Crypto projects cannot succeed without growing a community of enthusiastic followers, but unlike traditional businesses, they have some unique tools at their disposal to grow a fanatical user base.
Communities are essential for crypto projects because they enable its users to come together in a central location, where they can learn more about what the project is doing, engage with the developers and share their ideas on its future. In addition, communities are one of the primary forces that help to grow crypto projects, boosting awareness and adoption and increasing engagement. There are numerous examples of how crypto communities act like evangelists to generate awareness around their projects.
Network effects are also created by having a strong community. This is when a product or service adds value as its user base grows. For instance, the more users a cryptocurrency attracts, the more support it needs from different platforms, exchanges and payment providers. In turn, this attracts more developers to take a look at the project and build decentralized applications for its wider ecosystem, with the effect being that these dApps attract additional users.
In most cases, crypto communities are centered around just one or two popular platforms, such as Telegram, Discord, and X, formerly known as Twitter.
The mysterious Satoshi Nakamoto deserves credit, not only for inventing Bitcoin and the blockchain that powers it but also for realizing the importance of having a strong community behind it. He, or she, readily understood that Bitcoin and its vision of a decentralized, peer-to-peer digital payment system could only be fulfilled if it was to achieve widespread adoption, and the only way to achieve that was by creating a strong community of believers in the project. To that end, Satoshi sought assistance from the open-source community, creating the BitcoinTalk forum to seek out developers, cryptographers and cyberpunks who saw the value in his idea.
Why crypto is ideal for building communities
Crypto projects have some unique tools at their disposal that they can take advantage of to build out a strong community in a rapid fashion. Unlike traditional business platform models, in which the users are only ever seen as customers, crypto platform models see their users as participants. Crypto projects will actively lean on their communities for support and inspiration, and encourage them to play a role in its development.
One of the ways crypto projects do this is through governance. Because they’re decentralized, there’s no single entity that’s in charge of a project’s destiny. To enable the community to come to democratic decisions, projects have invented the concept of a governance token, which gives users the right to make proposals and vote on decisions. A good example of this is Polkadot, where anyone who holds the platform’s native DOT token is entitled to submit a proposal around the future of the project. Each new proposal is added to a queue, where it waits to receive endorsements from other community members. It’s a simple process and once enough endorsements have been gained, the proposal then moves onto a public vote, at which time every DOT token holder can have their say on the idea. Voting is weighted, based on the number of DOT tokens each community member holds, so those with more tokens – and more ‘skin’ invested in the project – have a greater influence on the outcome of each vote.
Crypto projects encourage their community members to get involved in other ways too, such as by allowing them to earn passive income. One of the most common ways of doing this is through staking, where users are encouraged to lock the project’s native token into a smart contract in order to secure the network. For the entire duration that their tokens are “staked”, the user will earn rewards in the shape of additional tokens.
Staking is becoming an increasingly important tool for crypto communities to generate engagement. Take Slash, which has emerged as one of the most popular crypto payment platforms in Japan, with support for more than 1,400 tokens residing on five different blockchains. Slash allows users to spend their crypto directly in hundreds of different e-commerce websites and brick-and-mortar stores, and use it with a variety of Web3 dApps. It is taking advantage of the popularity of cashless payments in Japan, and it is as simple to use as any traditional banking app.
Slash encourages users to lock their SVL tokens in Slash Vaults, which is a form of staking that allows users to receive veSVL tokens in return. This helps to secure the network, with users earning greater fees and more voting power the longer they agree to timelock their tokens in the vault. To pay rewards, Slash changes small fees on each transaction made using its app, and operates a model in which 100% of those fees are redistributed to community members, strengthening loyalty and boosting participation.
The project is likely to gain even more traction soon with the release of its first crypto wallet and credit card product later this year. It will give users even more ways to spend their crypto in their daily lives while boosting Slash’s status as the first and only compliant crypto cash service in Japan.
How crypto communities build success
The community is almost essential to the success of crypto projects these days. Because crypto is a global movement, most crypto communities are extremely diverse with people from many different backgrounds, yet they all share the same enthusiasm for the project’s vision. These people act as evangelists, showcasing the importance of the project to the world, and they often come together in highly organized ways, creating content that can help to guide new users, building up a rich economy around the project’s token, sharing their expertise to improve the project and more.
Crypto projects can benefit by reaching out to their communities for feedback and ideas on what steps to take next. The community will inform the project on important aspects such as its ease of use, its utility and more, enabling the developer team to fix any issues that are holding it back.
Anyone can become a member of a crypto community. Joining a community is usually as simple as heading to the project’s relevant Telegram or Discord group and signing up. They can immediately start posting, asking questions and offering suggestions of their own
Crypto communities can even provide a source of funding. These days, many crypto projects eschew traditional funding mechanisms in favor of token sales, where they will sell the project’s native token to early adopters at discounted rates, and use those funds to build out the project. In return, early adopters get to increase their influence by accumulating bags of tokens at a more affordable price. Assuming the project’s token gains in value, it can also earn significant financial rewards for backing it early on.
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