"Come for the tool, stay for the network" is a classic strategy for bootstrapping social networks. It aimed to solve a hard problem: how do you convince people to join your social network when there's nobody else to socialize with?
One approach is to build a single-player tool that gets people to use the product. Over time, as more people use the single-player tool, you then add social features such as likes, comments, follows, etc. to plant the seeds for a defensible network.
Today, with the rise of creator-focused platforms, this mantra is evolving into: "come for the creator, stay for the network." Creator-focused platforms realize that wherever the creator goes, the audience and attention follows. As a result, platforms bootstrap their network by attracting top creators.
The go-to-market strategy can generally be summarized as:
- Attract top creators with compelling features and / or a bag 💰
- Creators bring their audience
- Add features to retain the creator and their audience long-term
It's no secret that creator-focused platforms like Instagram, TikTok, Snap, Spotify, OnlyFans, Substack, and Triller (lol) are offering massive bags to attract top creators and their audiences.
But there's a few issues with this model:
- It's hard to make a sustainable living unless you're a top creator
- Creator payouts are determined by opaque processes
- Content and social graphs are rarely portable across platforms
In my job at Mirror, I think a lot about how to build products that put more power back in the hands of creators and their audiences. But we aren't a "company", in the traditional sense. Instead, we're building a creator-focused protocol. We work with creators to understand their needs, write smart contracts, deploy them to the Ethereum network, create interfaces to access these smart contracts, and have the goal of developing a new type of network to help creators solve their problems.
Decentralized protocols aren't social networks. They're cryptoeconomic networks.
Instead of "come for the creator, stay for the network", I think the mantra of creator-focused protocols will be more like "come for the creator, stay for the economy."
Here's the difference.
A social network is:
- Owned by shareholders (which skews towards finance firms, executives, board directors, and early employees)
- Governed by shareholders (in practice, governance is usually controlled by the board, CEO, and sometimes activist investors)
- Most code is private
- Data is secured by the company's engineering team
- The network becomes global over time
A cryptoeconomic network is:
- Owned by the community
- Governed by the community
- Open source
- Secured through distributed consensus, cryptography, and public / private key pairs
- Global from day one
Are cryptoeconomic networks perfect? Hell no.
But the point is, creator-focused protocols will be more like internet-native economies than traditional social networks. No more rigid hierarhcies, top-down product development, opaque payment schemes, taxation without representation, or walled gardens.
Creator-focused protocols will have community-led decision committees, native protocol tokens for governance, value capture, and utility, decentralized grant programs, universal creator income, an open developer ecosystem, pseudonymous collectives, degen investment clubs, protocol politicians, and more.
A couple years ago this may have sounded like another one of those idealistic crypto narratives that would never actually work in practice. But it's already happening. Since 2018, DeFi protocols like Uniswap, Compound, and AAVE have earned billion dollar treasuries, launched protocol tokens, and started experimenting with community-led initiatives like grant programs.
Over the next few years, I think creator-focused protocols will reach a similar scale.
But to get there, it usually takes an iterative approach. Similar to how social networks start off looking like toys but eventually evolve into something serious, protocols also need to go through their own natural selection process.
I think successful creator-focused protocols will go through three phases:
- Phase 1: Creator Mode
- Phase 2: Org. Mode
- Phase 3: A Protocol Economy
Here's a high level overview of each phase.
Three phases for creator-focused protocols
With decentralized protocols, "come for the creator, stay for the network" becomes "come for the creator, stay for the economy". Creators will have ownership stakes in the internet economies they're building. They'll be incentivized to hype up other creators. To invest in the community. To direct traffic. To provide support. Fans, curators, and community leaders will do the same.
But how do we get there?
In the rest of this post, I'll sketch out some rough thoughts on the milestones for each phase. To start, let's look at the first phase - Creator Mode.
Phase One: Creator Mode
In creator mode, the goal is to:
"Help creators generate on-chain revenue by selling crypto-native products."
Helping creators generate on-chain revenue is a good first step for a few reasons:
- Convinces creators that it's worth spending more time using crypto protocols
- Gets a creator's audience to download a wallet and on-ramp to ETH
- Provides a foundation for future on-chain experiments
In terms of deciding what to build, I like Li Jin's framework for creator lifecycles. There are four stages:
- Create something
- Build audience
- Monetize
- Manage and grow business
Today, crypto's killer feature for creators is monetizing through NFTs. Over time, I think crypto will get better at other stages like helping creator's build their audience through token rewards and enabling new content formats. But for now, as a creator-focused protocol, your best bet is to help creators monetize (given all the interest, activity, and novel use cases around NFTs).
At Mirror, we've built tools focused on the first and third stages of the creator lifecycle: create something and monetize.
Our founder / CEO, Denis, realized that all creative work has a story to tell and that long form writing was one of the best ways to do so. As a result, the team has spent the past few months building a crypto-native publishing stack for creators to tell their stories. Here are a few components:
- Decentralized identity using ENS. When you sign up for Mirror, you also register an ENS domain using your key. This ENS domain is basically a self-custodied Twitter username and Cash App handle. It's your social identity and economic identity. Soon, we're adding the ability to accept tips to an ENS domain and route funds to other ENS domains on Mirror.
- Decentralized storage using Arweave. All posts on Mirror are signed by your key and stored as a digest on Arweave. We plan on building a tool where people can click a button to export all their posts on Mirror to easily migrate to another publishing tool if they ever choose to.
- Markdown editor. Still in the early stages but the long-term vision is to have a Notion-like block based editor. You'll be able to embed crypto-native versions of crowdfunds, auctions, and global payments right in your post as easily as you can embed an image.
At Mirror, we also realized that creative work needs capital to sustain itself. Given that, we've also built a suite of smart contracts and a web app to help creators fund and monetize their work. A few examples include:
- Tokenized crowdfunds. Raise ETH from anybody in the world with an Ethereum wallet. One author recently raised $50k for an upcoming novel. The crowdfund is tokenized by issuing an ERC20 token to anyone that contributes ETH to the crowdfund. The crowdfund creator can then tie revenue from NFT sales back to the crowdfund contract and token holders can redeem their tokens for a portion of the sales. This has been called a Patronage + Ownership model. Why subscribe when you can invest? For more technical details, check this out.
- Reserve auctions. There are many ways to sell NFTs but reserve auctions are quickly becoming the best price discovery mechanism. Plus they're a lot of fun. As the NFT seller, you set a minimum price and the auction duration. Once the minimum bid is hit, it kicks off a clock based on the duration set by the seller. If a bid come in within the last 15 minutes, the clock is reset to 15 minutes. Mario from The Generalist recently teamed up with Jack Butcher of Visualize Value to auction an NFT that sold for ~$45k.
- Revenue splits. In web2, if you reference someone in your essay by linking out to their Twitter profile or Substack, you're rewarding them with attention. It's then up to the other person to convert that attention into cash. But what if you could financially reward anybody in the world, directly? At Mirror, we recently deployed a revenue split contract that allows you to split sales with any Ethereum address. Packy from Not Boring recently used this feature to split $5k in NFT sales with 16 contributors.
Building a protocol during the Creator Mode phase is hard because you don't have much information. Also, crypto is notoriously difficult to use. Creators are used to slick onboarding flows. Not signing messages through Metamask, paying gas fees, and waiting five minutes for a transaction to be confirmed on-chain.
But we view every experiment as a chance to learn something new about the market and incorporate it back into product development. Here are a few principles we've used to guide us during this initial phase:
- Launch features with a specific use case in mind and then generalize it. So far, our go-to-market strategy at Mirror has relied on partnering with creators on a very specific experiment they want to run. It usually starts with them asking us if doing a certain thing is possible. We go back and forth and scope out a reasonable solution that can be implemented in a couple weeks while still accomplishing their goals. We then implement the feature, reflect on learnings, and continue working with creators to iterate on the experience until we're confident to release it to all of our members. Crypto is so new that most creators aren't sure how to use it to accomplish their goals. These experiments serve as a form of documentation for creators to understand what's possible.
- Optimize smart contracts for security, mechanism design, composability, and gas efficiency. As an engineer building a crypto protocol, one of the first things you'll realize is that writing smart contracts is a whole different game from any other type of programming. If you're a decent software engineer, you can learn how to write a basic smart contract pretty quickly. But it takes years to build secure, composable, gas-efficient smart contracts that unlock useful functionality. By far the #1 competitive advantage a protocol can have is a team of world-class smart contract engineers. I think it's really hard to build a truly innovative protocol without one. Although I'm nowhere near world-class myself, I've been fortunate to work with some world-class smart contract engineers at Dharma and Mirror. I've noticed the four areas they're great at are: security, mechanism design, composability, and gas efficiency. Don't settle until you find a smart contract engineer that's great at these skills.
Listen to the ski instructor
- Use guarded launches to limit downside risk. Our crowdfunds have a funding limit of 25 ETH (~$55k today). Although we take an extreme amount of precaution before deploying contracts to mainnet, there's always a non-zero risk of vulnerabilities. Having safeguards like funding limits ensures people don't yolo their life savings into a random crowdfund and get rekt because of a vulnerability in a contract. No bueno.
Over the past few months, we've learned a lot about what creators want and how crypto can help them build stronger communities. One of the most common pieces of feedback we've received is that creators want to build sustainable recurring-revenue businesses using crypto-native tools. At the same time, they want to ensure their community has a chance to share in the upside.
This leads us to the next phase: Org. Mode.
Phase Two: Org. Mode
In org. mode, the goal is to:
"Help creators and communities build sustainable crypto-native businesses."
Creator mode is about selling crypto-native products. Org. mode is about building crypto-native communities and businesses.
It's kinda like the difference between being an independent artist vs. being signed to a record label. As an independent artist, you're responsible for production, distribution, publishing on streaming platforms, booking live concerts, selling merch, and more. Meanwhile, once you're signed to a record label, many of the implementation details are abstracted away so you can focus more time on creative work. The record label plugs you into a system that makes it easier to produce, distribute, monetize, and grow. For creator-focused protocols, I think the transition from Creator Mode to Org. Mode will look similar (minus the shitty record deals).
But what's the business model for creators? One approach is to connect value to an ERC20 token. Today, most revenue generated on creator-focused protocols goes to an EOA (e.g., an individual's wallet). It's then up to the individual to redistribute the funds themselves, if at all.
However, Org. Mode is about building a crypto-native community with a sustainable business. We can take inspiration from DeFi protocols to understand how to design such a system.
Here's the basic mechanism:
- Issue an ERC20 token. Distribution methods could include a crowdsale, a "fair launch", airdrop to anyone that meets specified criteria, a liquidity mining scheme for active participants, or any combination of the above.
- Develop on-chain revenue streams. For DeFi protocols, this is usually a transaction fee. For creators and communities, this could include selling 1 of 1 / fractionalized / open edition NFTs, collecting NFTs, access to a community, digital land, crowdfunds, consulting services, programmable subscriptions, etc.
- Funnel on-chain revenue to a treasury contract. Sales generated by the community flow to an on-chain treasury contract. The treasury is controlled by a multi-sig wallet which submits transactions based on community governance.
- Redistribute funds through community governance. If the community is optimizing for long-term growth, they may vote for a "buy back and build" strategy where the treasury buys back tokens on the open market and uses them to fund community growth initiatives. Alternatively, the community could optimize for short-term liquidity by offering dividends to token holders.
Most creators / communities in crypto aren't as sophisticated as DeFi protocols because the tooling doesn't exist yet. At best, they may stitch together a bunch of disparate tools. Yet, there's still a lot to desire.
In web2, there's a mature stack for building communities and businesses. Tooling for stuff like:
- Financing
- Payment processing
- Monetization
- Marketing automation
- Product analytics
In web3, there's an additional set of tools that still need to be refined:
- Multi-sig capabilities
- On-chain analytics
- Governance
- Treasury management
- Token rewards programs
Shopify makes it easy for anyone to start, manage, and scale an e-commerce store. For creator-focused protocols, Org. Mode is about making it easy for creators to start, manage, and scale a crypto-native community or business.