The imagination of the masses can change everything, whether the matter is real or fictional.

------ Le Bon

The essence of decentralized communities is the deconstruction and innovation of asset distribution models.

In the evolution of communities, the concept of assets has always held a crucial position. In the real world, people often come together due to common interests and goals. As society evolves, the manifestation of these interests becomes increasingly diverse, transforming into different types of 'assets'. The acquisition, distribution, and value growth of community assets are fundamentally driven by 'consensus'.

In primitive societies, based on a consensus around tribal totems, tribe members collaborated to obtain food, fend off external enemies, and protect assets, thereby sustaining the tribe's development. In the internet age, various media empower people to express their desires while also fostering a consensus around traffic. Nowadays, having a large following often represents a certain authority, becoming a virtual asset with monetization potential. The monetization of traffic assets has become increasingly smooth, which is also the core method of growth in traditional internet social networks today.

In Web3, the speed of community iteration far exceeds that of the Web2 era, with new projects emerging daily, becoming the latest news on some blockchain, while many others quietly fade away. In this rise and fall, we can summarize a rule: the essence of a truly sustainable decentralized community is embedding a fair asset distribution scheme that is both incentivizing and sustainable within the community structure. This is akin to primitive societies where, although the totem is a shared belief among members, there still needs to be fair and reasonable management of collective assets to maintain members' trust and consensus in the group. The principle of "more work, more rewards" is the most basic and easily understood asset distribution scheme, which is equally applicable in the crypto world.

Pioneers of the crypto world are trying to innovate asset distribution.

Focusing on Web3, community creators are pursuing the most 'decentralized' methods of asset distribution through continuous innovation, experimentation, and improvement. The asset distribution based on Satoshi Nakamoto's consensus of Bitcoin was the first attempt. Under the Proof of Work (PoW) mechanism, miners compete for the right to record transactions based on their computing power to earn Bitcoin as mining rewards. We know that the difficulty and consumption of mining are substantial, so how did the Bitcoin consensus successfully break through and attract a large number of miners to invest significant capital? It is, of course, due to the continuously soaring price of Bitcoin and the scarcity created by the halving of rewards every four years, which makes the incentive mechanism under Satoshi Nakamoto's consensus sufficiently attractive, thus turning miners into loyal supporters of this consensus, maintaining high enthusiasm and investment.

How did the elusive meme coins become high-quality assets loved by all?

If Bitcoin is the cornerstone of the crypto world, the first and most core asset for realizing blockchain value, how have the meme coins that have exploded in popularity in recent years gradually become regarded as high-quality assets? From the initial Dogecoin and Shiba Inu to the sad frog, sloth, and stick figure drawings in this bull market.

These coins, which originally appeared for the purpose of "memeing," have gained popularity among Web3 players due to their trendiness and entertainment value, requiring no understanding of complex technical principles. This trend has successfully attracted capital, with Musk's endorsement directly making Dogecoin a mainstream currency in the market. Today, popular meme coins are increasingly created by project teams or players who spontaneously establish communities, becoming well-known IPs in the crypto world, fundamentally based on the community's recognition of this trend culture. Originally elusive memes have become tangible due to the influx and accumulation of capital, forming a trend consensus and revitalizing them.

The past and present of Runestone: an attempt to further strengthen community assets

After discussing Bitcoin and memes, we must mention Runestone, a recently popular IP, especially today after its halving. One important reason for the Runestone project's breakout is that it set three major records on the Bitcoin blockchain: the largest Bitcoin block ever, the largest Bitcoin transaction ever, and the largest Ordinals inscription ever. The famous 8BTC auction proceeds used to pay miners' fees for airdrops also reflect the Runestone project's commitment to the entire community.

Of course, there are three most important reasons for Runestone's popularity: fairness, fairness, and more fairness.

The narrative of "airdrop" + "fairness" + "Runes protocol" has caused the secondary market to experience FOMO, with prices soaring to nearly $6000. Unlike previous inscriptions, BRC-20 is more played in the Chinese-speaking region, while Runestone has the consensus of both Eastern and Western community users. Founder Leonidas mentioned in a tweet that there would be no achievements today without the joint efforts of both East and West, highlighting Runestone's important role in connecting global communities. The famous 8BTC auction proceeds used to pay miners' fees for airdrops also reflect the Runestone project's commitment to the entire community.

Although the market experienced panic due to localized geopolitical crises in the past two weeks, leading to a price drop for the rune stones, the price of Runestone remains strong, especially with the Bitcoin halving and the official launch of the Rune protocol, coupled with Leonidas's enthusiastic tweets about subsequent airdrop expectations. The absolutely fair free airdrop mechanism continues to be maintained. There are no pre-sales that could rug pull at any moment, no scientists, and no skyrocketing gas fees, which has attracted many project teams to ride the wave and provide free airdrops to holders. Leonidas has effectively turned Runestone into a golden shovel for navigating the inscription ecosystem. It can be said that the emergence of Runestone is an attempt to further strengthen community assets in the crypto world.

The secret of decentralized social networking: the integration of community dissemination and asset distribution

For Web3 social networking, the mainstream platforms are still Twitter + Telegram, which do not fully align with the spirit of decentralization. SocialFi products aim to create a decentralized platform for Web3 communities, developing decentralized social platforms on par with Facebook and Twitter. Therefore, while focusing on social functions, they should also follow the aforementioned principles, enhancing asset characteristics and building a diversified asset structure to drive community dissemination, helping products successfully break through.

Wolves in sheep's clothing: Ponzi schemes based on social network tokenization

The previous generation of SocialFi products had a relatively simple and crude approach. Friend.Tech centered on the assetization of social network influence, bringing significant wealth effects to early users through bonding curves.

FT's economic model, with the pricing formula for the core community asset Key as Price = S^2/16000 (where S is the number of people entering the room), created an extremely Ponzi-like SocialFi product. From the image, we can see that the steep yield curve is fundamental to FT's explosive popularity, giving users the intuitive feeling that: as long as I enter earlier than others, I can achieve higher returns.

However, due to the overly straightforward nature of this model, it lacks sustainability under conditions of rapidly increasing user numbers. Although a 10% transaction fee is set for each transaction, with 5% going to the protocol and 5% to Key issuers, the model indicates that user transaction wear and tear far exceeds 10%. Therefore, for users entering later, the expected high returns cannot be realized, leading to a significant gap between user EV and BV, with user assets being drained by the protocol and early Key issuers—this is the essence of this Ponzi scheme.

From a game theory perspective, FT hopes to achieve a stable model of (3,3) on the asset side. However, since those who rush in under this economic model can obtain higher returns at the expense of others, the motivation for players to rush in increases, leading to mutual suspicion. Once a chain of suspicion forms, the final Nash equilibrium will only be (-3, -3). At this point, one might forget that we are not discussing a DeFi product but a SocialFi product, which is one of FT's biggest problems.

In short, FT places too much emphasis on financial attributes, making it a DeFi Ponzi disguised as a social platform. Additionally, since user consensus primarily stems from expected returns rather than the community itself, when users realize they are trapped in a Ponzi scheme where expected returns are unattainable, Friend.Tech cannot prevent user attrition, ultimately leading to the collapse of the bubble.

My name is Liu Cong Degen, circulating like currency

One of the popular products of this generation, Farcaster, has made a better attempt. By organically combining traditional social functions with asset distribution, Farcaster has created a more socially oriented SocialFi product.

Farcaster invests significant effort in encouraging user interaction and deep community participation, such as launching interactive posts, various forms of community activities, encouraging long-form quality tweets, and initiating $degen rewards. Notably, Farcaster's reward system sets a new benchmark for the integration of decentralized communities and assets. This feature incentivizes users to deeply engage in the community, produce quality content, and spontaneously promote the community.

As a result, the community asset $degen circulates within the ecosystem like currency, allowing users to both 'earn' assets and 'consume' them, completing a closed loop of asset structure. Additionally, Farcaster has released two NFTs: OG NFT and Farcats. As official assets, they also hold the potential for future empowerment by Farcaster.

Compared to Friend.Tech, Farcaster's asset distribution method places greater emphasis on users' level of participation in the ecosystem rather than relying on competition. We can liken FT to a casino, where users must bring assets to gamble against opponents, essentially a zero-sum game benefiting the house. In contrast, Farcaster's asset distribution method achieves positive mutual reinforcement between the price of $degen, platform DAU, and user earnings. In summary, the circulation of assets and the dissemination of the community complement each other, creating a sustainable growth model for decentralized social ecosystems.

Conclusion

Driven by the consensus of Crypto, the relationship between community and assets is continuously evolving. From Bitcoin to memes to inscriptions, the driving force of consensus has shifted from the initially practical price to culture, and finally abstracted to the spiritual level of 'fairness'. In the future, many new development models are worth imagining. For example, a tribe spontaneously creates totems, and each decentralized community can publish its own memes as community assets.

After all, at the end of the day, interests are the eternal truth.