Community in the blockchain world. False lights and a spiked pit.

Thanks to the massive influx of money, the cryptocurrency market has caught the attention of the world, the rapid growth in capitalisation has led to an explosion of thousands of projects and a huge hype around different technological solutions. Investments and people interested in cryptocurrencies and technologies started pouring into the new, flourishing and growing industry. But most of these people are speculators.

With the development of Layer 1 and Layer 0 blockchains, there is an opportunity to create a whole new digital community, metaverses, digital assets, etc. The world of anonymity and freedom is blooming. And while many of the technologies offered by today’s blockchain startups are indeed impressive, do they have value for the community of these projects other than speculative? Does the community pay attention to the subject of development, or are capitalisation and market perspectives the most important things for them?

Let’s not delve into the history of blockchain technology and how the idea of a decentralised digital currency grew into a technological leap and a socio-economic miracle. However, it is worth noting that we can question the understanding of the technology behind many projects and the community’s real intention to use that technology. And this is often not because the products developed by startups require deeper adaptation to the real needs of the modern world but because the main participants in the crypto world are speculators.

99% of those who, one way or another, can identify themselves with the crypto-world are initially introduced to cryptocurrency specifically as a means of speculation. The basic idea is an opportunity to make quick money in the growing new market, no matter what the project does, no matter how much these technologies will be applied in the future, the important thing is to buy the token cheap, sell it dearly and pocket the difference. Everyone starts their journey in this world based not on the revolutionary nature of blockchain ideas, but the financial component. Most of them remain speculators, some get into the concept of a digital future and start building a wonderful new world, and some decide to become scammers and develop scam projects. But whatever the ultimate goal of a project, the community always plays an essential role in its life.

Unfortunately, many startups are initially dedicated to making profits as quickly and easily as possible. After all, the strong driver for participants in this market is historically not technology but the thirst for profit. Therefore, the communities of these projects are not interested in technology. In the end, such a startup does not bring any benefit to the market; instead, it is the opposite. The scheme for developing such a project is often quite simple:

1. quickly pumping up the audience on a popular project theme (DEFI, NFT, METAVERSE)

2. Collecting money from investors

3. Collecting money from the community

4. Follow-up coin dump immediately after listing or after some time, or ragpull/no listing and project goes out of sight.

If there is a listing, the development of the startup often stops because the purpose of creating the project is initially speculative. In this scheme, the community can act as a donor of money for ICO, an initiator of maximum hype around the project and as imaginary support for investors who think that token will be repurchased in the market because the product will be in demand. Therefore, the modern crypto market can be called a struggle of some speculators with others. Unfortunately, this hinders its development and destroys even those projects that are not initially designed for speculation and carry the proud banner of technology.

Of course, after participating in such projects, many people are left with a speculation scheme in their minds and their attitude to the crypto market changes. Startups begin to be perceived as cash cows that will either get lucky and make a profit, or everything will end quickly, and one will have to look for another project.

At the beginning of the journey, founders often don’t think about how to develop a startup from a community point of view, copying ready-made schemes, not paying enough attention to analyse their effectiveness, and most importantly, not trying them on their own project in the long term.

So why does a project need a community? Why do so many people emphasise it, often even before the whitepaper is written? Unfortunately, it’s a legacy and part of the usual speculative system that also affects startups that are really developing technically exciting products. Community development is often one of the main requirements of investors. If a project has people who will use the product, it is possible to invest in it, offloading the tokens acquired in the early funding rounds to the community. Investing in projects at an early stage is a serious risk, and investors want to make sure that the project will be popular, so they often pay attention to subscriber metrics on Discord, Twitter, and Telegram.

Unfortunately, such requirements show investors’ focus on getting profit from the project as quickly as possible, lack of faith in development, insufficient analysis of the startup and the market, and a desire to speculate. This is a broad topic to which a separate article could be devoted.

So how can projects that need an initial investment to develop show interest in the product by the community? Of course, you can simply buy bots and subscribers and show the necessary numbers, which is often done. However, it is more reliable and effective to additionally attract people with the help of Ambassador programs because they give out yet non-existing assets, options for future tokens or NFT. Such traffic looks very organic and can nicely dilute the fake accrual numbers. It helps solve the problem of future token decentralisation and brings live people into the project who will be helpful to the startup. That should be the case but unfortunately is not always like this.

The average ambassador nowadays participates in many projects simultaneously, often running several more fake accounts to collect the maximum number of rewards. Usually, such people are not interested in technology and don’t have much faith in its future, have little idea of the challenges developers are setting for themselves and evaluate them solely from the perspective of the future price of the token. They are not ready to spend much time understanding the startup’s essence and agree only to perform the simplest tasks; they quickly switch to other projects and communities. Very often, the ambassadors’ activity drops as soon as they are accepted into the program because an ambassador’s very status gives hope for future airdrop, and the rest is not so important. What matters is the number of projects one participates in. The main goal is to enrich oneself in every way possible.

The professional ambassador industry has gained many followers in recent years. These people look for projects in the early stages of development, especially those in which large and prominent funds have invested. This increases the chances that the idea is successful and will likely bring in a significant profit. When the startup does not yet have an established community, it’s very easy to get in and get recognition from the team, and thus a high chance of getting an ambassador role or the opportunity to get an airdrop or run a node.

Schemes to make money without investing money when you have a computer or phone and free time have gained popularity in connection with the lockdown and the pandemic of covid and will gain even more followers due to market growth and almost 100% profitability of such an occupation. The only resource that the ambassadors are spending is time. The very notion of being an Ambassador has long been associated with making money rather than promoting and actually helping projects.

In the pursuit of enrichment, it is often practised to use free and safe “leverage” to increase rewards — registration of dozens and sometimes hundreds of fake accounts to participate in bounty programs and possible future airdrops. This approach is trendy and promoted as a foolproof way to get rich: the more accounts you sign up for airdrop or, the more you have in the ambassadors, the higher your share of the tokens allocated to the program will be. A project may end up doing an airdrop on 10,000 wallets and think they have distributed their token well and secured themselves. However, in reality, they will be owned by a few people, and sometimes it’s just professional companies making money through participation in such programs.

Yes, particularly advanced participants in such enrichment schemes set up a real business on this, hiring teams to develop content and run fake accounts. There are departments dedicated to drawing memes, editing videos, translating material, and writing articles. A real content stream broadcasts through fake accounts to get the most profitable roles in the project and, consequently, the most rewards.

Often such teams have developed social media channels through which they shill projects. The main participants in these communities are in countries with underdeveloped economies. It is very lucrative to set up such groups, their founders make extra money from advertising and they can attract a large number of participants to the project in return for additional rewards, and often these rewards are quite substantial. Eventually, after shilling the project in a few such groups, the startup’s social media followers skyrocket, and servers start getting flooded with messages and sham activity.

The announcement of an ambassador program often literally explodes the discord servers and telegram channels of the projects; thousands and thousands of new participants join the startup in hours, and the number of applications to join the ambassador program grows too. Inspired by such popularity, the project management believes that it is a success and that the project is attractive to many people. Investors, seeing the jump in interest in the project, start transferring funds and counting future profits. Everyone is happy and satisfied, but not everything is as rosy as one would hope.

What seemed like manna from heaven for the project may become big trouble. Of course, there remains the theoretical possibility that some part of this “community” will embrace the technology and use it once the project is officially launched, but most participants in these programs are solely focused on rewards, which means that the first thing they will do when they get their share of tokens is sell it, thereby putting pressure on the token price and, often, on the economics of the project itself.

The challenges also begin from the perspective of the actual development of the startup. It is impossible to get honest feedback from such a community because it literally has no interest in the product. Objective metrics get lost, the value of the technology gets distorted, and, as a result, the project may fail if it is false evaluated and developed. In addition, a community built solely on financial interest automatically begins to lose interest as soon as the prospect of enrichment becomes less clear if the price of the token falls or if the product is delayed to market.

Instead of a healthy discussion of the startup, its development, and communication with the team, server participants are only interested in how to join the Ambassador program, when the token will be released, what investors the project has, which exchanges will be listed on, and so on. Real work with the community becomes impossible, as well as the relevant identification of product needs. And as a result, the project may enter the market with inflated expectations, false-positive feedback from users, incorrect niche positioning of the product, and low genuine interest from users. Then the startup faces the sale of essentially free tokens by endorsers, and investors, demoralisation of the team and, finally, the failure of the whole project.

Of course, not all startups go this way, and there are excellent examples when the community is formed naturally in the process of project formation and development. However, as soon as the team announces the start of an ambassador program, it is guaranteed to be attacked by “professionals” and the problems described above become relevant.

Solving this problem is possible but complicated by the general situation in the industry. Specific standards for working with communities are firmly established, and the design and adoption of other development models require a fundamental review of the project-community and project-ambassador relationship models. Certainly, as the industry evolves, there will be changes sooner or later, but how many startups will suffer before the paradigm shifts?

The very situation of community distrust of projects, caused by the speculative nature of the crypto market, also brings additional confusion and a negative attitude of market participants towards each other. Having had a negative experience with one project, a participant may unwittingly transfer it to another project, ceasing to perceive it as an innovation and seeing it solely as a means of making money.

Prioritising development, defining niche integration, working with focus groups and furthering natural community growth that is not based on the immediate financial gain are keys to fixing mentioned problems and healthy relationships in the ecosystem. The product should be at the forefront of everything, it’s the product that determines the community’s actual need for it. And, of course, clearing the market of dubious projects that are not innovative and are aimed at speculation is one of the main factors in the further development of blockchain and the acceptance of this technology by the general public.