Outlier Ventures: The essence of crypto is social technology, and community monetization is the future of customer acquisition

Original Title: The Future of Customer Acquisition and Community Monetization

Original Author: Thomas Issa

Original Translation: 深潮 TechFlow

Acquiring users in the cryptocurrency space today is akin to early humans hunting deep in the Ice Age thousands of years ago: their tools are rudimentary, and the prey is hibernating. Early humans wandered the tundra, knowing little about their quarry, and ultimately faced two outcomes: successful capture or death from hunger and frostbite.

The story of customer acquisition for consumer-grade crypto products is no different: either acquire users or perish.

The years 2021 and 2022 marked a period when startups could combine fundraising announcements with subsequent NFT or token airdrops to attract and retain early users; this strategy was successfully executed by many markets, analytics tools, games, and Web 3 infrastructure, allowing them to gain early momentum based solely on the performance of token projects in the market. Whether it was the NFT pass for digital and physical market Americana skyrocketing to 0.25 eth after launch, or the once-promising NFT market Looksrare, which allocated 12% of its total token supply to attract customers from OpenSea. Both captured consumer attention in a short time, but their user bases have remained volatile in the long run.

The missteps of these two projects are by no means the biggest mistakes in the cryptocurrency space, but the core issue of these dynamics lies in the over-reliance on token and NFT issuance as long-term customer acquisition and retention mechanisms, especially in a poor macro environment, further suppressing the value extraction nature of these designs.

To address many of the shortcomings in consumer acquisition, cryptocurrency companies and funds have been investing in the best "loyalty" products. Projects have flocked to "earn-to-participate" platforms, with market leaders Galxe, Layer 3, and Zealy becoming methods for acquiring, retaining, and instilling "loyalty" in customers.

These platforms are interesting in terms of top-funnel growth metrics, but they are merely temporary solutions and marketing crutches, having little impact on the long-term growth and sustained customer acquisition of protocols or projects. Most of these platforms focus on social vanity metrics, encouraging users to follow or join communities on social media. The reward mechanisms are trivial (offering only minimal economic benefits, with almost no social or reputational advantages). The disconnect between pursuits and consumers exacerbates the inability to track future on-chain transactions, meaning customers cannot calculate the lifetime value of their potential clients.

Now, there is no doubt that we are rapidly moving towards a future where everything is tokenized. Network participants are inherently greedy, obsessed with financialization, a dynamic birthed by blockchain technology.

Just as we tokenize, we will "communalize." This means that for every commonality among humans, we have the opportunity to share that commonality in digital-native communities through the exchange of programmatic assets.

Whether it’s the music we listen to, the items we purchase, or the schools we attend, we can make these experiences immutable on-chain and share them in the spirit of online communities. We are seeing this trend thrive in the luxury market, as NFTs as companions to physical products bring buyers closer together. LV recently solidified this future with their soul-bound NFT issuance, which will provide physical products but, more importantly, offer unparalleled community access for like-minded consumers. Shifting the focus from tradability to consumption fundamentally redefines community, creating unique groups that are "inseparable" from their consumers.

As Shayon Sengupta stated, cryptocurrency is inherently a social technology, and I would further refine that cryptocurrency is super-social; it is a form of tribalism. As participants in cryptocurrency, we are all tribes, each tribe stemming from the commonalities among its members. As a community, we heed the warnings and advice of our peers. Typically, we do not act without the consent or recommendation of the group.

Ignoring the group is to ignore the spirit of consumer behavior in cryptocurrency.

Crypto-native use cases like Mirror's Subscribe to Mint, POAP's Attend to Mint, and IYK's Interact to Mint bring us closer to forming NFT communities through actions, preferences, aversions, and desires. Digital fashion startups and luxury fashion have established minting based on redemption as the future of their industry. Thanks to platforms like Medallion, we will be able to join the communities of our favorite artists or collect experiences with our future stars on Mercury. All of this lays an important foundation for the proliferation of digital-native communities in our lives.

With advancements in Web 3 attribution, it will become possible to extract information about the products and brands users purchase and endorse, the places they have visited, the blogs they have read, and even the sports teams they support. Web 3 allows for value capture, which is impossible in the current distribution monopoly system. In the new media model, the value of users is measured by the absolute value they bring and rewarded through mechanisms like revenue-sharing rebates.

These elements align with a future led by a new model known as "Community as a Service" (CaaS). Simply put, CaaS can be understood as the value of accessing a specific group being high enough to be considered a marketable product. If we delve into the concept of community, its trends, and its unique role in cryptocurrency, we can realize a future where enhancing organic visibility, providing low-cost feedback and insights, boosting brand credibility, and executing targeted advertising campaigns will become cheaper.

The future of customer acquisition revolves around monetizing communities through cryptocurrency, empowering consumers by simplifying and strengthening value creation. In Web 2 social consumption, the community entry process is simple and often disconnected from the brand itself. Through Web 3, the consumer experience shifts from a simple "buy now" to a more inclusive "gain access," representing the most basic form of the CaaS principle, where the most powerful distribution platforms come from these NFT-supporting communities. Cryptocurrency has established a value capture mechanism that enables communities to own, control, and track their influence. These dynamics will ultimately have a powerful impact on brands, projects, and protocols, establishing the CaaS dynamic as the future of customer acquisition in every direct-to-consumer vertical.

CaaS Transformation

The compelling argument is that Web 3.0 and blockchain technology will usher in an era of enhanced advertiser control, fairness, and decentralization. However, without systems to facilitate value creation and fairly distribute it among all value contributors, we cannot maximize this fundamental premise. The CaaS monetization model is the first step in building community-supported NFT infrastructure that has already expanded the field.

Once consensus is established, this trend will be driven by platforms that can aggregate communities, infer data based on chain activity, and identify value-added areas that communities need to reward. Builders will be inspired by community aggregation tools (like De.ID), contribution tracking platforms (like OrangeDAO's Grove), or efficient advertising networks that connect brands with Discord communities (like Wildfire).

While this concept is novel and has yet to be directly applied to product or protocol design, builders will productize these trends that have already supported customer acquisition dynamics, and we will see communities monetizing their social and technological influence, ultimately enhancing customer acquisition and validating the CaaS business case.