NFTs | MUSIC x

A music service based on collective bids on NFTs (aka fractional NFT ownership)

Posted on August 13, 2021 | by Bas Grasmayer | 2 Comments

This week hundreds of people pooled money to collectively place a bid on NFTs and attain fractional ownership using a tool called PartyBid. They succeeded. 478 people teamed up to form the Party Of The Living Dead and secured one of the highly popular (and expensive) NFT collectible CryptoPunks. 25 people acquired an NFT released by music x web3 project Songcamp Elektra, calling themselves Elektranauts.

The Elektranauts PartyBid (@prtyDAO) has officially won the auction for “Log 2: Godina’s Message” on @ourZORA !!!$SQUAD UP 🥳https://t.co/py566k4LtB https://t.co/sGGsND1I4P
— SONGCAMP (@songcamp_) August 8, 2021

After purchasing the NFT (of which there exists 1), buyers get ERC-20 tokens which represent the fractional ownership (of which there exist proportional amounts for each buyer). In my recent piece about data autonomy & the creator economy I explained how tokens on blockchains can be used to create platform-independent social groups. This is an example of it: the fractional ownership of the NFT represents group membership. In the case of the Party of the Living Dead that membership is signified through 1,201,725 $DEAD tokens and in the case of the Elektranauts through 2,100 $SQUAD tokens, a reference to a term used by the Songcamp DAO. What if certain privileges were given to those group members?

From whales to swarms

The NFT boom that happened over the past year saw so-called ‘whales’, people with a lot of (crypto)currency to spend, place huge bids in auctions. As the usability layer of the web3 evolves, we see groups of people (often organised in DAOs) come up with tools like PartyBid to be able to compete with whales.

It is early days for the web3. It may feel differently if you’re out of the loop, but new ideas, interfaces, protocols, tools, improvements, standards are being proposed, shipped and adopted on a daily basis. So what can build upon PartyBid? What can build upon fractionalized ownership of music NFTs?

A Bandcamp for Fan DAOs?

Fans can now come together to place collective bids on music NFTs. Afterwards, they receive tokens to signify their status as a fractional holder of that NFT. What if there was a service that offered extra perks based on the (fractional) ownership of music NFTs?

I buy music on Bandcamp for 3 reasons: 1) to support artists (for the brave: here’s my collection), 2) to get the audio files in order to DJ, 3) to offline sync the music into the Bandcamp app. The music may also be available on large streaming platforms, but I like the idea of ownership & supporting financially – it’s a win-win. So I stream my purchases from the app, or play from the offline cache. Could similar dynamics be utilized for a next-gen music service?

Each fractional NFT token you hold could unlock things like offline playback, although it may take a few years for the music licensing landscape to catch up with the web3. So let’s look at two other scenarios:

Fan chat

Communication tools for mini-fan clubs, e.g. a group chat. You login with your crypto-wallet, the service reads your tokens and 🪄✨ like magic ✨🪄 you’re connected to other fans. It would have to compete with other apps that may implement tokenized group chats, like Telegram (and I predict Instagram), so perhaps music-specific features should be included, initially by integrating with web2 platforms like SoundCloud, Bandcamp, Spotify, etc. A web3 route would mean empowering the group with tools specifically tailored towards DAOs of music fans.

Fan galleries

As a fan you can show off your collection on a profile. A service might help people find holders of fractional tokens of NFTs minted by the same addresses. That means: if an artist created 2 NFTs, the token holders for those NFTs can find each other through the platform.

This could create an economy on its own. If other people want in on the fractional ownership, then a new community could organize and place a bid to buyout the original community. The original’s members would be able to profit from the increased value of the NFT, plus would still be able to join the new community’s bid, so they retain access after the sale. Importantly, the original artist would also be able to receive a % of resale money, if such a clause is contained in the smart contract.

And then…

To imagine what the space could look like, one should ask “and then what?” If a certain scenario plays out, what does it look like when people build from there? What would have to surround it? There’s a whole lot of imagining going on right now and a lot of building. Some of it will follow patterns we’re familiar with from the web2, but much of it will diverge.

What’s becoming clear to anyone paying attention: what makes NFTs is not the high auction sums – it’s their functionality & use to underpin a new decentralized social web.

What do you buy when you buy merch?

Posted on July 29, 2021 | by Maarten Walraven-Freeling

Merchandise is important. It’s important for fans who can express their fandom. It’s important for artists and other rightsholders who use it as an extra revenue stream. But recently I’ve been wondering what you actually buy when you buy merch as a fan. And consequently, what that means for artists who look at merch as a form of revenue. It’s important to ask what kind of merch you want to sell and who your audiences are for it. Especially in a world where platforms like Amazon Music, Instagram and Twitter improve their creator-focus by making it increasingly easy to sell merch I see three major answers to the title of this piece:

You buy something physical like a t-shirt, a mug, or a record or something virtual like a skin, an AR filter, or a digital download
You buy status, showing off your fandom and gaining access to an in-crowd of superfans
You buy into an artist and show your love and, more and more, gain access to the artist

The physical and the virtual

Let’s start by going back to 2019, pre-pandemic. atVenu, a commerce platform for selling merch while on tour, shared data showing that on average people attending concerts continued to spend more because they were buying more merch items year-over-year. This increased the average dollar amount punters spent as well. A positive trend then, but looking at what concert-goers mainly bought the data showed that the most popular item was still a t-shirt and then preferably a black one. Moreover, further data by atVenu from 2019 shows that on average artists bring 17 items to a show while only 4 items bring in 75% of all revenue. This means it’s worthwhile thinking about the combination of merch items you sell during a show. Definitely a t-shirt, preferably a record, then some other form of apparel – depending on your genre it can be a cap or a hoodie or a longsleeve, etc. – and finally something else like the aforementioned mug.

When we move from the physical to the virtual I often think about gaming more than music. That’s mostly because in gaming virtual merch-type items are already a big business. And when music flows into the world of gaming we see the results. Of course, there’s Lil Nas X his famous Roblox show. In an interview with Gamefam, Roblox global head of music Jon Vlassopulos explained how you “could dance together using custom, exclusive emotes, throw snowballs at each other, dress up in custom merch, hunt for coins, etc.” Moreover, these virtual merch items drove “seven figures in merch sales.” And it’s not just an artist like Lil Nas X who drives these sales. Oana Ruxandra, chief digital officer at Warner Music Group, told the CogX conference this year that Why Don’t We‘s Roblox concert also involved good sales of “artist skins, clothing, [and] a number of different accessories.”

The Why Don’t We scavenger hunt in Roblox, Pro Game Guide

That’s what happens when an artist hosts a concert in game. However, with more direct-to-fan strategies like setting up a Patreon or a Discord artists can open up routes to sell virtual merch items that are not necessarily connected to a live event. Moreover, there are many virtual worlds that integrate virtual merch options. All of this will grow alongside physical merch.

Status as a fandom

The reason merch sales will continue to grow is that fans will continue to seek ways to express themselves. It’s often also a status thing. How often have you walked around in your semi-obscure – probably black – band t-shirt and gotten a shout-out from someone random just because you’re wearing that band’s t-shirt. Of course, this particular example can become commoditized like with Nirvana or The Ramones due to their availability in high-street stores like H&M. Yet, this form of status can be used to more effect by many artists today. It’s not just about the t-shirt, it’s about the status that comes with having that t-shirt from that particular tour or with having the ARMY Bomb. Merch can give a fan a place within a broader fandom. Taking a Status as a Service approach, as popularized by Eugene Wei, artists need to have a twofold strategy to merch in relation to status. Items, whether physical or virtual, should provide social capital and have a high utility.

NFTs and social tokens can be one example where ownership can showcase status and thus provide social capital. These tokens also provide a utility in that they often provide access to certain things like memberships, meet-and-greets, unique tracks, etc. Examples unrelated to blockchain can be fanzines that artists recognize or, to go back to the t-shirt, simply getting a shout-out during a concert for wearing a very specific tour t-shirt. Interestingly, this kind of status-recognition can also come from the artist. Eddie Vedder famously jumped from the stage lights during Pinkpop festival in 1992 wearing a home-made Tivoli – a Dutch venue – t-shirt. In 2001 he wore that same t-shirt again at the same festival and now it’s back on his Funko doll.

Buying-in and showing love

Of course, buying merch is always about showing love to the artist. Besides listening to their music, going to their concerts, your fandom goes one step further and you spend that extra buck to show your support. More and more, and especially during the recent periods of lockdown, buying merch has attained a bigger status as a show of love. It’s also changed how artists sell their merch and what kind of merch they sell. This is especially true of platforms like Bandcamp, where the virtual merch table is automatically integrated during the livestream. What’s more, any buyer gets a mention in the chat allowing the performing artist to give that all important shout-out. That’s not just showing love, but getting the immediate status recognition too.

Again, blockchain-based tokens take this one step further. Not only do they allow the type of investment that will let the fans grow revenues as their beloved artist gains more prominence. More importantly, tokens can provide the privilege of access to the artist. This can be in the form of 3LAU creating a song with the highest bidder of his NFT, but it can also take the shape of a more community-driven solution. In that sense, it’s similar to offering various tiers of access through a Patreon or similar service. The positive extra of a token is that it allows a more reciprocal growth as value can increase over time seperately from the interaction between fan and artist.

Know your audiences, or what do you sell when you sell merch?

The key to understanding these various ways of engaging with merch from the perspective of the fan is to know how to approach those fans as an artist. Not every fan is the same, nor do they want the same. Realising that you have multiple audiences as an artist allows you to strategize accordingly. There’s many ways to do this. One example is terrible*, a company that takes a product management approach to physical merch and helps artists conceptualize, design and deliver products to their fans. In a similar vein, the increasing focus on utility in relation to NFTs shows how artists are thinking about adding value for specific fans. Whether it’s physical or virtual, and whether it’s about status or showing love, what matters is that merch is about more than just selling something. More and more it’s about establishing a connection and doing so with a broad variety of your fan audiences in mind.

The non-static tipping point: how culture’s going non-linear and generative

Posted on July 20, 2021 | by Bas Grasmayer

Deepfakes, infinite albums, generative NFTs – creative pioneers are rapidly pushing technology-enabled concepts into the center of web culture. Whereas just a few years ago, it was hard to get people to care about non-static media, it’s now grabbing people’s attention and their (crypto) currency.

Problem-solving

The Infinite Album gives video game streamers a way to soundtrack their streams without risk of takedowns. The AI creates soundscapes that react to your gameplay and even lets Twitch viewers use commands in the chat in order to influence the soundtrack. The music industry as a whole has been unable to form a global approach that makes it easy for gamers to understand what music they can play on-stream. This situation has given room for new entrants, some very tech-driven, to solve a clear problem.

https://www.youtube.com/watch?v=-0KCZlvNVKw

Another example I’ve mentioned here before over the years is Endel, which provides ‘personalized soundscapes’ that help the listener focus, relax or sleep. They’ve essentially taken a common use case for music and have built a product that doesn’t neatly fit within the common formats of the music industry: a mental health app with adaptive soundscapes. Their artist collaborations include techno pioneer Plastikman (Richie Hawtin) and Grimes.

World-building

One of the most ambitious projects to recently launch is Holly Herndon‘s ‘Holly+‘. The singer, musician and frequent AI-collaborator has created a deepfake version of herself which people can then collaborate with. Another way of putting it is that Holly, through her collaboration with Never Before Heard Sounds, has created an instrument that is based on herself. She will set up a Decentralised Autonomous Organisation (DAO) to govern her likeness and is creating an NFT auction house using the Zora protocol to sell approved artworks. She describes:

“The Holly+ model creates a virtuous cycle. I release tools to allow for the creative usage of my likeness, the best artworks and license opportunities are approved by DAO members, profit from those works will be shared amongst artists using the tools, DAO members, and a treasury to fund further development of the tools.”

Other recent examples include a new release by Agoria & Ela Minus on Bronze Player, a tool that lets artists create music that recomposes itself infinitely, which in a way makes recorded music feel more like performed music in that you won’t be able to experience it exactly the same way twice. A linear version of the song was also released (embedded below).

One NFT platform I’m keeping a close eye on is Async, which sells art NFTs in layers, allowing the creator to set rules for the manipulation of the art and the buyers to reconfigure the work. After starting with visual arts, it launched Async Music:

“This is music with the ability to change its composition. It may sound different each time you come back to listen. This is achieved by breaking down a song into separate layers called Stems. Each Stem has multiple Variants for its new owner to choose from. In this way, a single Async Music track contains many unique combinations of sounds.”

Water & Music, run by Cherie Hu, estimates that Async has grossed about $650K in revenue from music NFT sales in May & June of this year, taking the third place in terms of music NFT marketplaces by revenue size.

Status-shaping

Possibly the largest non-static art projects, by revenue share, are NFT collectible avatars such as CryptoPunks and Bored Ape Yacht Club. These avatars are generated from variables like hair & skin colour, accessories and other types of character customization, leading to sets of 10,000 unique avatars. These collectibles are then sold as NFTs. Particularly CryptoPunks are highly valued due to them being minted before last year’s NFT explosion and thus being a status symbol in the budding Web3, often selling for tens of thousands of dollars. There are even cases of people paying over a hundred thousand dollars, like Jay-Z for CryptoPunk #6095.

A tipping point?

I believe that music’s future is non-static. It gained a default characteristic of linearity in the age of the recording, meaning: a song will sound the same every time you hear it. That’s a very recent trait for music to have by default. Now with powerful connected devices and a new generation of DAWs, we’re seeing this temporary reality of the recording age unravel and become optional rather than a default.

If you’re an artist, this unraveling means greater freedom in how you approach music as an art; it can be interactive, adaptive, generative, dynamic, augmentative, 3D, etc. If you’re more interested in the business side, you may find that you can take a page or two from the gaming industry’s book and make more money by charging for features rather than the content itself. Sell features, not songs.

Why I’m participating in Songcamp Elektra ⚡️

Posted on June 29, 2021 | by Bas Grasmayer

Songcamp started late March with a simple idea by Matthew Chaim:

This is a place for music and the new internet to crash into each other.

5 weeks later, 13 strangers had made roughly $34,000 USD through their creative collaboration which they sold as NFTs.

I watched from the sidelines excited to see artists find new ways to collaborate, be onboarded to Web3 tools, terminology, and mindset, and make money along the way. This was exactly the mentality I was referring to in my piece Thinking small: a meditation on scale vs success for artists which encouraged musicians to consider options beyond the rat race of streaming, charts, playlist pitching, and constant touring.

Now, the second season of Songcamp has kicked off and I’m glad to be able to help out the music teams in a strategic capacity. Season 2 is called Songcamp Elektra.

Steep learning curves

Once you have some basic experience with web3, many interactions become fairly easy. You’ve bought some cryptocurrency, transferred it to your wallet, acquired some tokens, maybe bought an NFT, registered your name on ENS (also an NFT, by the way), and joined a DAO where you vote on community proposals. From here on out you’re fairly familiar with some of the topics, they become easier to research, and every next step is less daunting than the previous one. It makes it easy to forget about the steep barriers to entry.

There are two barriers to entering the space: one is tech literacy and the other is economical. As I was onboarding a friend the other day, so they could register their ENS domain, I was actually shocked how much work getting set up was. I spread that out over months, but doing it all in one go was a lot.

We went through:

The Metamask sign up process, which is unconventional for many web users, since it requires people to securely store a phrase they need in order to access their wallet. That comes on top of a password. This practice is more common in banking than in most web services – very logical once you’re onboarded, but perhaps less so if you’re ‘just signing up for a thing’.
An issue adding funds to the wallet, since Metamask’s partner that allows you to buy ETH (Wyre) seemed incompatible with their bank. Maybe it was another issue, but in any case: repeated errors.
Registering at Coinbase to acquire ETH. Coinbase requires ID verification, so you have to upload a photo and wait for review. (if you have tips for easier methods, let me know)
Me sending them ETH instead.
Being quoted a price on ENS and then having to pay ‘gas fees’ on top.
When registering their name on ENS: needing to wait for minutes in order for the transactions to clear. This can make people who are used to a fast web, and fast URL registration, quite nervous.

This is tough and requires a serious commitment from people. Suddenly, the streamlined UX landscape of the internet breaks down and things get clunky. For most people, that’s daunting, which is why I wrote a piece clarifying all these terms recently for my newsletter.

What I like about Songcamp is that it helps onboard people. It is really helpful to do these things as a group and to have a trusted group of peers you’re collaborating with in case you run into trouble or have questions.

Financial barriers

I’m concerned about how hard the web3 can be to participate in if you don’t have much disposable income. The way things work right now, it feels very much like pay-to-play. I’m glad there are projects like The Mint Fund which helps underrepresented creators mint their first NFT by covering their gas fees and offering additional support, however people shouldn’t have to rely on funds in order to be able to meaningfully participate.

The way around is participating in a DAO. You can collectively raise funds and then grant participants tokens, which they can convert to cryptocurrency or fiat in order to accomplish their goals.

Songcamp did a version of this for their first season when they sold an NFT in order to raise funds to cover the camp’s costs.

Group experimentation

Together, we’ll be doing a lot of firsts. I haven’t minted an NFT, I haven’t been part of a split, and as a matter of fact it’s been a while since I could lend support to artists from the very beginning of their creative process until post-release.

Songcamp is about firsts: both on an individual level, a collective level, as well as in a more general sense. The general firsts are that the creative experiments Songcamp is running haven’t been done yet before. As a collective, it’s our first time collaborating and many people inside the collective have never met each other before. On an individual level, this is a first for the aforementioned reasons, but also because there may be web3 firsts like those I mentioned in the intro paragraph of this section.

we are about to flip the switch on 💡
a full-stacked cross-disciplinary media company will appear as if out of thin air 💨
we will build a world, and own that world together 🌏
making art will never feel the same 🎨

🔜 @songcamp_
— matthew chaim (@matthewchaim) June 25, 2021

Fun & valuable

Most of all, it’s fun. I started the article with a sum of money to get your attention, but nobody is in this for the money. We have no idea what the outcome will be. Instead, it’s about collaboration, learning, experimenting, creating, socialising, and inspiring.

It’s exciting to be able to participate. I think the time commitment may even be similar to a well-prepared conference keynote about a topic I haven’t spoken about before. But in that same amount of time, I directly help creatives (and myself) with everything I’ve described above.

The most valuable thing we’ll get out of this is that we’ll learn skills, tools, and ways of organising. We’ll develop new perspectives. All of this will compound with previous experience and make it easier to start or participate in any subsequent web3 projects thereafter.

–

MUSIC x is a regular newsletter about innovation in music.
Follow us on Twitter @musicxnetwork.

Select previous writing:

Blockchain basics: how to start a DAO

Posted on June 22, 2021 | by Bas Grasmayer

My recent writing has focused on the community dynamics of blockchain-based ‘Decentralized Autonomous Organisations’ (DAOs). I’ve explored:

why it may make sense to organise your fan community as a DAO.
what a rave collective might look like as a DAO.

In this article I will attempt to explain some of the more technical aspects in clear terms for people with little to no experience with these topics. I’ll be diving into the steps outlined in a tweet by Jess Sloss of Seed Club, a DAO that builds and invests in communities.

How to bootstrap a DAO:

📥 Drop an NFT or series (on chain revenue)
🎁 Give NFTs to dope ppl (on chain community)
🛫 Launch snapshot + token gated discord (gov. infra)
🪂 Airdrop ERC-20 tokens (governance to the ppl)

Use ETH / Tokens to go do cool shit.

🌱🚀✨
— Jess 🌱 (@thattallguy) June 21, 2021

There’s a comment section below. If anything is unclear or could be worded better: let me know either with a question or by spelling things out more clearly yourself.

How to bootstrap a DAO

People familiar with English-language startup terminology will be familiar with the term bootstrapping: to start something using nothing but your own funds (or in some cases: zero funds). Continue reading to learn how a DAO might do that.

You can’t have a DAO without a great community. I won’t go into that for this piece, but recommend reading How to grow decentralized communities by pet3rpan (before you click out of this website, consider joining the newsletter, so we can reach you in case you get lost in a rabbit hole ;-)).

📥 Drop an NFT or series (on chain revenue)

I think by now, for many people, non-fungible tokens or NFTs have become synonymous with auctionable digital artworks. This is not incorrect, but it’s a little bit like saying MP3s are music, while actually it’s a technology that has lots of uses in terms of audio encryption. A slightly better way of thinking about NFTs is as collectibles.

Non-fungible tokens allow for tracking ownership, as well as functionality like ‘splits‘ which are commonly used to make sure the original author gets money (in the form of cryptocurrency) every time their NFT is resold. This is done through smart contracts: little computer programs linked to a blockchain database that run whenever certain actions are performed or conditions are met.

Although the most publicised use case is 1 NFT of a unique artwork being sold, there are also countless examples of collectibles where 10 people can buy NFTs that represent identical artworks (e.g. this NFT by musician Sevdaliza). The former case would be described as a 1/1 and the latter as a 10/10 run, like a collectible. A series could be a set of NFTs, like a bunch of 1/1s, multiple 10/10s, or any mix like a 1/1 and a 5/5 drop.

This creates on-chain revenue: value stored on the blockchain that the DAO will use to let the community participate and distribute ownership. That revenue is stored in cryptocurrency.

A recent music-related example of a DAO that funded itself with an NFT sale is Songcamp. With the on-chain revenue, it could afford to cover the fees associated with ‘minting’ (creating) an NFT for the participating artists in its first songwriting batch.

🎁 Give NFTs to dope people (on chain community)

On chain community means that you have a way to track, via blockchain, who are the people in your community. Since tokens like NFTs allow people to see who owns them, it’s an easy way to trace ownership back to a DAO (the link between the DAO and the recipient is forever recorded).

Step 1: create an address for your DAO on a blockchain by setting up a wallet which allows for transactions and storage.
Step 2: create NFTs with that address.
Step 3: send the NFTs to addresses of people you want to add to your community.

Now there is a link between your address and theirs, through the NFT. You can see this happening in the above screenshot, but strip away the interface of the auction house and you get something like this.

Here you can see the transfer of a token from one address to another, here indicated as club.eth, which is the same @club from the Zora auction house screenshot and actually also the Seed Club referred to at the start of this post.

A community or service can let you sign in using your wallet (e.g. Metamask) which is a little bit like the type of ‘Single Sign-On’ you’re used to around the web from Google, Facebook, and Twitter. It can then check your wallet for any NFTs or other tokens (I’ll get into this) and grant you special privileges, ranging from simple access to more advanced features.

I was recently lucky enough to get voted into Mirror, a kind of crypto version of Medium, but way more interesting (thanks for the votes!). To participate in the vote, you have to connect your wallet. If you win, Mirror transfers an access token to your wallet. On Twitter that looks like this:

Attention $WRITE RACE 💨 Round 17 finalists!
It's time to check your wallets 🪙

Welcome to Mirror 🍾
— @zachingrasci
— @Houses
— @DHannum8
— @BenjaminPrune
— @catalogworks
— @dhof
— @basgras
— @tomosman
— @pnts https://t.co/mBWa4cgyt9
— Mirror (@viamirror) June 16, 2021

On Etherscan, a tool to read about transactions on the Ethereum blockchain, the above looks like this:

Here you can see 1 address sending 10 tokens to 10 addresses through the execution of 1 smart contract (you can read the code of that contract here). Bonus points if you can figure out which address I hold. 😉

Overwhelming? No worries, the user experience is easier than setting up an internet connection or email in the 90s. In the end you just need a browser extension like Metamask’s to log in to Mirror and when it sees you hold the correct token it presents you this simple interface for creating your account:

🛫 Launch Snapshot + token gated Discord (gov. infra)

To set up the DAOs ‘governance infrastructure’, you can use a tool like Snapshot to let people submit and vote on proposals, plus you create a community for token holders (I’ve described token gating in the previous paragraphs). The latter is commonly done through Discord.

Here’s an example of a proposal for CabinDAO: a community that is creating a cabin residency program for select creators.

Here the community (or DAO) is voting on a linked proposal. It’s essentially deciding to commit a certain amount of funds (15 ETH) and community tokens to the program.

There’s a list of voters – 15 in total. They’re shown as addresses on the Ethereum blockchain and since Jon Gold has registered his name through ENS, I can recognize him and search for him elsewhere. For example, I can see he used his $WRITE token to join Mirror a few months ago. The votes are ranked by the number of community tokens someone holds (the bottom 13 are cut off). I haven’t looked into exactly how CabinDAO has distributed tokens so far, but usually they’re awarded to early community members and rewarded for participation, contribution, or in exchange for things (or cryptocurrency).

🪂 Airdrop ERC-20 tokens (governance to the ppl)

I’ve explained non-fungible tokens already, but haven’t gone into detail about other types of tokens.

ERC-20 is basically the technical standard for token implementation on smart contracts on the Ethereum blockchain. Remember Mirror awarding 10 people with tokens to join their service? It happened in 1 transaction through the execution of a smart contract.

While no two NFTs are alike (and commonly use the ERC-721 standard), ERC-20 tokens are fungible, meaning that they can be interchanged with one another. In simple terms, if I send you 1 $WRITE token mentioned above and you send me 1 $WRITE token, we end up with the same in the end. Trading NFTs would typically leave us with two distinct items.

Through your community’s smart contract, these tokens can give you voting rights or participation rights in a DAO, e.g. access to a Discord server or the ability to vote on proposals on Snapshot or similar.

POV: you joined a DAO discord server pic.twitter.com/GuWRbShSKO
— eshita.eth (@eshita) June 17, 2021

This is where you might award the buyers of the NFTs with a certain number of tokens created uniquely for your community through aforementioned smart contract, e.g. if it were for my newsletter’s community, I might call them $MUSICX tokens. You’d also give early community members and other supporters some tokens in your community. This incentivises them to get active and start participating in the governance.

This process of distributing tokens among your community is called ‘airdropping’. Now, there’s just one thing remaining:

Use ETH / Tokens to go do cool shit

Like the Friends With Benefits DAO, you could let people buy their way in through exchanging a cryptocurrency (ETH) for tokens ($FWB). This means as a DAO, you have a certain liquidity from token sales. So as a community, you can use tokens to incentivize certain actions (e.g. creating a residence program for artists in a cabin) and you can use ETH to cover certain costs, from renting the cabin, to infrastructure, to perhaps paying a few developers to build your website.

That’s it. All of the above is using the Ethereum blockchain, but there are other blockchains out there that support similar functionality.

Go organise your community and if you’d like to invite me – send me a token at basgras.eth or a tweet @basgras.