Why I think Loot is the most important token class in the next 5 years
Loot tokens are tokens you earn through community contributions. Instead of mining, staking, or having computers automate certain actions in the network, you are rewarded in utility tokens for your contributions.
governance token
governance token
stable currency
stable currency
dApp tokens
NFTs
access token
discount token
dividend token
So far, we have been discussing the relationship of tokens to financial gain within the narrow confines of token protocols. Even our discussions of NFTs often focus on return on investment rather than economic or personal value. Perhaps this is because: In this field, a lot of mainstream thinking and research comes from venture capitalists and investment funds.
That's not a bad thing, but VC funds are only getting token economic benefits through capital and not through contributions. Therefore, their interest in tokens that need to be earned through contributions is naturally low.
That’s why I think so far “the most important token classes for the next 5 years are not clearly defined and discussed.”
Understanding "Loot"
Loot are items of value and property, historically referring to trophies taken from an enemy during war.
However, in our current colloquial language, it refers to special rewards in the game world. In the game, "Loot" refers to the rewards for defeating a challenging boss or completing your guild quests.
You act together as a team, and together gain the rewards of tasks that cannot be done alone by contributing the unique value of your character (whether as a healer, a fighter, a controller, etc.).
This newly created economic value is only possible through your collective labor contribution, but the reward compensation is often not worth it. For example, a guild in the game can choose to take 30 players to participate in a boss battle, and this boss will drop 10,000 gold coins and a rare sword worth 75,000 gold coins. Maybe each of the 30 players spends 2000 gold on equipment and medicine. They spent a total of 60,000 gold coins. Ultimately, only one player can own the rare sword, while the others share the rest of the gold, meaning each player spends 2000 gold and only gets about 344 gold.
If the team is made up entirely of strangers ad hoc, the financial rewards of this challenge may not be worth it to them. However, since they are guilds that often team up together, the calculation method has changed. They will all profit from the team, which will create more long-term financial returns for them.
Where are the problems in the community?
One of the most interesting debates online is how to enhance and incentivize community participation.
Because of the value of long-tail content, social networking and online community businesses can be profitable. Each visit is worth very little, but when you add up the value of millions of users and tens of millions of visitors, each visit becomes profitable.
The problem is, if you try to pay people for content or contributions that incentivize them to create, everyone ends up only getting a few dollars, so it feels personally worthless.
It's not in Facebook's interest to pay for your data. Facebook uses data to sell ads, earning as much as $15 per user per year.
But if the law changes and Facebook has to pay for your data, and they pay you $12/year for access, selling all your private information, would you accept the deal? of course not.
This is why most incentivized networks have failed historically.
Unlike the "guild" in the game example above, these individuals do not create economic value for the larger group for long-term benefit.
So while a platform that connects users of a specific interest group may generate enough overall value to convince users to buy a membership - it's hard to be rewarded enough for the value created by any one member, so individual members create works that get tips or Revenue sharing is often not directly proportional to pay.
Viewings are evident on most social networking sites, the top 1% of users have large followings and thus monopolize the vast majority of the revenue share - getting to that point requires years of consistent content creation with low pay . So while your current income may be more than enough to pay for the value of creating content, it's still not worth it when you look at the average ROI.
how to provide solutions
That's why we need this new category of "Loot Tokens".
"Contributing to the community through quality labor" earns these tokens, which also represent "reputation, influence, pledge, or authority within the community" and "enable community members to gain personal incentives and continue to create community economic value” and can even “create economic value and interact with the larger community”
Let's take it apart and take a look.
"Contributing to the community through quality labor"
Earn Loot Tokens by contributing to the communities you belong to. This contribution is not financial. It is about contributing by creating value, such as (but not limited to) creating content, hosting events, helping others, sharing or curating content, discussing governance, etc.
"Quality Labor"
Not all contributions are created equal. Communities need a way to determine, measure, and proportionately incentivize the value created by an action.
If two users post the same length of forum post on a message board, but, one adds value and the other is just spam - they don't get the same amount of loot.
There are many ways to solve this problem, such as voting, or other distribution methods. In any case, contributions need to be rewarded commensurate with the economic value it creates, not strictly based on the amount of labor.
In the loot model, not all labor is created equal - it can sometimes be, but sometimes it needs to be able to differentiate.
"reputation, influence, stake, or authority within that community"
Loot tokens are not dividend tokens. They are not revenue sharing tokens. They are not securities. Strictly speaking, it is an incentive model that rewards users in terms of influence, authority, voting rights, speaking rights, or other aspects based on user contributions.
For example, this could be like Reddit Karma, which is a measure of contributions to various Reddit communities. It has no actual economic value and practical value. It unlocks new features like avatars or colored names on forums. New features in online communities are often a status symbol that can be rewarded.
Additionally, it can have an impact on community governance or direct voting.
While these tokens can become economically valuable and even increase in value, it is only a "loot token" if it has a practical use and is not specifically designed for economic distribution. This is where systems like Steem get tangled up. The only uses are for finance (buying ads) and to represent dollar value. No redemption model to align long-term incentives and onboard community members; no utility other than simple financial redemption.
"To align community members with personal incentives and continued creation of community economic value"
The larger the system, the more useful/valuable the reputation or stake incentives members gain within the community. for example
Encourage users to participate in community development.
Users are encouraged to continue adding economic value to the system (such as new premium content).
The result is that users' personal goals are aligned with the long-term goals of all users (regardless of what value they are chasing)
Its value is not the immediate financial value that matters. While some individual users may seek economic benefits for the value they create, some users are seeking reciprocal value, and others are seeking to exchange economic value for something else of value.
"In turn creating economic value and a means of interacting with the larger community"
Now, those communities with shared interests (such as a Facebook group for classic car collectors, and a message board for classic car collectors) are broken down.
As we often say in marketing, the community users on this topic overlap significantly and have a lot of content overlap, but lack a clear communication medium.
When a Loot token develops and provides economic value in one of the sites, it automatically becomes valuable in the other site as well due to overlapping membership.
It's the same pattern of economic pressure that formerly based monetary systems that ran on ropes, stones, and shells quickly adopted the gold standard when they came into contact with other cultures that needed it.
We don't need money to give it value. We just need to know that someone wants it.
The influence of this loot transcends the digital boundaries of a particular website and creates a race condition where the first entity to issue an asset based on its community development ends up being able to capture value not just from their own website , and being able to capture value from all the communities around the same topic, the Loot token ends up being influential.
A layman's explanation of the Loot token
“Loots are tokens that you earn by contributing to a collective goal. They increase your status, access, reputation or authority within the community and can be used within the community, not just consumed, owning them, you will Hope to contribute more to the community over time."
Loot Hierarchy
Just like most MMORPGs have loot levels ranging from junk to legendary, we can also use Loot tokens to calculate how many loot criteria they meet.
For example, Bitcoin and Ethereum are clearly not loot at all.
Dogecoin is loot because its value was originally derived from earning and spending in the subreddit community, however, this value has since been lost and it is not a token.
BAT is loot, even to the point of "normal loot" in that it lets you earn BAT for actions you take, but it doesn't have a strong community and currently has no governance or non-financial loop.
Next, we'll cover companies like Kleros, Flux Market, and UMA, where you can earn profits through actions like judging cases or oracle validation. These actions require human input, but each action either requires staking or can be machine-driven to some extent.
Then there are Santiments, which reward users in a qualitative way for very clear community contributions. However, the scope of the token is currently somewhat limited. The token can be used to unlock more access to the santiments network, but it lacks governance or reputation features.
If we're looking directly at the legendary level, then look at Reddit Donuts, a subreddit token for /r/EthTrader where users can earn cryptocurrency based on their posts on the subreddit.
These tokens can be used to weight votes, redeem loyalty badges, colored nicknames, and unlock new features like embedding gifts into your post replies. (The Ultimate Meme Weapon!)
As these communities grow, so does the influence of the token, and it may start to grow outside of the community.
Why Loot is the Most Important Token Class in the Next 5 Years
For economic stores of value to be effective, they must:
Non-specific: Use cases should not be limited or predetermined.
Non-intrinsic value: They cannot attribute their own value for a single purpose.
Credibility: They must derive value from understandable sources.
Loot tokens balance by creating value within a community of shared interests.
Initially, the issuer comes to authorize as they create tokens and possibly create their first use cases. However, as the token gains acceptance in the community, the token will start to have value in various communities due to the high frequency of user overlap with other communities in the same ecosystem. These expanding spheres of influence will make the loot token the community's de facto currency.
We’ve already seen major players like Reddit and Tapatalk start exploring implementing these token models — it’s only a matter of time before someone commits at scale.
These tokens are often overlooked by VCs because most of them have no investment model - you have to earn your share by contributing, or buy from someone who already owns it.
For over 20 years, millions of active, passionate communities on the web have created incredible value. Loot tokens will give them the ability to further align and incentivize their users and enable their community beyond the boundaries of their own site.
