Why Crypto Community Building Matters

In this post, I break down some of the fundamentals of crypto community building and explain why strong communities are indispensable for the long-term health of decentralized networks.

Community is about ownership

Let’s first get on the same page about what a community even is — because how can we talk about building something unless we agree on its definition?

I’ve been spending a lot of time thinking about a definition of community that is universal for all cryptoassets. It’s not a straightforward exercise, especially when you consider all of the different types of decentralized networks (e.g. currencies, middleware, smart contract platforms).

Over the past few weeks, I’ve asked a number of operators and investors in the space to define the term for me as well. Here is my favorite answer:

Community is about ownership — feeling not just that I am part of something bigger than myself, but that I have some skin in the game. It doesn’t matter so much whether that stake is economic or not — in fact I think non-economic stake (e.g. reputation) can be a much bigger motivator. (source)— Lane Rettig, Independent Ethereum Core Developer

I like this definition because it’s not too prescriptive and it captures the essence of what it means to be in a crypto community above all else.

We can also go a level deeper with community to identify three types of stakeholders that have skin in the game:

  • Users — those who utilize a network for its intended purpose(s)
  • Builders —those who develop, maintain, or contribute to a network
  • Speculators — those who purchase cryptoassets in order to make a profit

Decentralized networks are open and permissionless, so their communities will always comprise of these groups. And no matter what kind of protocol you’re building, you should be able to characterize your stakeholders into one (and sometimes more) of these groups.

Note: If you’re looking for specific community building strategies, I’ve written about that here.

Fundamentals of Community Building

Target users and builders

Most people would agree that only users and builders — not speculators — are indispensable for the long-term health of a decentralized network. I’ll dive into the role of speculators later in this post, but for me, a credible community building strategy should place the highest priority on acquiring users and builders.

Intuitively this makes sense. Decentralized networks without builders will not be able to adequately maintain or upgrade their protocol over time — a recipe for death. Those without users simply don’t have a reason to exist in the first place.

There are challenges with acquiring both groups because they are so often highly specialized. As an example, let’s take FOAM protocol, which is building a consensus-driven map of the world:

  • Users of FOAM include dapp developers leveraging Proof of Location.
  • Builders of FOAM include cartographers who curate, map, and verify the locations of static objects.

As the saying goes — if you build it, they will come — but that really doesn’t apply to finding open source cartographers!

Successful projects will seek out and acquire these people.

Convert speculators

The cryptocurrency community has openly debated the role of speculators for years. There are merits to both sides of the debate. However, in the worst cases, speculators have caused projects to prioritize the wrong things (e.g. short-term prices) at the expense of what really matters — delivering a useful network that can survive long-term.

When projects so clearly target speculators, I’ve found it to be a helpful indicator for identifying projects that are poorly run, or in the worst cases, in it for the wrong reasons. Nic Carter describes some of these projects in a recent post:

The main challenge for the folks on the altcoin team is not technical, but rather social. This is euphemistically called community building. This of course refers to broadening the set of buyers for the token or coin, and getting existing buyers to become more fanatical in the support of their chosen coin.

Now, what Nic describes is not community building, and to be honest, this characterization offended some founders, community managers, and core team members who dedicate time to growing their communities and are in it for the right reasons. But it’s not completely unfair — the industry is littered with projects who do this.

In any case, there is no getting around the fact that open networks invite speculators. Therefore, your community building strategy should be focused on converting speculators into productive users and builders.

Why community building matters

#1 — Fewer contentious forks

Contentious forks are devastating to a protocol. But while it’s easy to fork a protocol, it’s hard to fork a community. Projects that invest in their communities are thus proactively playing defense. When technical and philosophical disagreements inevitably surface, well-functioning crypto communities will have fewer contentious forks than their peers.

#2 — Better governance

Governance is critical to the long-term health of a decentralized network, but a strong community is the foundation of good governance. While many projects focus on establishing good governance mechanisms, these efforts are incomplete at best if you’re not building out your community simultaneously.

#3 — Faster pace of innovation

This should be self-evident. The larger and more diverse the community, the greater the pace of innovation. We can observe this most clearly with Bitcoin and Ethereum, which have benefited from numerous community contributions over the past year related to initiatives such as privacy and scalability.

Closing thoughts

We’re still in the early days of crypto community building. However, the field is growing at a rapid pace. It will only be a matter of time before projects start taking it more seriously and devising community development strategies in earnest.

One thing currently holding us back is that measuring community strength is difficult to do. The community metrics we know of today (Github commits, Reddit comments, Telegram users, etc.) are game-able and incomplete. I caution teams from placing any emphasis on these metrics because they really don’t mean anything.

With that said, we’ll soon be able to accurately quantify community strength. There are a number projects working on these problems, most in the data and CRM space, and there are also relevant industries that have solved similar problems in the past that we can learn from. I’m excited for the future.

It’s time to to start prioritizing community building.