-- Lauren Tierney, Venture Investor, Decasonic
Finding Narrative Market Fit.
—
Rooted in the essence of decentralization, tokens represent not only tangible assets but also intangible interests, ushering in a new era of economic possibilities. This paper delves into the realm of "token narratives," exploring the multifaceted dimensions through which crypto tokens unfold their narratives representing their ownership, value, and utility, as instruments of investment, stores of value, and mediums for transactions.
As we embark on this journey, we unravel the narratives that these tokens carry, shaping the future of finance and technology.
Mainstream Token Narratives
Web3 and crypto are often associated with “cryptocurrencies,” digital code that secures value and enables digital transactions. Popular “cryptocurrencies” are often associated with Bitcoin, Ethereum, and even a category of meme coins such as “Dogecoin.”
Still, token use cases run far beyond these well-known coins and are not just tied to these traditional crypto narratives of speculative buying and selling for returns.
Tokens have a broad range of use cases, and their broad adoption can be tied to the narrative behind each token. The token's leaders, alongside the community, align around a common token narrative and evangelize that narrative to the broader world.
How should we think of a token? Technically speaking, a token is a digital representation of a digital or physical asset stored on a blockchain. Many different technical standards align the web3 communities on various forms of tokens, however he mainstream token holder likely cares about said token because its narrative resonates with them.
What’s a token narrative?
A token’s narrative is the common story that aligns a token’s stakeholders and compels these stakeholders to own and improve said token ecosystem. In a simple framework token narratives can be evaluated across three key aspects: the vision, the values and the identity of a token ecosystem.
Vision entails a vivid portrayal of the coveted future state that the company aspires to achieve. A potent vision can ignite the community's imagination, vividly illustrating the forthcoming achievements and sensations of triumph.
Values constitute a collective framework of guiding principles, beliefs, and conduct norms shared by the token's stakeholders.
Identity signifies the demographic profile of individuals who resonate harmoniously with the envisioned future. This encompasses details such as geographical location, spending habits, lifestyle choices, and economic circumstances. Essentially, it delineates the primary target audience for the token's endeavors.
In this piece, we will unpack the power of token narratives and how finding “narrative-market-fit” is largely tied to the “adoption” of a token, using three very different value propositions.
Bitcoin
Narrative: “Store of Value”
Let’s start with one of the first widely adopted tokens, Bitcoin. The widely adopted narrative for Bitcoin is “Digital Gold” and a “Store of Value.” Bitcoin's status as a store of value is underpinned by its programmatic and verifiable hard cap, lending credibility to the store-of-value narrative.
The Bitcoin ecosystem embodies a paradigm shift in the world of finance, encapsulating a triad of attributes that define its profound value and identity. Operating on a decentralized framework, Bitcoin offers a secure and transparent avenue for the storage and seamless transfer of value, unbound by the constraints of governmental or financial institution oversight. This innovative system is underpinned by a public ledger, meticulously documenting transactions, thus fostering an unparalleled level of transparency. In its disruptive pursuit, Bitcoin emerges as a technological marvel that dares to challenge the conventional norms of the financial landscape, beckoning a future where the notions of currency, control, and autonomy converge.
Worldcoin
Narrative: “Proof of Personhood”
More recently, in the news, Sam Altman, the Founder of OpenAI, has launched Worldcoin. The narrative that has been driving World Coin (WLD) is fostered around the idea of “Proof of personhood” and a transformative digital economy tying AI and blockchain together. Worldcoin envisions universal access to the global economy, emphasizing the importance of inclusivity for individuals from all backgrounds and countries. The Worldcoin protocol aims to simplify processes such as opening bank accounts, obtaining loans, and making payments, enabling broader economic participation. To ensure secure and reliable identity verification, Worldcoin adopts a biometric iris scan, surpassing traditional methods like passwords or social security numbers. With ambitious plans to establish the world's largest human identity and financial network, Worldcoin aims to address pressing global challenges, including poverty and financial exclusion. The Worldcoin whitepaper presents a vision for a new cryptocurrency that strives to enhance global economic accessibility and inclusivity.
StepN
Narrative: “Get paid to be healthy”
StepN's narrative feels simple enough; Get paid to be healthy. The app gamifies exercise and makes it fun and rewarding to get moving. StepN presents itself as a "move-to-earn" app that incentivizes users to stay active by walking, jogging, or running, earning them cryptocurrency in the form of GST tokens through GPS tracking. As users accumulate steps and complete exercise goals, they receive GST tokens, which can be exchanged for real-world currency, motivating them to maintain a healthy lifestyle.
The StepN Investment Token represents a longer-term investment vehicle, fostering a sense of loyalty and financial participation among community. With over 800,000 daily active users, the app has gained popularity as a fun and rewarding way to promote a healthier lifestyle while offering the potential to exchange earned tokens for real-world currency. StepN's narrative remains centered on promoting health and wellness, allowing users to get paid for staying healthy and potentially saving on healthcare costs.
Narrative Market Fit
We believe the next generation of token designs will create better alignment of all stakeholders within a token ecosystem. This 10x better alignment reflects the shared vision, values and identities that balance the financial actors with utility based consumers.
Thus, effective token designs begin with establishing a well-defined and compelling vision.
Exceptional tokens seamlessly weave together their narrative and distinctive attributes to motivate community members toward realizing this vision. One of the key advantages of tokens is their capacity to provide accessible ownership within a company's or protocol's vision, enabling widespread participation.
Bitcoin, Worldcoin, and StepN are three highly differentiated token narratives. Bitcoin exemplifies the concept of an open digital store of value. By acquiring and holding Bitcoin, individuals actively contribute to the realization of this vision, playing a part in shaping the future of decentralized currency. Similarly, Worldcoin offers a platform for establishing transparent online identities, potentially fostering greater trust and credibility among digital interactions. And StepN, incentivizes healthy lifestyles by rewarding individuals for their wellness endeavors and connects like minded community members around this aspiration.
In these three cases, each narrative speaks uniquely to a different community. Each token serves as a catalyst for advancing a visionary concept. And ultimately, a token's success in adoption may be tied to the success of presenting a compelling story that is relatable for an audience to engage in the tokens ecosystem. A token never finds durable success if it never aligns all stakeholders in a durable ecosystem, and it doesn’t align an ecosystem if it lacks a compelling narrative.
The narrative matters first. Narrative market fit drives the broad adoption and success of any token.
At Decasonic, we believe that founders with compelling visions can and will win. If you are building a business and have a differentiated token narrative you believe is propelling your product forward, get in touch. We believe in the future of digital assets and want to partner with outlier founders to bring this future to the global mainstream
—----
The content of this material is strictly for informational and educational purposes and is not meant to constitute investment advice or a recommendation or solicitation to buy or sell any asset or to make any financial decision. Nothing in these blog posts should be considered legal or tax advice. You should consult with your own professional advisor before making any financial decision. Decasonic offers no warranties on any content in the material posted in these blog posts, including that it is accurate, complete, or correct. The opinions expressed in these posts are those of the authors and do not necessarily reflect the views of Decasonic. Decasonic is not liable for any errors or omissions in the content of this newsletter or for any actions taken based on the information provided herein.