Greetings, Fabulous Felines and Hoomans of Hivelandia and surrounding communities!

I hope this week has been treating you well, so far!

Let's Talk Community Tokens!

Around here, much "talk" is given to the importance of "Layer 2" communities within the Hive ecosystem... both as a way to gather people around an interest, and as a potential rewards mechanism.

Some even go so far as to say we should "do away" with rewards at the root level and leave it entirely up to the second layer.

That seems like a singularly poor idea to me (for many reasons!)... but that's not my point, here.

Honestly, I do love the many and varied communities we have, and I'm a big fan of the cornucopia of secondary tokens we can find on Hive-Engine... UP TO A POINT.

Reality Check: You're not as Popular as You Thought!

The hard cold FACT is that the vast majority are miserable failures. Not because there's anything wrong with the fundamental idea and intention behind them, but because the economics - or tokenomics - simply do not work.

There's no "magic" needed, just attention to the simple realities of the pricing mechanism at work, in the face of natural demand and supply.

This is NOT rocket science!

If you have a (free) market with a "thing" — could be pretty much ANY fungible thing, from apples to crypto — the price is set by the intersection of the most willing seller and the most urgent buyer. It's simple enough.

Can Has Reward? Can HAS!

So you have your community and you offer a "reward" for content creation, in the form of your token. So now you've basically set the fundamentals for an exchange. I publish something, you give me some tokens. Let's just overlook that the "you" in this case is a collective of individuals, not a central entity.

So now I have these tokens. Since you gave them to me on the fundamental premise that it was a reward, I'm oriented towards them being "of value" to me. So, my first inclination is that I now need to go sell them, so I can buy apples, or pizza, or cat treats.

Now, let's multiply that by a few thousand users, all getting rewarded, and most wanting to end up with anything from cat treats to apples to gas for their cars.

Why Should I BUY This Token?

As I said, the price is typically "set" by the agreement of a buyer and a seller.

We have 1,000 sellers... but where are the buyers? Moreover, where are the "compelling reasons" to BUY this community token, as opposed to merely SELLING it so you can do something more practical and tangible with the proceeds?

How does this functionally translate, in terms of my statement that most layer two communities have been miserable failures?

Look at the hundreds of community tokens we have — and HAVE had — that started off with great fanfare, even rose to considerable heights, only to gradually drop back... and then keep dropping back in what seems like an almost inevitable slow death spiral into worthlessness.

What Did You THINK Was Going to Happen?

The vast majority might start out with a token price of $0.05 or $0.10 or even more... and a year later, they have likely dropped to $0.01, and a year after that, they are $0.0001 with no "final bottom" in sight.

Some might argue that the problem is "unsustainable tokenomics," but that's pretty much putting on blinders. It's simple demand and supply. Where is the value provided that offers a compelling case for people to BUY INTO the community, rather than just using it as a glorified coin dispenser?

Seems to me that a good question to address is how to shift the sales pitch emphasis from purely "rewards" to a broader look at value offered.

It's More Work Than You Think!

Community building is not easy, and it is a lot of work. And it requires tireless and relentless innovation and communication with stakeholders to keep people interested in the long run.

"This is a LOT more work than I thought it was going to be!" is a common complaint... Yes. Yes, it is.

And "wishful thinking" is definitely not going to be enough to carry you through!

Thanks for visiting!

=^..^=

Curator Cat Contemplates Crypto is periodic series of articles and editorial commentaries on Hive, its Communities and the Cryptosphere in general, as seen through the eyes of someone NOT deeply immersed in the technological and financial end of the industry. Equal Opportunity Offender! We've likely got something to piss off everyone, here!

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