# One of Two Ways *If Success is a Game, These are the Rules.* By [Writings](https://paragraph.com/@davewardonline) · 2024-05-26 --- Tokens need Social Utility, Capital Utility, or both for success. 1\. Social Utility ------------------ > _Provides an exclusive, unique identity and activity_ — i.e., a strong sense of belonging in a fun community through activities like meme-making. #### Examples: * **PEPE:** Fun and easy to meme and the most recognizable meme globally after Doge. * **WIF:** Extremely memeable via fun and simple hat memes. * **DEGEN/HIGHER/ENJOY:** Tips and social belonging to the Farcaster/Zora community. These tokens thrive by allowing holders to engage in social activities, demonstrating their community belonging, and providing entertainment beyond trading. While tokens are bought for future gains, the sense of community provided by a token's Social Utility is far more valuable than any financial incentive during the duration of the position _and_ intensifies during highly emotional periods in the market. This community aspect makes ownership enjoyable, encouraging people to hold onto them. [![](https://storage.googleapis.com/papyrus_images/cfb3ef64d40c601099d51cad1f77ab91.png)](https://x.com/free_electron0/status/1793353849505206618) [Subscribe](https://paragraph.xyz/@davewardonline/memberships) 2\. Capital Utility ------------------- > _Provides good, non-inflationary opportunities for yield_. **Good Capital Utility:** Can be locked to receive a new token, like locking SOL or ETH for an airdrop. **Bad Capital Uility:** Staking a token to earn higher yields in a token with high inflation. I.e., CRV. * * * **_Why is CRV Bad?_** CRV _released_ outpacing CRV _locked_ adds inflationary pressure to the token's price, meaning value dilution. ![](https://storage.googleapis.com/papyrus_images/2915ba68dee8d4af3622ec0add1d50cd.png) * * * #### Examples of Good Capital Utility: * **Solana:** Farm airdrops + earn yield — 1st is more important than 2nd. (Despite being inflationary, SOL's popularity and demand make this a minor consideration.) * **Ethereum & Bitcoin:** Farm airdrops, earn yield, borrow, and lend for liquidity. * **Maker:** Holding MKR will increase the [DAI's base yield.](https://forum.makerdao.com/t/makerdao-endgame-launch-season/23857?ref=bankless.ghost.io) [Share](/@davewardonline/ga8x43K0uLq9AdwrHhKV) ### Tokens That Have Both * **Milady:** Strong _Social Utility_ from its unique community, posting style, and memes, plus _Capital Utility_ from qualifying holders for airdrops like Ethena, [Fantasy.top](http://Fantasy.top), and Omni. * **Schizoposters:** Like Milady, Strong _Social Utility_ via posting style and memes, plus _Capital Utility_ from qualifying for airdrops like Ethena, [Fantasy.top](http://Fantasy.top), and Renzo. * **Pudgy Penguins:** _Social Utility_ from their recognizable community — though less memeable than Milady — and _Capital Utility_, qualifying for extensive airdrops. [![User Avatar](https://storage.googleapis.com/papyrus_images/a822e0d1061ff912d911067f83355459.jpg)](https://twitter.com/mehranhydary) [𝖒](https://twitter.com/mehranhydary) [@mehranhydary](https://twitter.com/mehranhydary) [![Twitter Logo](https://paragraph.xyz/editor/twitter/logo.png)](https://twitter.com/mehranhydary/status/1792911581111546140) milady ![](https://storage.googleapis.com/papyrus_images/5fecae479559e7f340eb511f2283d771.png) [![Like Icon](https://paragraph.xyz/editor/twitter/heart.png) 74](https://twitter.com/mehranhydary/status/1792911581111546140)[ 9:33 AM • May 21, 2024 ](https://twitter.com/mehranhydary/status/1792911581111546140) Further Considerations: Social Capital Utility ---------------------------------------------- Some tokens have Social Capital Utility, providing people with community arenas to build social capital, which can translate to financial capital.(_S/O @divine\_economy for a great piece.)_ [![User Avatar](https://storage.googleapis.com/papyrus_images/c587ba68df3dbdc95c7f2fa1379a067b.jpg)](https://twitter.com/divine_economy) [david phelps 🐮🏰🃏🐘](https://twitter.com/divine_economy) [@divine\_economy](https://twitter.com/divine_economy) [![Twitter Logo](https://paragraph.xyz/editor/twitter/logo.png)](https://twitter.com/divine_economy/status/1794027018411008138) one major lesson i've learned from the past year of [@jokerace\_io](https://twitter.com/jokerace_io) is that even among cryptonative audiences, financial incentives are \*way\* less powerful than reputational incentives (status) and social incentives (the chance to make friends) and this makes perfect sense because… [![Like Icon](https://paragraph.xyz/editor/twitter/heart.png) 138](https://twitter.com/divine_economy/status/1794027018411008138)[ 11:25 AM • May 24, 2024 ](https://twitter.com/divine_economy/status/1794027018411008138) > **Reputational/social incentives being more desired and valuable** makes sense given: 1. The tight-knit nature of crypto. 2. How crypto makes _implicit_ network value _explicit_ via tokens and cabals. 3. We are operating on the internet, the ultimate social hub. In our online world, _social capital_ can convert to _financial capital_. Tokens with opportunities to build reputation and social standing often lead to greater financial opportunities long term. I.e., people can launch tokens, serve as figureheads for tokens, get access to alpha, etc. [Collect](/@davewardonline/ga8x43K0uLq9AdwrHhKV) #### Examples: * [**Ansem**](https://x.com/blknoiz06)'s first big trade this cycle was SOL. The ecosystem's state last year allowed him to develop social capital, which, once SOL shot up, turned into a reputation that now directly translates to financial capital — any token he posts about moves and has angel check opportunities. * _\*Prominent traders, in general, fit here._ * [**Spymilk**](https://x.com/SpymiIk), a Milady community figure, used her standing to launch [Bored Milady NFTs](https://opensea.io/collection/boredmilady), which have traded >1k in ETH. * [**Cassie Heart**](https://warpcast.com/cassie), a well-known Farcaster presence who's also one of their engineers, recently launched Quillibirum, a protocol focused on decentralizing the web's traffic. Its success is fueled in part by her Farcaster reputation. * * * In conclusion, tokens' success and desirability largely hinge on: * **Social Utility:** Fostering a _unique_ sense of community and activity, usually with memes, making it enjoyable to hold tokens, especially during market volatility. _or_ * **Capital Utility:** Providing non-inflationary yield opportunities. Proper Capital Utility is harder to come by and can be less rewarding since it's usually reserved for majors like SOL, ETH, and BTC. Further, as @divine\_economy's analysis of incentives explained, Reputational and Social incentives hold _priority_ — giving more weight to Social Utility. Finally, Social Capital Utility, a token's ability to offer community arenas for building social capital that translates to financial capital, also strengthens the importance of Social Utility. _Special thanks to_ [_@parkerjayp_](https://x.com/parkerjayp) _&_ [_@arjunnchand_](https://x.com/arjunnchand) _for their input and feedback_ ![](https://cdn.jsdelivr.net/npm/emoji-datasource-apple/img/apple/64/1f33e.png) [![](https://paragraph.xyz/editor/youtube/play.png)](https://www.youtube.com/watch?v=47YNsf-7Y7c) --- *Originally published on [Writings](https://paragraph.com/@davewardonline/one-of-two-ways)*