Friends With Benefits

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How users acquire membership and participate:

1. Alice applies for membership. Membership questions relate to experience and interest in the web3 space as well as demographics (gender, location, etc.) and interests and skills outside of web3. Approval is a fairly manual and opaque process. Existing members can also vouch for applicants. Approval appears to be heavily dependent on diversifying membership.
2. Alice purchases $FWB. While the application flow requests that potential members select a tier, any accepted member at the local tier may swap additional Ether for $FWB to gain full status without an additional application process.
3. Alice participates in Discord, socializing with other FWB members. Access to other FWB members is seen as a primary benefit of membership.
4. Alice votes. Voting power is token weighted, so Alice as a full member has higher voting power than local  members. Prior to the implementation of Snapshot, votes on proposals were conducted via Discord polls using emoji reactions.
5. Alice attends an official FWB event. Official ticketed FWB events require a formalized application process for event organizers and make use of wallet verification for access. Informal and unofficial event access generally does not require token verification.
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As the key token interaction diagram helps illustrate, participation in the FWB DAO is, in fact, a relatively permissioned process, requiring a successful membership application. However, this permissioned membership process would appear to minimally contribute to keeping membership benefits exclusive to members: little above community norms prevents the resharing of token gated writings and voting records raise questions of whether Snapshot voting is restricted to successful applicants, rather than any token holder. 

The case of asynchronous membership applications highlights an important design consideration. While all  DAO members must hold 75 $FWB for full membership (or at least 5 $FWB for local membership and 1 for read-only content), the $USD cost per membership can vary broadly between members who apply at different times. For example, in Oct of 2021, when 1 $FWB traded for ~$130 USD, the price of full membership was $9750, while in Sept 2022, the price fell to ~$10 USD, and full membership price with it to $750. 

For DAO members, such differences in price tag for full membership contributes to different perspectives on utility of membership. As the token utility classifications clarify, $FWB primary utility is membership: token holders have an incentive to hold just the requisite tokens to receive membership benefits. From a user’s perspective, it may seem puzzling that Alice and Carol purchase membership at different times, are granted (ostensibly) the same membership benefits and utility, yet one pays 13x the price for membership of the other. To an economist, such sameness in utility may be merely ostensible — arguably, users who join at later stages of the DAO join when there are stronger network benefits, and assessments of the  DAO’s prospects are sensitive to the performance of the enveloping ethereum ecosystem. But it is the DAO’s end users, not economists, that the DAO must ultimately keep satisfied, and FWB’s approach to membership pricing sets the DAO up for a difficult conversation on a topic perhaps not top-of-mind for its target demographics.

Token Utility

Token utility classifications  answer the question ‘what can the asset owner do with this asset’, and focus on benefits to end-users rather than benefits to the protocol. All classifications are based on a token utility typology of discrete utilities developed from corollaries from non-crypto environments. Classifications are based on implemented vs roadmap functionality, are non-exclusive, and are relative to the time of publication. 

$FWB has two forms of utility:

The current membership structure, which allows for three tiers of membership access, is due to be consolidated into two tiers on January 15, 2022, in a shift that will likely have consequences for both the health of the community and the value of the token. Key changes include:

• Token holders who do not convert to full membership will lose voting rights and access to the Discord.
• FWB will become primarily a virtual community while still supporting regional events for full members.
• Access to the newsletter and other token-gated publications will remain at 1 $FWB with no requirement to pass a member application and no other benefits offered for holders of more than 1 and less than 75 $FWB.

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Below is a a full summary of proposed changes.

| Pre-Merge

| Post-Merge

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Token Supply

Following conventions used in the design and maintenance of virtual economies, token supply is explained via three questions. How assets were issued, how much of it, and under what conditions is answered via initial distribution findings. How the asset supply expands over time is answered via source findings. How liquid asset supply shrinks over time, either through usage and burn, is answered via sinks findings, with the hard/soft distinction indicating which types of sinks temporarily lock up supply v. which permanently reduce it.

FWB has a fixed token supply, with no tokens generated or destroyed. Users typically acquire $FWB through swap via Uniswap protocol, and, post hack, $FWB was airdropped to $FWB Classic holders. The absence of sources and sinks for $FWB means the project has a comparatively more limited toolset for responding to $FWB volatility, which impacts the $USD value of the requisite 75 FWB holdings. A fixed $USD membership cost might be supported by an oracle system that checks the average $USD/FWB and periodically updates the membership cost. Such an approach ,however, could introduce disruptions to members who lose access to during high $FWB periods and likewise introduce incentives for members to sell excess $FWB tokens during low periods. FWB’s simpler approach to monetary policy and access costs may be appealing to a DAO whose members are more interested in coordinating social events than managing an economy.

FWB’s struggle to be a truly global social DAO highlights the limitations of token-gating regional events in a community that ostensibly features members from around the world. The flat cost-of-entry for membership, even at the token’s lowest price, is still prohibitively expensive in comparison to the average cost of living in many parts of the world, and these regions tend to be those least served by the DAO’s offerings. The token’s value has fluctuated broadly, from a high of $196.19 USD in August 2021 to a low of less than $8 in November 2022. Such fluctuations in token pricing and the logistical complications of expanding beyond its initial core cities (NYC, LA, London) complicate membership’s value proposition and have left the DAO community in a state of flux. 

FWB’s membership structure and long term goals appear likely to change in response to new voices in the DAO’s governance and market pressures. The recent vote to eliminate the Local membership tier was controversial, and a counterpoint drafted by members of the community highlighted the concern that it is likely to provoke an exodus of members outside of the DAO’s core cities of Los Angeles, New York and London who already struggle to see the value of holding the $FWB token when they receive little support from the DAO outside of their own self-organized local hubs. As these local members make up nearly 50% of the unique wallets that currently hold $FWB, the risk to the community’s diversity and vibrancy is significant.

These struggles raise the question of ‘to what extent has FWB’s choice of token facilitated social club, compared to a similar web 2 org, helped or hindered the project?’ More specifically, can a token facilitated social club surmount the challenges of financial solvency, participant burnout, and lack of diverse participation that often plague traditional communities? Notable points of comparison include:

1. FWB raised $10M USD from investors like a16z, etc. Compared to a conventional club, FWB’s ability to finance its organization may have benefited from interest in its early adoption of a new technology.
   
   
2. Compared to conventional membership fees, which often involve periodic payments, a $FWB holder retains the option to re-sell tokens at a future point, either to a loss or gain. There may be a comparably higher initial price-point to membership but a lower life-time cost — some members could even participate at life-time profit.
   
   
3. A conventional club can respond to member concerns around utility of membership by adjusting price. FWB’s commitment to a holding of 75 $FWB for membership access limits their ability to adjust over time.
   
   
4. Non-crypto natives are apt to encounter greater technical barriers participating in FWB than they might in a web 2 organization, such as wallet setup, gas fees, and indirect $USD to $Ether to $FWB acquisition. Conversely, FWB members may have greater social support acquiring this know-how compared to a non-crypto native learning independently.
   
   
5. The community has attempted to mitigate some issues of access and diversity by granting tokens to potential high value members who may be financially limited from entry, and the DAO may weigh member applications in favor of underrepresented groups. The need for these mitigations, however, highlights the persistence of the financial barriers that have traditionally excluded members of many underrepresented groups from such organizations.
   
   
6. Formal and informal networks that make use of web2 technologies for connecting creative professionals internationally for conversation and collaboration already exist, but FWB’s tokenized system may attract members who see the potential for a direct financial return on their participation in a way that challenges many web2 or traditional networks’ failure to provide adequate compensation for tastemakers, matchmakers and creators.