Are Club-like PFP/Avatar projects worth the excitement?
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
Are they just a fad or here to stay?
Can they really deliver sustainable value? Can they be good investments?
Will they still exist in X years?
Yes. And here's why. (TL;DR: simple arithmetic)
🧵/N
Clubs are not a new thing. Clubs have existed literally for thousands of years, in different formats. Some time ago maybe they were called cults instead, or other sorts of names, but people gathering with other likeminded people is as old as humanity.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
2/N
This is not to say that all clubs succeed. Anyone who's tried to start a club in their school, or watched someone else do it, has probably observed the model failing to get traction for various reasons.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
But NFT-backed clubs have a lot of things going for them.
3/N
First of all, they're online. That's a huge advantage over offline clubs. Although being physically in the same space with other club members can definitely be a boon to networking, being online means that clubs can be much more niche and still thrive.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
4/N
You might struggle to start a club around, say, the Curse of Strahd adventure in D&D in most places in the world, with the exception of megatowns like London where there's just 1000+ of every kind of person.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
But the CoS Discord is thriving and active, because it's global.
5/N
And when you take larger niches... the effect is even more pronounced, and plays into the reason why these clubs have the potential to reach stratospheric valuations compared to offline clubs.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
6/N
Here's the thing. An NFT club is like an offline club, except that the memberships are:
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
- fixed in number (* - we'll revisit this later)
- tradeable
- emotionally engaging and fun
- investments
7/N
Here's the thing. An NFT club is like an offline club, except that the memberships are:
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
- fixed in number (* - we'll revisit this later)
- tradeable
- emotionally engaging and fun
- investments
7/N
If you have an OG BAYC, you know for a fact that there's never going to be more than 10k of them. You don't need to trust "the club leadership". It's in the code. It's immutable. Only an Act Of God level event can change that (like: Ethereum being decommissioned).
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
9/N
Most club memberships are not transferrable, let alone tradeable. This is really important. I've been a member of private clubs where you could buy someone's membership, but it was a laborious process.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
And I was only buying out the rest of their subscription.
10/N
With an NFT club, your NFT is a membership for life. And it's tradeable if you decide to leave the club. That is *FAR* superior to the model most clubs use to manage their memberships (usually expensive yearly subscriptions).
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
11/N
The best part is, by doing so, the club itself doesn't even lose out on revenues, because they're getting royalties from those subscription trades now. And they're selling the initial NFTs so much higher than a regular subscription. And online clubs have no fixed costs!
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
12/N
So the tradeability makes it, imho, an absolute no-brainer for both club owners and club members.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
But that's not all! NFT club memberships are also, or can be, emotionally engaging.
13/N
I'm sure in history there have been many clubs where people really identified with the club membership. "I'm a member of the Rotary Club", or that sort of stuff. But let's face it, few rl clubs have been able to tap into that. You need to be really premium for that irl.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
14/N
NFT clubs deliver this emotional engagement via, yes, those cute PFPs. They make it easy for people to care about their membership and identify with it. Notice the picture on the left of this tweet. It's part of my identity at the moment. Changing it would be effort.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
15/N
This helps make the club memberships extremely sticky, and likely makes up for the physical engagement of going to a physical club, which online clubs can naturally not deliver. I might change my lion some day, but I'll need a really good reason.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
16/N
All of these reasons end up building up the mechanic of club memberships as investments. Here, it's just arithmetic at work. Let's say an NFT project is like a fixed set of things being sold, which it is.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
17/N pic.twitter.com/29FKUGLCG3
All of these reasons end up building up the mechanic of club memberships as investments. Here, it's just arithmetic at work. Let's say an NFT project is like a fixed set of things being sold, which it is.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
17/N pic.twitter.com/29FKUGLCG3
All of these reasons end up building up the mechanic of club memberships as investments. Here, it's just arithmetic at work. Let's say an NFT project is like a fixed set of things being sold, which it is.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
17/N pic.twitter.com/29FKUGLCG3
So long as there's enough ideal members to form a core that makes the club good for those "ideal members", and the project really delivers on being a good place for those ideal members, then over time, investors do their trading and are replaced.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
20/N pic.twitter.com/MLSToiSi5W
And the cool thing about those ideal members is they're in it for the club, not for the money. They are super sticky. They probably won't leave/sell as long as the club delivers.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
Investors provide a padding of funding and trading activity in the meantime.
21/N
Over time, though, the non-sticky investors are slowly replaced by ideal members. This might take days or weeks or months or even years, but it's inexorable as long as the club is actually worthwhile for those ideal members.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
22/N pic.twitter.com/xonPpiPxkE
As the supply that's actually available for sale gets smaller and smaller, but the demand keeps coming, prices will inevitably rise. That's the simple, inexorable arithmetic of NFT clubs. And that's what makes them a good investment.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
23/N
Eventually, the supply might become so small that the price is way out of reach of ideal members, even those who really want to join. Then an NFT club can expand the membership by doing an airdrop, releasing a companion NFT, etc.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
24/N pic.twitter.com/I7OOp1Ytd6
This means the supply was not really truly "limited forever"... but it kind of still is, because those are a new token, that may have similar rights but is ultimately not quite as precious as an original membership.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
BAYC pioneered this among other things and it works.
25/N
Because of all these features, NFT clubs are so evidently a better model than regular clubs that, honestly, it's not even worth asking whether they're a fad.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
Seems more worthwhile to ask whether offline clubs without NFTs are the fad that's drawing to an end.
26/N
My prediction: offline clubs will start adopting the NFT model too, because it's just too good to ignore.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
And online clubs will continue to thrive and end up occupying every niche imaginable, at every price point.
27/N
The key to remember for a club, though, when evaluating whether to invest (from an investor perspective rather than a member perspective) is:
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
Are they actually making a good club for this?
28/N
The key factor for an NFT club's success will be:
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
- have they figured out who their ideal member is?
- are they building something attractive enough to them to make them sticky for years or even life?
If yes to both: it might be a good investment.
If no to either: run.
29/N
TL;DR: I am extremely bullish on NFT clubs as a concept, and on projects which execute this concept well.
— Daniel Tenner (swombat.eth) (@swombat) November 15, 2021
I wonder when the offline club fad will end.
gm & gl
30/30