Loot is a token you get through community contributions. Its value is not given by money, but from influence.
Original title: “Why I think Loot is the most important token category in the next 5 years”
Written by: Adam Cochran
Compile: SHOU
Originally published in May 2020
Loot tokens are tokens you get through community contributions. Instead of mining, staking, or letting the computer automatically perform certain operations on the network, you will obtain utility token rewards through your contributions.
We have already witnessed the rise of multiple tokens:
- Governance token
- Exchange tokens
- Stablecoin
- dApp token
- NFTs
- Access tokens
- Discount token
- Dividend token
So far, we have been discussing the relationship between tokens and financial returns within the narrow scope of the token agreement. 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.
This is not a bad thing, but venture capital funds only obtain token economic benefits through capital and not through contributions. Therefore, their interest in tokens that need to be earned through contributions is naturally low.
This is why I think so far “the most important token category in the next 5 years has not been clearly defined and discussed.”
Understand “Loot”
Loot is a valuable item and property, historically refers to the spoils taken from the enemy during the war.
However, in our current colloquialism, it refers to special rewards in the game world. In the game, “Loot” refers to the profit from conquering a challenging boss or completing your guild mission.
You act with a team, and by contributing the unique value of your role (whether as a healer, a warrior, a control, etc.), together you get rewards for tasks that one person can’t do.
This newly created economic value can only be obtained through your collective labor contribution, but this kind of reward and compensation is often not worthwhile. For example, a guild in the game can choose to bring 30 players to participate in a boss battle. This boss will drop 10,000 gold coins and a rare sword worth 75,000 gold coins. Perhaps each of these 30 players will spend 2000 gold coins to buy equipment and medicines. They spent a total of 60,000 gold coins. In the end, only one player can own this rare sword, and others share the remaining gold coins, that is, each player can only get about 344 gold coins for 2000 gold coins.
If the team is made up entirely of strangers temporarily, then the financial rewards of this challenge may not be worth it for them. However, because they are a guild that often team up together, the calculation method has changed. They will all benefit from the team, which will create more long-term economic returns for them.
Where are the problems in the community
One of the most interesting debates online is how to enhance and motivate community participation.
Because of the value of long tail content, social networking and online community businesses can be profitable. The value of each visit is small, but if 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 motivate them to create, each person will only get a few dollars in the end, so personally feel worthless.
It is not in Facebook’s interest to pay for your data. Facebook uses data to sell ads, and each user earns up to $15 per year.
But if the law changes and Facebook has to pay for your data, and they pay you $12/year to gain access and sell all your private information, will you accept the transaction? of course not.
This is why most incentive networks in history have failed.
Unlike the “guild” in the game example above, these individuals will not create economic value for a larger group in order to obtain long-term benefits.
Therefore, although a platform that connects users of specific interest groups may generate enough overall value to persuade users to purchase memberships-it is difficult to obtain sufficient returns for the value created by any member. Therefore, individual members create works to get tips or Income sharing is often not directly proportional to payment.
The number of views on most social networking sites is obvious. The top 1% of users have a large number of fans, so they monopolize the vast majority of revenue sharing-to achieve this level, it will take years to persist in creating content with low compensation. . Therefore, although your current income may be enough to pay for the value of the created content, it is still not worth it when you look at the average input-output ratio.
How to provide solutions
This is why we need a new category of “Loot Tokens”.
These tokens are obtained by ” contributing to the community through quality labor “. These tokens also represent “reputation, influence, pledge or authority within the community”, and it can also “enable community members to obtain personal incentives and continue to create A consensus on the economic value of the community” can even “create economic value and communicate with the larger community.”
Let’s take it apart and take a look.
“Contribute to the community through quality labor”
Earn Loot tokens by contributing to the community you belong to. This contribution is not financial. It is to contribute by creating value, such as (but not limited to) creating content, hosting events, helping others, sharing or planning content, discussing governance, etc.
“Quality Labor”
Not all contributions are the same. The community needs a way to determine, measure, and commensurately motivate 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 cannot get the same amount of loot.
There are many ways to solve this problem, such as voting or other distribution methods. In any case, contribution needs to be rewarded commensurate with the economic value it creates, rather than being determined according to the amount of labor in the strict sense.
In the loot model, not all labor is equal-it can sometimes be equal, but sometimes it needs to be able to distinguish.
“Reputation, influence, pledge or authority in the 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, voice, or other aspects based on their contributions.
For example, this might be like Reddit Karma, which is a measure of contributions to various Reddit communities. It has no actual economic value and practical value. It can unlock new features, such as avatars or colored names on forums. New features in online communities are often status symbols and can be used as rewards.
In addition, it can have an impact on community governance or vote directly.
Although these tokens can become economically valuable and even add value, if they have practical uses and are not specifically designed for economic distribution, then they are just a “loot token”. This is where systems like Steem struggle. The only use is for finance (buying advertisements) and expressing dollar value. There is no redemption model used to coordinate long-term incentives and to attract community members; there is no utility other than simple financial redemptions.
“Enable community members to obtain personal incentives and continue to create an agreement to create community economic value”
The larger the system, the more useful/valuable the reputation or stake incentives that members receive in the community. for example
- Encourage users to participate in community development.
- Encourage users to continue to add economic value to the system (such as new high-quality content).
- The result is that the user’s personal goals are aligned with the long-term goals of all users (regardless of what value they are pursuing)
Its value is not as important as direct financial value. Although some individual users may seek economic benefits for the value they create, some users are seeking reciprocal value, while others are seeking to exchange economic value for other valuable things.
“In turn, create economic value and communicate with larger communities.”
Now, those communities with common interests (such as a Facebook group of classic car collectors and a classic car collectors message board) are broken.
As we often say in marketing, the community users on this topic overlap significantly and there is a lot of overlap in content, but it lacks a clear communication medium.
When a Loot token develops and provides economic value in one of the sites, it will automatically become valuable in the other site because of overlapping members.
This is the same as the pattern of economic pressure. The previous monetary system based on ropes, stones and shells quickly adopted the gold standard when it came into contact with other cultures that needed a gold standard.
We don’t need money to give it value. We just need to know that someone wants it.
This Loot’s influence transcends the digital boundaries of a particular website and creates a competitive condition. In this case, the first entity to issue assets based on its community development will ultimately not only get value from their own website , And being able to get value from all communities around the same theme, Loot tokens eventually become influential.
Popular explanation of Loot token
“Loots are tokens that you earn by contributing to a collective goal. They improve your status, access rights, reputation or authority in the community, and can be used in the community, not just for consumption. With them, you will I hope to make more contributions to the community over time.”
Loot rating system
Just as the Loot level of most MMORPGs is from junk to legend, we can also use Loot tokens to calculate how many Loot standards they meet.
For example, Bitcoin and Ethereum are obviously not loot at all.
Dogecoin belongs to loot, because its value originally came from income and consumption in the subreddit community, but this value has since been lost, and it is not a token.
BAT belongs to loot, even reaching the level of “ordinary loot”, because it allows you to earn BAT through actions you take, but it does not have a strong community, and currently there is no governance or non-financial cycle.
Next, we will introduce companies such as Kleros, Flux Market, and UMA, where you can make profits through actions such as judgment cases or oracle verification. These actions require manual input, but each action either requires staking or can be driven by a machine to a certain extent.
Then there is Santiments, which rewards users for very clear community contributions in a qualitative way. However, the scope of current tokens is somewhat limited. The token can be used to unlock more access to the santitments network, but it lacks governance or reputation features.
If we look directly at the legendary level, we can look at Reddit Donuts, a subreddit token for /r/EthTrader. Users can earn cryptocurrency based on their posts on subreddit.
These tokens can be used for weighted voting, redeeming loyalty badges, colorful nicknames, and unlocking new features, such as embedding gifts in your post replies. (The ultimate Meme weapon!)
As these communities expand, the influence of this token also grows and may begin to develop outside the community.
Why Loot is the most important token category in the next 5 years
For economic value reserves to be effective, they must:
- Non-specific: Use cases should not be restricted or predetermined.
- Non-intrinsic value: They cannot give them their own value for a single purpose.
- Credibility: They must derive value from understandable sources.
Loot tokens balance by creating value in communities with common interests.
Initially, issuers come to authorize because they create tokens and possibly their first use cases. However, as tokens gain recognition in the community, due to the high frequency of users overlapping with other communities in the same ecology, tokens will begin to have value in various communities. These expanding areas of influence will make loot tokens the de facto currency of the community.
We have seen major players like Reddit and Tapatalk begin to explore the implementation of these token models-it is only a matter of time before someone invests in a large scale.
These tokens are often ignored by venture capital companies, because most of them have no investment model-you have to earn your share through contributions, or buy from someone you already own.
For more than 20 years, there have been millions of active and passionate communities on the Internet, and they have created incredible value. Loot tokens will enable them to further adjust and motivate their users, and enable their communities to transcend the boundaries of their own websites.
Source link: medium.com
