“Permissionless Brands”

Authors: Chu, Fancy, Protein Community

Compiled by: Rhythm Research Institute - NFT Labs

Recently, the copyright issue surrounding CryptoPunks has been brought up again. Larva Labs has not transferred the copyright of CryptoPunks to the holders but has chosen to keep it in their hands. On one hand, people question that CryptoPunks has gradually become a symbol of identity in the metaverse, representing their digital avatars, making it less appropriate for Larva Labs to maintain control over the copyright; on the other hand, people believe that a CC0 license should be adopted in the Web3 era.

CC0 is a type of Creative Commons license where creators waive all rights, allowing others to use their works unconditionally. Before the emergence of NFTs, digital content creators often refrained from choosing the CC0 license to protect their interests. However, as NFTs became mainstream, more and more creators began to adopt this license, as they understood that NFTs could help people clearly identify which "digital file" is the "authentic" one. Even if it is frequently disseminated or even pirated afterward, it captures the value of the unique "authentic" file, and in the digital age, the degree of dissemination is positively correlated with value.

While Larva Labs clings to copyright and sends new legal letters to projects like Phunks, brands like BAYC, Nouns DAO, and The Hundreds have begun to enter the Web3 world, transforming their brands into "permissionless brands" and adopting the CC0 license to rapidly expand the influence of their brand culture and values.

The social token community aggregator Forefront's Protein community published an article exploring how brands should view their copyright issues in the Web3 era. Rhythm translates the full text as follows.

Brands Are Quietly Changing

We have noticed this among marketers lurking in Discord servers, in the Gen Z craze for meme coins, and in beer companies launching NFTs and purchasing .eth domain names. Brands have begun to think about Web3, and not just in the superficial forms mentioned above, but in more meaningful ways, regardless of whether they fully understand it.

This idea has become popular across communities such as Friends with Benefits, Bored Ape Yacht Club, CryptoPunks, and Nouns DAO, which are driving the evolution of the concept of "brand" to be more fluid and focused on authenticity rather than control and consistency. At its core, these brands are "permissionless."

Permissionless is the most powerful launch tool for a brand. It has the potential to reconstruct the brand itself, allowing people to create more value in any way and at any time without permission, combining attention and ownership economics to give the entire brand greater brand power.

Here’s some historical context. Modern brand communication began with one-to-many broadcast media, using curated channels like newspapers, television, and advertising to dictate perceptions of brands—this is a form of psychological attack on the public.

Then, the introduction of Web2 and user-generated content forced brands to communicate in fragmented ways through social media. Without this broadcast control, brands would resort to social listening, pyramid marketing plans, and cultural movements under the guise of communication.

In this article, we will delve into the issues plaguing today’s Web2, interpret the three key principles that define permissionless brands, and share case studies conducted to realize their potential. We will then summarize what Web2 brands need to do to enter the world of Web3.

Brands, Control, and Culture: How Communities Are Changing Brands

There has always been a subtle relationship between "brands" and controlling their position in culture. In the early days of Web2 (1996), an email marketing campaign to boycott Tommy Hilfiger erupted due to rumors that the designer made racist comments on The Oprah Winfrey Show, saying, "If I knew that African Americans, Hispanics, and Asians would buy my clothes, I wouldn’t have made them so good."

The rumor stemmed from the fact that people who often wore Tommy Hilfiger could not believe that a brand like Tommy Hilfiger could accept their clothes being worn as streetwear. Although these rumors were clarified multiple times later, and the designer never appeared on that show, the rumor is still being discussed on social media today—decades after it was born.

The existence of this internet "urban legend" illustrates two things: 1) Compared to brands creating their narratives behind closed doors, people generally distrust the personas brands build for themselves; 2) Brands have almost no final say in how they integrate their brand into the real world.

"A brand does not objectively exist: it is merely a collection of existing perceptions in the minds of consumers." — Susan Fournier, Harvard Business School

Design-wise, a brand is a declaration of a community’s lifestyle choices. Without a community, there is no brand. This fact is evidenced by brands like Clarks (practical clothing), Adidas (sportswear), and even Brandy Melville (prepwear), which have been repurposed for modern and punk, streetwear, and the recent cottagecore subculture.

Fast forward to today, brands continue to forcefully adopt broadcast marketing in more fragmented digital spaces, often employing 360º integrated marketing plans, product placements, user segmentation pushes, and multicultural marketing. In the "traffic is king" era, social media is overly polished and beautified, leading brands to believe they can solidify their cultural positions by selectively collaborating with KOLs they think can amplify their influence.

However, the relationship between brands and KOLs has also become increasingly nuanced. A famous case is Abercrombie & Fitch paying Jersey Shore's Mike "The Situation" to stop wearing their clothes; when super KOLs like Kim Kardashian collaborate with multiple brands, their fans often struggle to figure out which brand they should support.

As KOLs and their fans develop into a community, some individuals genuinely become content creators. This is where things quietly happen: a person who previously promoted a teeth-whitening product starts launching their own products, signing licensing agreements, and building their toothpaste empire.

Brands connecting with KOLs through paid means, where users must purchase products to enter the community, turns KOLs into distributors, creating a conflict of interest between brands and KOLs.

This is the crux of the issue: brands believe they can form a community by getting people to buy their products, but they do not empower that community in any way.

The Web3 Revolution

Web3 technology has the potential to genuinely transform the concept of community ownership through decentralization and transaction transparency, challenging the fragmented control relationship between brands and consumers. However, like all technologies, the technology itself is neutral; its so-called morality depends on how we use it.

Thus, for web3-native brands like Bitcoin, Ethereum, and other new blockchains without any central CEO or marketing director, they create communities of brand supremacists through mimicry, which can easily be remixed and remain active in people's views through "showing off." However, today, while there are still many meme products, many new things are also emerging.

Welcome to the Era of Permissionless Brands

Let’s take a look at the key characteristics that are pioneering and defining this new field.

1) Adaptability

2) Humility

3) Decentralized Ownership

1) Adaptability = Dynamic Guidance

For new brands forming in the Web3 space, permissionless means being able to guide and adjust brand positioning at the speed of brand development. It is an ability to elevate oneself at any time, a network effect that challenges traditional models of external institutions, consultants, or "internal" talent, emphasizing purpose over perfection.

Through "in-DAO" brand building, we see real-time permissionless brand innovation. Members may create other logo designs, DJ songs, suggest growth strategies, and invite friends to join without anyone explicitly asking them to. In this way, each brand iteration can reflect the personal preferences of its members.

We see this in the hive-mind thinking of PHLOTE, where people are solving user experience and logo design issues, with daily updates shared on Discord, and hundreds in the community using tools like Miro, Figma, and Google Sheets for collaborative work. We are putting this into practice through a series of workshops in the Protein community, continuously refining through collective effort to maintain healthy growth.

2) Humility = The Community Is Always Right

For a long time, Web2 brands have been "telling" consumers what to buy and when to buy, leveraging social listening and targeted advertising to achieve competitive product-market fit.

However, web3 brands can leverage distributed decision-making and collective guidance to have open discussions around the brand, allowing the market to instantly match community fit.

The idea of decentralizing power to the community is a shift from "user-generated content" to "user-owned content." This is why we see DAOs exploding this year, whether it’s collectively voting on brand strategy directions, proposing strategic partnerships, or even discussing the value of a product entering the market.

However, the ultimate trend of DAO governance is to hand over more and more power to the community. Because when it comes to aligning the community with the market, the community is always right.

3) Decentralized Ownership = Everyone’s Token

Social tokens are a type of digital asset backed by the reputation of a community, individual, or brand. We like to think of them as tools for collaboration and coordination, creating value through interactions and reputations of individuals or communities.

One form of social token is stonks (meme stocks). What people often forget is that publicly traded companies are owned by dispersed shareholders, who have actual legal and social responsibilities to them. That is to say, by 2021, most corporate responsibilities were almost nonexistent because financial giants, legislative bodies, and powerful boards had conspired for decades to strip shareholders of their rights.

However, stocks are just one way to achieve decentralized ownership, and this method has already been adopted. When social tokens are developed for communities that have been building brands, like Clarks and Adidas, what can they provide? After gaining ownership of the brand, the brand reaches new heights. How can we bring power and ownership to these subcultures and communities?

The reimagining of social tokens, digital currencies, and socially exchanged based on distributed ledgers is leading to a renaissance of the collaborative economy, where Web3 brands can integrate and allocate ownership to early users and brand ambassadors shaping the brand from day one.

Now that we have explored the three key characteristics of permissionless brands, let’s look at some case studies.

Bored Ape Yacht Club

Bored Ape Yacht Club is a collection of 10,000 unique NFTs, each Bored Ape is "programmatically generated from over 170 possible traits, including expressions, headgear, and clothing," all related to different rarities.

While the initial price of Bored Apes was only 0.08 ETH, six months later, their floor price rose to 39 ETH. At the time of writing, this is about $180,000.

How did they achieve this? The answer lies in adaptability, ownership, and community.

For Bored Ape owners, they are not just changing their profile pictures to signal their status to the brand; they do so because promoting the brand aligns with their interests. Why? Because the NFT contract stipulates that Bored Ape owners have complete commercial rights over the apes they own, thus holders own a small part of the entire Bored Ape ecosystem.

The recently released Bored Ape roadmap 2.0 shows the influence and fluidity of the Bored Ape Yacht Club brand vision, attempting to layout streetwear and mobile applications, as well as bridging brands across different cultural levels.

At the same time, since permissionless brands like BAYC have grown through the community of Bored Ape holders, the brand itself is very open to external cultural observations.

In this case, our perception of the brand is unlikely to reflect BAYC's original intent, but rather the status symbol and consequences of late capitalism created through its ownership. In any case, the BAYC community now has the opportunity to respond (or not respond) to this feedback and readjust (or not readjust) its community structure.

This is an example of a permissionless brand that grants ownership and commercial rights to its members but cannot fully control what others see when they see someone representing that brand.

Friends with Benefits

Friends with Benefits (FWB) is a social DAO at the intersection of cryptocurrency and culture, a space for people to gather, hang out, and collaborate. While most activities currently take place on Discord servers, FWB is constantly exploring ways to expand, whether through creating city DAOs, IRL events, partnerships, or launching products with immediate community-market fit.

When FWB launched a year ago, the entry threshold of 75 FWB was valued at about $20. Nearly ten months later (September 2021), this entry threshold price nearly reached $14,000.

Although this entry model has been questioned by the community for its scalability and normativity, using social tokens as an entry threshold has created a powerful "exclusivity" that most cultural brands cannot match. For those who already own 75 FWB, the difference between social capital and financial capital is a constant test of brand loyalty.

This intimate relationship between individuals and the community makes FWB a pioneer of the permissionless brand model. Its adaptability in openness allows hundreds to participate in workshops and hackathons, and members' own projects often launch within days.

It is precisely through these contributions that members are rewarded in a mix of FWB tokens and USDC (a stablecoin pegged to the dollar), as the brand grants them more decentralized ownership and "shared benefits, shared risks" while they create value for the brand itself.

Another example of FWB is developing its members through its city DAOs and scholarship programs: creating a more convenient entry for new members. The motivation to remain true to FWB's original vision, as a diverse space at the intersection of cryptocurrency and culture, demonstrates adaptability to innovation and humility in listening.

While these examples show the potential of brands in the Web3 space, the incentives for permissionless brands may lead to brand chaos, misinformation, and unhealthy development directions. Let’s explore this issue.

The Story of Loot, AGLD, and Bloot

Loot is an NFT project consisting of 8,000 text files, each containing a set of random "game items" that can be used in a game that does not yet exist.

When the project launched, Loot could be claimed simply by "paying the gas fee (the small amount of Eth required to record transactions on the Ethereum blockchain)."

Within days, Loot worth millions of dollars was frequently traded. While this price may seem relatively chaotic on the surface, for those who understand, Loot is the holy grail of permissionless brands; it is the smallest unit that allows others to build entire ecosystems.

From the beginning, community members began publishing visual NFTs, expansions, and mini-games to make these text files more concrete, expanding the Loot ecosystem. Most importantly, the AGLD token was airdropped to all Loot holders.

Although the initiator of the Loot project (Dom) and the creator of AGLD had no connection on the project, AGLD (a digital cryptocurrency) once reached $5, meaning each Loot holder received about $50,000. This created value for a brand and community in just a few days, showcasing the immense potential of permissionless brands in Web3. For AGLD, it was the community—Loot holders—who adopted it and made it a reality.

Then, amidst the wave of expansion, imitation of Loot began to emerge. Loot for CryptoPunks, Treasure for Loot, and the infamous Bloot (not for weaks). Bloot quickly became a substitute for Loot, capturing a significant market share.

While Bloot initially capitalized on Loot's brand hype, attitudes within the Bloot brand quickly turned hostile and confrontational. Although Bloot's value later plummeted and the project nearly died, the lesson is clear; a brand is only real and valuable within the community that drives it. Cultural hijacking can be very deadly in the essence of permissionless brands.

Mapping Web3 to Web2

For established brands, transitioning to a permissionless state is a more challenging journey. But don’t worry, if you are reading this article, it means you are still far ahead.

At best, the inevitable shift to the Web3 world is an opportunity to expand your brand and build lasting relationships with your community. At worst, it means relinquishing some control, ownership, and having to truly listen to your shortcomings while rebuilding with your brand advocates. Ultimately, it is about viewing the characteristics of your brand through the lenses of adaptability, humility, and decentralized ownership.

Braintrust

Brands like Braintrust have achieved this. Their story began like other talent networks, building a community of talented freelancers and a solid client roster in this age-old matching scene.

However, by introducing the BTRST DAO token, they created a shared value system where talent can earn rewards or tokens by strengthening their talent network, participating in courses to learn more about the platform, referring more clients, or even designing emojis and GIFs for the DAO's Discord.

While the brand helped create the startup assets for community work, the copy, tone, and creative direction that decide new member onboarding are almost entirely determined by individuals. This is a more dynamic and open-source approach, rather than a repetitive cycle of brand feedback, which brands typically create through micro-influencers with #SponsoredAd.

Moving forward, members can initiate proposals and vote on important issues, including determining the commission fees that Braintrust should charge. They are brainstorming new token benefits (insurance for freelancers?) and the token is already developing new market mechanisms—clients can purchase BTRST as a way to prioritize their work list and reduce noise.

In this case, the adaptability of their talent network humbly allows their community to influence key decisions, then decentralizes ownership through a token economy, enabling Braintrust to do things that previous freelancer alliances could not. They are building a brand that can be truly collectively participated in and owned by their community.

The Hundreds

Another good example of mapping Web2 to Web3 is the case of streetwear brand The Hundreds.

Founder Bobby Kim is no stranger to blockchain technology. In past blog posts, he wrote about the creative potential of minting NFTs as an alternative to pursuing art galleries and publishers, incorporating his photography into it. The potential of Web3 has clearly been brewing in this innovator's mind.

Then, on August 31, 2021, The Hundreds decided to fully enter the metaverse, providing their community with the opportunity to mint 25,000 unique combinations of their iconic "Adam Bomb" logo. They designed quirky personal features, leveraging the mimetic, scarcity, and adoptive nature of cryptocurrency, creating a mechanism to destroy unsold NFTs at the end of the sale, marking a poetic execution of fixed supply limits.

Similar to previous NFT examples, by joining the "Adam Bomb Squad" (ABS), community members not only gained ownership of The Hundreds brand but also unique benefits, including exclusive merchandise and early access to other NFT drops.

The white paper continues:

"We are exploring technology that allows Adam Bomb Squad NFT holders to 1) purchase The Hundreds clothing themed around their bombs, and 2) earn rewards by selling clothing to others. We want The Hundreds to earn more, but there's no reason not to share profits with our community."

If there’s one thing to note, it’s that outside of the NFT token economy, there is no mechanism that is truly groundbreaking for streetwear or fashion brands. The ideas of exclusive merchandise, early access, and turning brand moments into collectibles (for better or worse) are trends in streetwear during the StockX, Yeezy drops, and Grailed era.

Instead, the uniqueness lies in the ability to build collective value and shared benefits through digital NFTs, placing The Hundreds and its community's ABS holders on equal footing. This is a way for a private brand to go public while also fostering participation through Discord and social media, beginning to dissolve the divide between brand and community, merging the two.

These examples merely scratch the surface of how traditional brands can leverage token economies, NFTs, DAOs, and blockchain to unleash the true creative power of communities.

Let Go and Make Your Brand Permissionless

As we have seen, one exciting aspect of Web3 is that it is a continuous social experiment, permanently in flux. Brands that step up now will define the future dialogue around brands and learn alongside their communities in the process.

We advocate for "gradual decentralization," or making a series of decisions that slowly delegate ownership of your brand to the community. After all, this is a significant decision, and once you embark on this journey, you will open the floodgates to philosophical questions about governance and voting rights, allowing holders to vote on its future.

This is not about launching a shiny NFT collection, nor is it about mining crypto slang like "gm" or "wagmi." Instead, this drive to transition to Web3 will force brands to relearn and completely reorganize the values and configurations of your organization. In short, turning to Web3 is not a marketing decision but a philosophy in practice.

Ultimately, this means letting go of the idea that you, and only you, have the right to tell others what your brand is. It means not viewing misunderstandings, criticisms, and feedback as attacks or assaults on the brand you worked hard to create, but rather as gifts from those who care about your impact on the world and are trying to help you improve.

This means the fusion of brand and community, where the brand is the community, and the community is the brand.

To help businesses embark on the path to permissionless, we have gathered some enlightening ideas from web3 brands:

• A fashion brand launched a competition for fashion designers to create a new concept collection; each submitter receives tokens (which they can hold or sell after receiving), and the winner of the competition receives additional tokens and a share of the revenue from their design and sales.

• A consumer tech brand could offer NFTs for each product purchase, providing holders the opportunity to propose new product ideas, vote on new product features, and receive exclusive customer support.

• A brand with a humanitarian perspective could establish a funding pool through limited sales, allowing community members to reinvest in specific areas of brand growth, community activities, or redistribution.

• A brand with significant global influence could publish proposals on-chain and provide updates on major brand decisions, establishing a recorded history of transparency with the community.

Each of these examples creates a long-term relationship in which your community participates in your brand and can claim ownership over existing processes—from start to finish, and even beyond.

Therefore, as more and more brands enter the Web3 space, we encourage you to think about this question: which aspects of your brand operations can be shared with the community? Which aspects can allow them to truly own and participate in?

To borrow from brand jargon, permissionless brands in Web3 are the ultimate flywheel, with the community participating in the flywheel, shaping the brand, and then becoming the brand's ultimate direct "consumers."

Those who continue to cling to their positions, touting "brand value" and movements without true decentralization will be left behind by the times, while the communities they once cherished will turn to brands they can own and build, whether or not they have permission.