Fixing Content Coins

There’s been a lot of recent debate on “content coins,” especially the recent wave coming out of @zora and promoted by the Base team. These are tokens tied to individual pieces of content, posts, or media, and they function similarly to memecoins, but with a more explicit cultural anchor (avoiding the chaos of multiple overlapping markets).

Anatoly has dismissed them as worthless, citing their lack of fundamental value. Meanwhile, @jessepollak is arguing that culture itself is valuable, and that these coins offer new tools to express belief in the cultural importance of a given piece of content. Both views have some truth to them.

Anatoly is right that the coins lack fundamental value and their current design is dumb. But that doesn’t mean that purely speculative content markets can’t be done well. The problem is that the dominant mechanism being used right now, the bonding curve, borrowed from pump.fun, is the wrong fit entirely.

Content Speculation

I’m not going to debate right now the merits of speculating on content virality. I do think there’s legitimate value created by the act of curation. Existing social media algorithms are already pretty good at surfacing content (well at least according to their goals), but it is interesting to see what sort of novel properties a market mechanism can bring to that process.

Either way, the fact of the matter is that people want it. Entertainment and speculation have always gone hand in hand. People like to speculate on things they care about. Sports are entertaining, and so sports betting is a massive market. Politics has blurred into entertainment, and political prediction markets have followed. Social media is where people now spend much of their attention, and so it’s natural to want to bet on it, too.

The Value Problem

But if people are going to make money off of this, then there needs to be a source for where the money is coming from. In traditional finance, that comes from cash flows or productive assets. A stock represents a claim on future profits.

Anatoly is right, ideally, the best version of content coins would be structured like this. If content coins were tied to ad revenue, IP licensing, or tipping flows, then believers could be rewarded from actual economic activity tied to the content’s success. That’s not what we have right now.

To build that would require a complete upending of social media platforms themselves (which to Coinbase’s credit they seem to be taking on the challenge of; good luck) and getting the legal system to even comprehend the concept of “tokenized IP rights”.

And that’s not even accounting for the fact that we have to figure out how IP and monetization itself works in the new world where most content is consumed and summarized by LLMs, not human eyeballs, thereby bypassing the entire ad-driven economy of large portions of the web. It’s a hard problem, and one we probably won’t solve in the short term.

And so, until we get there, we’re stuck with a system where there is no content coins with “fundamental value”. We’re stuck with what we’d call a “zero sum game”.

Zero-Sum Is Fine. But ponzis are not.

Not all zero-sum games are bad. Sports betting and prediction markets are also zero-sum. Hell, even poker is a “zero-sum game”. In all of them, someone wins and someone loses, but the structure of the game matters. You win by being right, and your winnings come from your opponent who lost by being wrong. That makes for a healthy kind of opposition.

Content coins today don’t work like that. Because they rely on bonding curves, everyone who is putting capital into the system is betting in the same direction, on the content’s success. Thus there’s no natural “opponent” from whom the winnings derive.

Instead, the only way to profit is to dump on someone who shows up after you, and to take the capital that they brought in. A ponzi. But this is really wacky, because you’re pitting fan against fan. Even if you’re right about the content’s success, your profit only comes from extracting from other people who are also right. That’s a strange model for fandom.

In something like a prediction market, if you were more late to the winning cause, you might win less than someone who was earlier. But you still all win together. You both make money off the losers.

But here, fans aren’t betting against skeptics, they’re in a pvp against each other! Some fans win, some fans lose. The only difference is in their timing and their willingness to “defect” against their team. The game becomes zero-sum within the group of supporters.

I once spoke with the founder of a very prominent NFT collection (can’t say who because of Chatham House rules) about whether they’d ever launch their own L2. They said no, because it would just turn the community into PvP. If the only people on the chain are your own members, then the competition becomes zero-sum within the group. The incentives begin to cannibalize the culture that brought them together. Their goal wasn’t to fight each other, it was to take on the world together.

That stuck with me. Because the same logic applies here. You don’t want to design a system where the only way to win is to beat people who believe in the same thing you do. That’s not the way to build a community.

You want your fans to profit not off each other, but off of the haters.

Building Better

To be honest, I don’t yet know exactly what a better model would look like. I just know it needs to have two sides. Right now, everyone is betting in the same direction, and that creates perverse incentives. A healthier system would pit belief against doubt. Not early believers against later ones.

Maybe it ends up looking something like a prediction market. Or maybe it just needs a way to “short” content, so that longs and shorts are matched against each other. The attention market design being explored by the folks at @noise_xyz might be pointing in the right direction? Or perhaps the answer requires making communities compete with each other. Remember the PewDiePie vs. T-Series YouTube race? That kind of rivalry drove massive collective effort without fragmenting each fanbase from within.

Content speculation might be inevitable. And in a purely speculative system, some form of PvP is necessary. But that doesn’t mean it has to be PvP within a fandom. Let’s try to building systems that enable PPP among the believers, and reserve the PvP for the doubters.

(Or maybe we just skip all this and figure out how to build real, cashflow-backed content coins after all…)