Since the Radicle Funding Team first announced NFT Community Tokens, one of the questions that has come up the most frequently is:
“Why should we use NFTs to represent membership for project supporters? Couldn’t we simply record the membership status of various supporters in a smart contract using a “registry” model instead?”
This is a great question! In this post, we will share some of our design thinking around Community Tokens, and why we believe that an NFT-based design can offer significant advantages and flexibility beyond what a simpler registry-based design allows.
In any kind of donation or patronage relationship, one important benefit that a beneficiary can offer to a supporter is the ability to display some kind of badge that publicly acknowledges that support was given. This pattern can often be seen in non-profit organizations, for example, which frequently publish names of significant donors, or give out clothing, mugs and other items that supporters can display to show that they donated.
However the reality of this sort of highly-specialized custom tooling is that it is difficult to develop and maintain, and even harder to drive adoption for. With that in mind, we asked ourselves: what if we used NFTs to coordinate supporter contributions? Could they function as better badges of support?
A major advantage of using NFTs, in this respect, is that there is already a tremendous amount of standardized tooling available for managing and displaying NFTs (see the screenshot from OpenSea below, for instance). Additionally, because so many of the existing use cases around NFTs are built around the idea of scarcity, many tools for browsing and displaying NFTs are highly optimized to highlight each NFT’s specialness and importance, and we believe that this will help project maintainers and supporters recognize the full impact of the supporter’s contribution as a badge of honor.
An additional advantage of implementing Community Tokens on top of NFTs is that it would give projects flexibility to incentivize early contributions and support. For example, consider a scenario where a project offered a limited-edition Community Token to its early supporters that granted these token-holders a very high level of access and a large number of Snapshot votes for the lifetime of the token. Such designs could cause supporters to want to get in early with their contribution, on the off-chance that purchasing significant influence and access to the project might become more expensive later on.
While it’s true that the delivery of these sorts of incentives could be accomplished using a registry-based approach, an NFT-based design would have advantages for most users in any scenario where the user wanted to transfer the accrued value to another address. This is true simply because of the quantity of standardized, battle-tested software that already exists around managing ownership of NFTs, as well as the familiarity that many Ethereum users already have with such tools.
Even if a project didn’t choose to utilize built-in incentives like those described above, for prominent projects, early Community Tokens might still come to have a kind of “antique” value someday just by virtue of being the first minted, and therefore make them more desirable to supporters.
Regardless of where the value originates, an NFT-based design allows any value that accrues to a Community Token over time to be easily transferred or exchanged later on, which unlocks more ways for projects to incentivize supporters to get in early and bootstrap funding during the difficult early phases of fundraising.
Another way that projects could reward their supporters would be to offer access to member-only content and communication channels for support. A simple version of how this might look would be a private Discord or Telegram channel that was available only to project supporters, where bug announcements and other general project roadmap discussions were disseminated, and high-touch chat-based support could be provided.
Conveniently, tools already exist that allow bots to be utilized as “concierges” for providing permissioned access to these sorts of messaging platforms, based on token holdings (including NFTs). Specifically, Collab.land has a solution that is currently in public Alpha that supports Discord and Telegram and Coinvice also has a similar bot-based solution for Discord. With these solutions, roles are granted to users through a challenge-response interaction with the bot once a user has joined the general channel on the server as a (non-permissioned) user.
By building our membership design on an NFT, we believe that projects will be able to easily build on more and more tools like those developed by Collab.land and Coinvice to automate and streamline the process of offering special access to members whenever it makes sense for the project to do so.