How to maximise the value of content on Hive via layer-2
Direct from the desk of Dane Williams.
A look at why content on Hive has value and how to maximise that value on Hive’s layer-2 like LeoFinance (LEO).
Yes, content on Hive has value…
The thing is however, we’re looking at what makes content valuable the wrong way.
As such, completely wasting its potential to generate value for the communities who put the work into publishing it in the process!
In this post, I go over the extremely important role content plays in ensuring Hive’s governance remains decentralised, talk about Hive’s failure to fully maximise its value and share my opinion on what needs to happen next.
Let’s dive right in.
What gives the HIVE token value?
The value of HIVE comes from the fact it allows you the ability to transact and influence governance on a truly censorship-resistant network.
The HIVE token will always have value as long as HP gives you the ability to operate on this immutable network.
As such, the key to the network is to spread out the HIVE token as far and wide in order to avoid the type of governance attack we saw happen on Steem.
Something the Hive network has and continues to do very well with its zero pre-mine HIVE token! :)
How?
By paying anyone and everyone for creating content.
I’m sure you’ve looked at the absolute horse shit that gets upvoted on Hive and thought what the hell?
That a system that continues to reward old mate’s crappy insect photos or Mum’s gross looking pics of her cooking must be broken.
But nope.
In fact, it’s an extremely effective system working perfectly as intended!
When it comes to the HIVE token, content is merely a tool to distribute the token to as many people as the blockchain can.
HIVE inflation goes to a reward pool and there it is split between authors and curators depending on their stake.
The content itself?
Well to the blockchain, it has absolutely zero bearing on the job of distribution and therefore it has no bearing on the value of the token.
The 7 day reward pool incentivises repetitive spam by design.
But if you think that sounds like a waste of perfectly good content, of which in amongst the garbage there is actually a shitload of on Hive, then yes.
You would be correct lol.
But before explaining why this doesn’t have to be the case, we need to understand Hive’s layer-2 and the different role their community tokens play.
What gives Hive's layer-2 tokens value (like LEO)?
Unlike HIVE, the value of Hive’s layer-2 tokens does NOT come from giving users the ability to transact on a decentralised network.
At their most basic, the value of Hive’s layer-2 tokens comes from the ability to influence how content is displayed in a niche community.
Unfortunately due the relatively small size of every Hive community, this isn’t enough to generate the demand required to even come close to achieving an equilibrium point between reward-pool emissions and buyers adding to their stack for influence.
As such, every single Hive layer-2 token is either at, or currently on their way to zero.
It sucks to say, but that’s just where we’re at.
But it doesn’t have to be this way!
Every community owner has the ability to monetise the content they’re choosing to display from the underlying Hive blockchain.
The blockchain itself may waste the content by focusing purely on distribution of HIVE, but that doesn’t mean the front-ends have to do the same.
An example of using content to give a Hive layer-2 token value would be placing ads on a community’s front-end and using that ad revenue to buy back and burn their own token.
With the relatively tiny market caps, it wouldn’t take too much of a traffic boost to be earning enough ad revenue to reach an equilibrium point between token emissions and sellers.
Essentially putting a price floor under the token, halting the slide and maximising value in the token that continues to be distributed to that community!
The thing is, not one single community has actually tried to monetise their content and taken this path
Why?
Final thoughts on maximising the value of content on Hive
In short, the answer is simply because no front-end has taken the initiative by monetising the content they’re pulling from the Hive blockchain to display and buying/burning their layer-2 token.
We’re just stuck in the wrong mindset when it comes to tokenised communities.
But it just needs one community leader or token creator to take the initiative and monetise content pulled from the Hive blockchain.
To generate revenue via the content their community provides and then pump it back into the community via those with stake.
For things to change, my opinion is we just need to see one community implement ad revenue buybacks and publish stats on how much ad revenue their front-end generates for x number of monthly page views.
From there, a path to sustainability (by burning more than inflation is rewarding authors) can be mapped and every community, including some new ones, will have a clear path to sustainability.
By maximising the value of content on Hive via layer-2, the age of tokenised communities will truly begin.
LeoFinance are leading the charge, saying they're on top of it and that the ad revenue they're collecting will eventually be used in this manner for the LEO token.
So layer-2 front-end owners and teams, I now hand thighs over to you.
The future value of content on Hive sits firmly within your hands.
Best of probabilities to you.
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I wondered why many communities aren't taking this measure, I'm guessing they're probably waiting for one community to act as the guinea pig, so they might know if it'll work or not. Many may try to also implement it, if Leofinance can pull that rabbit out of a hat.
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I also wonder.
One reason I that I can think of is that communities need to collect data on users that reads the content which I believe some would not agree as it kinds of oppose the purpose of decentralization.
Alternatively, there is also the possibility of using the blockchain as our database to fetch our own post/articles that we can monetize (via ads) on our own personal domain/front-end.
Oh nice, this idea is making my brain tick over!
So it would essentially be a self hosted front-end that displays only the posts from 1 single username (your own), no matter what?
Do you know if anyone has built their own front-end in this way?
In the past I've talked about a Hive Web3 account being a viable alternative to OnlyFans if they ever decide to go ahead with their porn ban.
Essentially these content creators' own accounts are entire communities in themselves and as such the model you just brought up is the perfect solution.
Just need someone to build an out of the box version of this that people can plug into their own hosting and you have a censorship-resistant OnlyFans alternative on Hive 🤯.
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Yup. But I think we need a way to manage it (e.g. with tags) as there might be some content that we might not want to appear on our webpage. There are a lot possibilities.
I can't remember any. But, I've been thinking of making one.
Theoretically, it is easy. The website will just fetch it from the blockchain and display the content the way we like it. I am just currently thinking of what topic I will start with and how I would present it. Plus, I am a bit lazy. 😅
This is an interesting idea as well. For me, I see Hive as a base that we can develop a lot of apps on top of it. I have a few ideas on my mind too. 😊
Whoever takes the initiative has the potential to make a lot of money from this ;)
...ah I'm lazy too haha.
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That's an awesome idea!
In terms of why nobody has done it yet, all I can think of is the negative perception around ads.
People view Hive as this bastion of freedom and decentralisation.
And running ads goes against this mantra.
But as I tried to outline in the post, they seem to misunderstand how decentralisation and censorship-resistance on Hive actually works.
They don't get that front-ends are nothing more than private businesses that choose to display the data we publish to the immutable blockchain in whichever way THEY choose.
Anyway, like you said, hopefully LeoFinance can pull a rabbit out of a hat, successfully implement ad revenue into LEO's tokenomics and pave the way for all future communities on Hive.
It will only take 1 to show that the model works!
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Well you've said it all. To some extent we have to begin to redefine the meaning of decentralization because I feel there should not be a static nature to it. Ads are not entirely infringing if the revenue would be to the advantageousness of the community members and the project. I think since it's not the core concept of the blockchain but individual communities people can choose to be there or not.
Anyways there's always a choice, but this time, ads and the revenue would come good. Can't wait to see what Leofinance would make of it..
No doubt leofinance are really giving in their best In making sure the community progress more than what it is now which we can all testify with the initiative and progress of it.
Well, at the moment we just have to trust the team that they are going to do what they say they will with the ad revenue.
I'd at least love to see more communication around the path they intend to take when it comes to using revenue to help the token reach an equilibrium point.
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I think more communities should build back some way of being sustainable like LeoFinance with ads. Other ways outside of ads aren't as reliable though and I don't think NFTs will help much. Although some of the other ways such as the Defi systems (CUB) which burns LEO tokens might also work.
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Yep, using ad revenue to buy back and burn layer-2 tokens are just one way of doing things.
It's the easiest way that takes maximum advantage of the user generated content that the blockchain is already paying people to produce.
The content is already there, it just needs to be organised properly by front-ends and monetised.
I'd love to hear other ideas that front-ends can use to generate revenue for the token.
You brought up NFTs and DeFi.
But what about subscription models for premium content?
At one stage, LeoFinance was actually branding itself as an alternative to Seeking Alpha!
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I am not a fan of subscription models because there are just way too many subscriptions out there right now. I frown on all the battle pass stuff in games now.
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It's definitely overwhelming paying subscription fees to many different platforms.
The amount of content streaming services I pay for (mostly for sport) is ridiculous.
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This is definitely one possibility. Alternatively, we can also reward the author a portion of the revenue from the ads based on the number of pageviews their article got or will get indefinitely. This will encourage authors to implement SEO on their content that would attract non-Hive viewers. I'm seeing that this is a huge topic.
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I'm glad you brought up SEO.
Right now, the 7 day reward period actually incentivises spammy, repetitive, crap content.
But if you use ad revenue to provide value to a layer-2 reward token, you flip the Hive content creation game on its head.
Suddenly authors are incentivised to not spam, but focus on editing and building high quality pieces that drive ongoing traffic via Google.
It's going to be a game changer for Hive.
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I noticed this too. And a way to earn continuous passive income from SEO would encourage more users to create quality content.
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couldn't have said this better bro
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Gotta keep the LEO discussion front and centre on LeoFinance.
Too many Cub and PolyCub (lol, remember that?) distractions...
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Cheers mate.
I'm interested in hearing your opinion around maximising the value of content on Hive - Especially via layer-2.
Mind sharing?
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I started a community called Hive Buzz. It's purpose was to increase the exposure for businesses already running on HIve.
Hive, like all cryptocurrencies needs utility.
While it enjoys the status of reward token for the social media platform Hive.Blog and Hive.Blog's many interfaces like Peaked and Eccency for example, tthis single utility isn't enough to broaden the use of the token, bring capitol into the ecosystem and booster the price.
This same lack of utility plagues the layer two communities in general, they suffer from a lack of utility , other then a duplication of this reward token function.
There are businesses on Hive which use Hive as a form of fiat for their businesses, which are also open to the outside world. These businesses create demand for Hive and create a circular economy where people can earn Hive, buy products, the product makers cash out the HBD and invest in their businesses and the cycle continues. These businesses accept HIve Back Dollars, and the stability of it makes it a good medium of exchange.
The Hive ecosystem has many new businesses like this, but they are unknown. There's even a business on Hive that makes it easy for Businesses off Hive to accept HBD for their products on their website.
This type of utility is also publicity, and I think it is important to improving the reputation of Hive and the awareness of it in the general population.
I tried to bring that idea of creating a community dedicated to publizing, promoting and utilizing buisnesses on HIve to Leofinance and make the commuity. I wanted to make it one of the first of the communities, but I was unsuccessful. People here are to busy to get back to you about things like that.
In general, I think people heer are operating in a box which has very high walls around it, those walls are technology, terminology, and people who sneer at new ones. Khaleelkazi istarted a community to escape that crab mentality. He also understands to the need to reach out beyong our blockchain and beyond crypto people.
His cross-blockchain economic activity is important, but I see his other projects which reach out to non-crypto people are the ones which will have the greatest impact. He is making it easy for people outside Hive to come inside easily.
The learning curve for crypto is to steep. Only businesses which make it easy will grow. Others will continue to compete for the same small pool of people who know crypto very well.
Second layer tokens really shouldn't duplicate the utility of the first layer, because thats reducing utility to a fraction of Hive and they are doomed from the outset.
Some communities try to set them selves apart by topics, but that isn't enough to generate utility. DEC as a second layer token was successful because it had a utility separate from the Hive token utility, as it was originally the reward token for Steem-Monsters, wich migrated to Hive after the Steem HardFork and was renamed Splinterlands.
When people ask me the difference between successful tokens and unsuccessful tokens I always say utility, community and development. I think those are the most important aspects, which most tokens miss.
this is alredy to long, because I have much to say. consider it part one.
This is brilliant. I'm not a financial wizard or a developer, but I have a similar idea for a Hive front end that uses already published content in a different way than is already being used. I come from the publishing/editing world where the finer details of layout and content value are my thing. If anyone with complementary skills is interested, we can talk.
Awesome to hear!
I'll definitely be following your progress :)
It's frustrating to see that there just aren't many front-ends innovating... or maybe even understanding that they can innovate?
I mean most still use that 1990 style Steemit condenser for displaying long-form content only 🤮🤮.
Hive as a truly decentralised, fast/feeless base layer offers builders so many opportunities for innovative builders.
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Very intresting idea.
It brings up multiple ideas, some about ad revenue, some not about Ad revenue.
First, it's an excellent way to generate revenue.
Second, censorship
Very importantly.. I am not saying this is a fatal flaw or that it is insurmountable.
I am saying it must be dealt with just as you waterproof a boat.
A leaky boat will sink on it's first voyage across the lake, but that doesn't mean it never gets to cross the lake. It simply means you need to waterproof it and make it sea worthy. :)
Third, Buy backs are great,
but they must be enough and you should plan to make them successful.
What does that mean?
What does it look like?
To me it means that buy backs must generate a proportional amount of income to be near to the amount of new tokens being minted, as in token inflation.
All tokens follow a path of supply and demand, the more tokes you mint, the less the demand, and the lower the price.
We were given multiple examples of this with the token inflation generated by most defi projects this last year. They opened with soaring token prices, often opening at a dollar, and soaring to 5,6 or even 100 dllars in some projects. But the incredible rate of new token minting which is required to pay the inflaated APRs leads to so many tokens that toekn price inevitably tumbles from these follar heights to pennies.
So when you plan a buy back it must be a big enought buy back, and your token inflation must be adjustable so your buy back eventually buys back more tokens then are produced, so that you actually start to reduce the number of tokens outstanding. This reverses the downward trend and increases token value.
Fifth it is important not to rely on one thing... toekn deflation, token buy backs, token utility, enlarging the community...
The people proposing these ideas often fight each other for dominance, as if one singular option will do the job.
When in truth multiple methods of supporting the token price must be employed; token utility, token scarcity, deflationary tokenomics, buy backs, increased utility, and more...
So yes I support your idea, and think it is one leg of a stool upon which sits token value, and the stool needs more then one leg.
@shortsegments
Another way to give value to layer 2 tokens is to add them as options for payment on other platforms. I believe LEO is an option for payment on other platforms (on Hive), CTP is integrated into the other applications the team has and it had a very steady price for a very long time, until recently.
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There's one which keeps rising. The BRO token. I wonder what they're doing differently
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BRO are akin to shares in an income generating 'fund'.
This is a completely different model to tokens that are given away for content via a community front-end.
It's not better or worse - just different.
The BRO price can however, be a little misleading.
There is no volume going through the token and no liquidity on the market:
If a holders want to actually sell, they can't easily get out.
This is a whole other problem haha.
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hehe, so many issues with hive-engine tokens at the moment. It's all part of the journey :)
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Come take a look at my site for the Proof of Brain community. https://www.proofofbrain.blog. The code is a second fork of the Ecency code. After about a year, Ecency had advanced in features, and as I had changed a lot as well. Merging via Meld, via git seemed impossible. So, I forked again and repasted old code into the new, and then adapted to the changes.
Right now. The features it has is:
It's hard enough to get people to use my front end without adding ads that will annoy them.
Figuring out how to monetise your content, while getting people to use it, is a business problem you have to solve.
I hope you can figure it out because we need more front-ends who monetise content and run a sustainable model... without DHF charity!
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