Token Holders are not Project Users
Stop thinking everyone will buy your token. They won't. And can you please take a marketing 101 course to remember that *everyone* is a delusional target market...
Since my last web3 stint, I’ve been catching up with industry friends. I was interested to hear how people thought about tokens and the challenges surrounding it.
We have really good tech, but why aren’t people buying and holding our token?
- says all token issuers, ever
It’s a good question. A lot of teams and founders I talked to asked the same. As someone that’s worked on tokens and attention in crypto for the last 3 years, I have an intimate understanding why this is the case. This article is an attempt at condensing my learnings.
The hard truth is token holders don’t care about tech. They care about getting rich. They bet on projects they think will 100x. That’s the cold hard degen truth.
But this isn’t a helpful answer, certainly not for a builder trying to make a difference in the world of crypto and change the world.
So let’s expound. What does it mean to think a project will 100x? What’s the difference between DEX A and DEX B? Why can one have a significantly higher valuation when they are almost identical products?
Token holders and users are two very different target segments
It sounds obvious, but it seems builders, founders, and teams tend to forget this regularly. The ‘investor’ persona is very different to someone who’s using your product for a job-to-be-done. Someone who trades on your DEX to swap tokens won’t necessarily care about your DEX’s token.
Taking this step further, think of these two segments being represented by two different funnels from not aware to evangelist.
These intersect. A Tesla user could be so impressed by the experience that they buy into the vision of EVs taking over transportation. This leads you to eventually become a TSLA investor. In fact, this is exactly what happened which led to the run up of TSLA’s stock price. You’ll see prominent YouTube influencers making content about their TSLA experience and how much stock they bought after.
Investing is a bet on the future
To make the difference very clear, think about what you’re considering when you’re either buying Apple’s stock versus buying an Iphone. In one case, you’re an investor and the other you’re a user. You can choose to invest both in Google (Android) and Apple, but choose to only use one type of phone.
Usage is when you need something done today. You need a phone to call someone today, that’s why you have a phone. You could choose to use Uniswap today because you want to swap from one token to another on Ethereum. And you could use Jupiter tomorrow because you need to swap for Solana tokens. None of those use cases logically nor emotionally compels you to buy the $UNI or $JUP token.
Investing and Hodling is when you make a bet on what’s going to happen in the future. Buying Google or Apple stock implies you believe this decision will be rewarding for you in the future. That is, whatever Google or Apple or both is doing today sets them up for the future or where they are heading will be a financially rewarding direction. And you want to be a part of that which is why you buy a piece of ownership of that company. You believe what they believe, but you don’t necessarily share the same taste for your daily phone usage.
Another important difference is what you’re paying for. When you use a product, you’re paying for a service or output i.e. swapping a token quickly and cheaply. When you invest into a token, you’re paying for multiple bets:
I bet that the market this product is playing in is worthwhile (TAM is big)
I bet that this particular project will eventually win over this market
I bet that this token will reap meaningful rewards when the project wins (i.e. tokenomics)
For token holders, articulate and winning vision; For users, ship product that just work
Going back to the first question, “we have really good tech, why aren’t people buying and holding our token?”
A DEX that’s really fast, performant, and cheap should have metrics and users that affirm the same. Are people using your product? Do they agree that it’s the fastest and cheapest? Are more users coming in to use it for the same reason? Are you talking about this in a channel filled with potential users that are looking for the same elements of a DEX? They won’t necessarily want nor need to buy your token.
On the other hand, who are the token holders that typically buy DEX tokens? Do they also believe a fast, performant, and cheap DEX will win or capture the most value in the market of DEXs? If so, are you showing off your current product to these people in the channels they hangout in? How are you articulating that you’re closer to winning the market with this latest launch and what are the next milestones for you on the road to winning the market? They don’t necessarily need to use nor like your DEX to be convinced you’re going to win if you show the progress and trajectory to victory.
Yes, you may have good tech. Hopefully that means a lot of people want to use your product.
But having a great product doesn’t mean you’re also a good token investment. That’s a whole different ball game.
So how exactly do you solve for token holders then?
That’s another big question! It deserves a dedicated post. I’ll publish my thoughts on this soon.