Social tokens are a rich, diverse market. While the space is growing rapidly across domains and use-cases, we lack simple, useful metrics for tracking key elements of the market at large. In a first step at solving this problem, we are excited to introduce Forefront's early exploration of a Social Token Index.
The index consists of a basket of 7 tokens, designed to capture the trends of some of the leading social token projects.
We have created a dune analytics to track the index (work in progress):
Note: It is not yet an investable product, but we’re moving quickly to explore that in the near future.
Why Social Tokens
Social tokens are rapidly transforming online communities. From enabling equitable pay for creators to coordinating activities for communities, these virtual currencies disrupt traditional ways of thinking about our online relationships and offer a vibrant tool to build entirely new worlds.
Forefront’s mission is to provide the port of entry to social tokens, to make them more accessible and therefore unlock their potential to power innovations across the world. One way of doing that is by making it easy for anyone to understand how tokens work and how they can be used. You can find those resources at FF Learn.
Another way of making tokens more accessible is by giving easier and simpler exposure and tracking via indexes like the Social Token Index, especially as the size and depth of the space continues to expand exponentially.
Social Tokens Are Hot
The past 90 days have seen an explosion of interest in social tokens. Communities such as Friends With Benefits (see our recent case study) have seen the price of their tokens soar by 950%.
According to our recently published mid-year social tokens report, in 2021, the total market cap of key social tokens surpassed $303m, a ~500% growth from 2020. The amount of addresses holding social tokens grew by ~200% from 6000 to now 19,000.
Forefront has seen a 5x increase in Discord users and have had to pause onboarding processes to cope with the flood of interest.
The market cap of the tokens making up our Social Token Index has increased from $152 million to $669 million in the past 90 days. The tracker is up 322% in the same time period.
Methodology
Building an index is a natural extension of what Forefront has been doing already - highlighting and partnering with some of the most innovative social token projects in the world. We have leveraged this expertise to develop a novel screening, review, and portfolio construction methodology. We will be sharing the specifics of that methodology in the weeks to come.
We have opted to keep version 1 of our social token tracker simple, with a square root market cap-weighted index capped at 25% for the initial 7 tokens. This ensures both a diverse product and greater exposure to newer projects.
We are working with industry leaders to develop an investable product. This will give people a simple, yet powerful way to gain exposure to the innovations being built in the social token world. Liquidity challenges prevent the responsible launch of that product now, but the day is coming quickly.
For more details read our proposal on the index Coop Forum
Exciting Days Ahead
Innovative social tokens are around the corner. Vibrant communities like the Bored Ape Yacht Club are considering launching tokens, while artists across the world are discovering the value unlock of web3. Big things are coming.
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In the meantime, Forefront will collaborate with the best minds we can find to innovate, engineer, and battle-test an investable social token index that we hope to bring to you soon.
Our Discord doors are open to any community members or partners who want to explore this with us.
WAGMI, FF Growth Guild