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In today’s interconnected world social media wields immense power for global businesses. It goes double for web3 projects, where the success of blockchain products and especially decentralized services often hinges on their community. In the web3 realm, community isn’t merely one of communication channels with the target audience – blockchain projects are often designed to exist as an extension of their community, entirely depending on it as a prerequisite of their sustainable growth.
Ultimately, understanding the best practices in building such communities can truly make or break your web3 product. In this article Evan Voinov, Community Team Lead at NinjaPromo, will provide an overview of various web3 community monetization approaches with the emphasis on their pros and cons in the context of sustained growth and success.
Main principles and questions to consider
Before diving deep into this topic, it’s important to keep in mind that in the vast majority of cases, you don’t build a community for the sole purpose of monetizing it. In our experience, a web3 community works the other way around – it acts as a relatively cheap and efficient marketing channel for a product or an ecosystem, which, of course, has its own monetization logic.
You should not always plan to monetize your community directly, but sometimes it can be a valid approach. To find out what situation your project is in, ask yourself the following questions:
- Are there ways to scale other revenue streams without imposing on the community in any way?
- Do my competitors do it, is it a successful practice in my niche?
- Does direct monetization align with the long-term goals and vision you have for your community?
- How will monetization affect the overall community experience? Will it add value or potentially alienate members?
- Is my community ready for it? Does it have enough active, engaged members who will not be opposed to certain monetization ideas?
Monetization methods of web3 communities – Pros and cons
- Tokenomics: One of the most common ways to monetize a web3 community is through tokenomics, or rather one of the popular ways to kickstart a tokenomics model is to build a community around it.This involves creating a native token for your platform that can be used for various purposes within and outside the community, such as governance, staking, and rewarding users for their contributions.
The value of the token is directly tied to the success and growth of the community, creating a symbiotic relationship between the two. A good example of the role of community in tokenomics and governance is the Uniswap decentralized exchange. Uniswap is governed by a DAO, or decentralized autonomous organization. This means that all decisions about the future of Uniswap are made by the community of UNI token holders.
On the flipside, if the community’s activity drops, or its opinions get too polarized, stagnation is inevitable.
- Premium Memberships: Another way to monetize your community is by offering premium memberships or subscriptions. This can include access to exclusive content, features, or events. It’s straightforward: you provide additional value to paying members, which in turn can generate revenue while also incentivizing users to support the community and its growth.
The main problem with this approach is that, with the exception of communities centered on exclusive information access, like trading signals, it’s often hard to provide enough value for users to buy a subscription.
- Sponsorships and Partnerships: As your community grows in size and influence, you may have the opportunity to partner with other projects or companies. This can include sponsorships for events, paid promotions, or collaborations on products or services.
However, it’s important to carefully select partners that align with your community’s values and goals – if your community sees a partnership as “whitewashing”, you’ll have a scandal brewing in no time.
- NFTs: In our experience over the past couple of years, non-fungible tokens (NFTs) have been one of the most popular ways to monetize communities in the web3 space. These assets can be used for various purposes within your community, such as access to exclusive features or events, tiered access passes, or simply as a collectible item. NFTs can also be sold on secondary markets, which can increase their value for your community and attract more brand awareness.
It’s worth noting that different social groups have drastically different perceptions of NFTs: while digital artists love NFTs as another means of monetizing their work, gamers have a strong negative bias towards NFTs, which may take years to overcome.
- Targeted marketing and partnerships: Another way to generate revenue for your community is by leveraging user data for marketing purposes. Offering targeted advertising options or partnering with other companies to provide sponsored content can be a fast way to bring in additional income once you have established a large member base.
Keep in mind that it’s important to obtain proper consent and be transparent with users about how their data is being used. This approach can backfire if your community feels like it’s being “sold out”, and this can seem out of place for a community of an actual working product that has other monetization methods. An example of that is Ledger. A positive example, on the other hand, is Discord’s user data policy, even though their data would be extremely valuable to the right buyer.
Our experience and main takeaways
NinjaPromo played a crucial role in the success of MicroBuddies, an innovative blockchain-based NFT breeding game. In this case, Ninjapromo helped the company build and monetize a community around NFTs.
To captivate both crypto enthusiasts and casual gamers, our team executed a diverse marketing strategy blending organic and paid methods. Our experts utilized social media outreach, community engagement, influencer collaborations, and video creation. Crowd marketing efforts included forum creation, active management across platforms like Telegram, Reddit, and Discord, alongside on-site events, influencer AMAs, competitions, and giveaways, all generating hype for the NFT launch. Maintaining 24/7 activity in Telegram and Discord, hosting interactive events, polls, and sharing a dynamic video explainer featuring vibrant animations played a pivotal role in educating newcomers, complemented by engaging user-generated content.
MicroBuddies successfully sold out 2,500 NFTs, the community grew exponentially, their social media channels amassed over 15,000 subscribers. Our influencer campaigns drove significant traffic to their website, generating essential buzz for their project, but it was not the case of “all buzz and no substance” – our actions had a lasting impact. Among other factors, a sizable and active community of the project enabled MiroBuddies to partner up with another company, and get cross-functionality with Minecraft, which opened up more monetization avenues for the project’s community.
By integrating monetization methods that align with the community’s ethos and aspirations, you can create a positive feedback loop where growth drives monetization, and monetization fuels further growth. However, it’s crucial to strike a balance, ensuring that the monetization efforts don’t overshadow the community’s core values or hamper its organic development.
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