated tokens

Proposal C:

  • Votes cast: 1
  • Cost: 1 delegated token

Total delegated tokens: 14
Remaining tokens: 11

With the remaining tokens, the voter can choose to allocate additional votes to the proposals based on their preferences or save for future proposals. If they feel particularly strong about Proposal A, they might decide to cast one more vote:

Additional vote on Proposal A:

  • New total votes: 4
  • New cost: 16 delegated tokens
  • Additional cost: 16−9 = 7 delegated tokens

Updated total delegated tokens: 14+7 = 21

Updated remaining tokens: 25−21 = 425 - 21 = 4

This additional vote on Proposal A costs 7 credits, significantly more than the previous vote, illustrating how the quadratic cost discourages excessive influence on a single issue without strong conviction.

Benefits of Implementing Quadratic Voting

Key Characteristics of the Quadratic Cost Function

  • Marginal Cost Increases Linearly: The marginal cost of each additional vote increases linearly. The cost difference between casting n and n−1 votes is 2n−1.
  • Total Cost Increases Quadratically: The total cost to cast multiple votes rises steeply, discouraging voters from concentrating too many votes on a single issue without significant reason.
  • Promotes Egalitarian Voting: Small voters are encouraged to participate, because relatively they have a much higher impact.

Advantages Over Traditional Voting Systems

Quadratic Voting offers several benefits compared to traditional one-person-one-vote systems:

  • Captures Preference Intensity: By allowing voters to express how strongly they feel about an issue, QV leads to outcomes that better reflect the collective welfare.
  • Reduces Majority Domination: The quadratic cost makes it costly for majority groups to overpower minority interests on every issue.
  • Encourages Honest Voting: Voters are incentivized to allocate votes in proportion to their true preferences, reducing manipulation.

By understanding the foundation of Quadratic Voting, stakeholders in Web3 communities can appreciate how this system supports more representative governance.

Conclusion

Quadratic voting is a novel voting system that may be used within DAOs to foster decentralization. The key idea is to make the cost of voting on a certain issue increase quadratically. The leading player that makes use of this mechanism is Optimism. If you're pondering about the design of your DAO, we highly recommend taking a look at their research on quadratic funding.

If you're looking to create a robust governance model and go through institutional-grade testing please reach out to contact@nextrope.com. Our team is ready to help you with the token engineering process and ensure that your DAO will stand out as a beacon of innovation and resilience in the long term.