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Ethereum's most undervalued asset at risk (and what we can do about it together)

The financial and technological dimensions are not always in our control, but “community” begins with individuals like you and me. If Ethereum would see itself also as a social movement, it could take control of its destiny and become the #1 blockchain community in the world.

Mihai Alisie

• 13 min read
Ethereum's most undervalued asset at risk (and what we can do about it together)

The other capital we’ve been missing from the picture so far

"You can't depend on your eyes when your imagination is out of focus." — Mark Twain

Thomas Sander defines social capital as "the collective value of all social networks (who people know), and the inclinations that arise from these networks to do things for each other (norms of reciprocity)."

Social capital can only be generated collectively thanks to the presence of communities and social networks, but individuals and groups can use it at the same time. Individuals can harness the social capital of their networks to achieve private objectives, while groups can use it to enforce a certain set of norms or behaviors.

In this sense, social capital is generated collectively but it benefits both the individual and the groups, in a way bridging the discussion around “communitarianism” versus “individualism.”

With the beginning of our implementation of Ethereum World we would like to introduce “social capital” as a third dimension of Ethereum, next to the already well appreciated economic and technological capital dimensions.

As a term, it is not necessarily my favorite since it reduces certain aspects of social human existence to “capital,” but it does a great job of highlighting the fact that our social interactions and relations can be seen as a form of “value.”

The term capital used in analogy to other forms of economic capital, as social capital is argued to have similar (although less-measurable) benefits. However, the analogy with capital is misleading to the extent that, unlike traditional forms of capital, social capital is not depleted by use; in fact it is depleted by non-use (use it or lose it).

Ethereum is not all about tech and money. Ethereum is also about people.

Our research within Ethereum found that today there are at least three different types of communities in this space, that often blend with each other, but which deserve independent appreciation:

  • communities focussed on the technological aspects.
  • communities focussed on the financial and entrepreneurial aspects.
  • communities focussed on the societal implications of decentralization.

This is why we believe it’s important for everyone in the Ethereum community to learn how these functioning social groups can derive social capital from interpersonal relationships, a shared sense of identity, understanding, norms, values, and trust.

Surely, many in the space have for quite some time understood and begun to strongly appreciate the value of social interactions in the Ethereum movement. One characteristic for that is the large body of vibrant physical meetups and conferences.

People love to “meet in real life'' and interact with each other to share ideas; often such spaces are where new ideas emerge from the interdisciplinary energy, tapping into the collective intelligence present at these events.

In a way, it could be seen as a crypto renaissance coffee shop effect with people bumping into each other, completing each other’s ideas, and working together on projects. Plus you also have the social learning aspect gained through casual conversation with people sharing a common interest.

It’s fulfilling and core to our social human nature.

It’s also part of what “Ethereum” means to so many, often mentioned in the same breath with the term “decentralization.” Judging from the numbers of Meetup.com, this is today the case for more than 1 million people in the world, likely more.

With the term social capital defined, it is worth while taking a look at some numbers for Ethereum within the concept of social capital.

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Social Capital: The most undervalued asset of Ethereum

The chart above shows the number of members from various blockchain projects across the Meetup.com platform.

The top ten numbers used in the social capital chart are as follows:

  1. Bitcoin: 1703858 members in 4568 groups
  2. Ethereum: 1226659 members in 3148 groups
  3. EOS: 60548 members in 150 groups
  4. Litecoin: 36996 members in 99 groups
  5. IOTA: 21695 members in 44 groups
  6. Monero: 21999 members in 36 groups
  7. Cardano: 20327 members in 75 groups
  8. NEO: 16181 members in 26 groups
  9. Ripple: 8772 members in 37 groups
  10. Stellar: 8522 members in 27 groups

Bitcoin and Ethereum have both the biggest meetup communities in the blockchain technology space and the two biggest market caps in the cryptocurrency financial space. It’s hard to pinpoint the exact nature of the relationship between the two axes (social and financial) but at first sight it seems there is at least some correlation between the two.

In any case, nurturing this community of events should be seen as a worthy endeavor towards making Ethereum a success. It's not all about technology and money here. It appears that the people are important as well, maybe even more than tech and money in the big picture.

The financial and technological dimensions are not always in our control, but “community” begins with individuals like you and me. If Ethereum would see itself also as a social movement, it could take control of its destiny and become the #1 blockchain community in the world.

However, when looking at the current state, in its truest sense, Ethereum is not behaving so much as a “global community,” rather an agglomeration of independent groups that happen to find themselves to be operating on the same (centralized) information platform.

Ethereum and the incoming social capital splintering: the meetup exodus

"It takes ten times as long to put yourself back together as it does to fall apart." — Suzanne Collins

In just a few short years Ethereum spread like wildfire, from an idea in Vitalik's mind to becoming the world's largest blockchain ecosystem co-created by over 200,000 developers from across the world. In the process it also became a vibrant multi-billion dollar economy and a globally networked movement of self-organized events attended by well over 1 million participants.

Just a few days ago, though as most of the Ethereum community was focusing its attention on DEVCON 5 and typhoon Hagibis hitting Japan around the time of the event, something else happened that could have a pivotal impact on this community and Ethereum in general.

Meetup.com, the home of over 3000 self-organizing Ethereum and decentralization-related groups, had announced overnight a surprise pricing-model change. What was previously a "free" website allowing people to organize and attend events announced that starting November it will begin charging $2 per RSVP.

It's worth mentioning to those not familiar with the business model of Meetup.com, that this has never been a "free" service for the Ethereum community. Organizers have to pay out of their pocket monthly/annual fees for the privilege of creating an Ethereum meetup group on Meetup.com. Currently, we can estimate that the 3159 Ethereum related meetup organizers listed on the platform pay over half a million USD per year to Meetup.com.

What changed now is that, while the costs for the organizers have been effectively reduced, a larger rent is going to be extracted from the entire community through RSVP fees. To estimate the impact we harvested RSVPs of a total of 7506 past Ethereum related meetup events from some 400 accessible meetup groups that were accessible to us and determined the average number of RSVPs for those.

At an average count of 43 RSVPs and assuming a recurring monthly frequency of the events, the change in pricing policy would amount to a total annual cost for the community of around $3 million USD across its 3159 groups. In other words, the costs will skyrocket for Ethereum as a movement for the privilege of having a meetup group and attending the events organized by the group.

One could even think:

“Hey! That’s a lot of money we could use so much better growing and nurturing this ecosystem!”

To illustrate this further you can see below a few examples of the community costs associated with organizing and attending an Ethereum event following the new pricing structure:

While the taxation of organizing and attending a meetup would be spread among a larger number of heads, a gain in utility or any other good reason for the communities themselves remains elusive.

The reactions were - as can be expected - acid and quick.

Many communities have threatened to leave the platform if this pricing change is applied. In an awkward backpedaling from the surprise announcement, Meetup.com later "clarified" that it's "just a test" and that no one should panic.

It is important to highlight that there is real value in the service offered by Meetup.com to connect, meet in real life, learn, and discuss new developments about Ethereum. Events organized through Meetup.com clearly are an important aspect of the Ethereum movement but what about the costs to derive that value?

On the meetup platform users and customers alike benefit from network effects yet represent much less a global community than we might think. Connected by one idea they remain independent groups with a large diversity of interests such as Ethereum developers, entrepreneurs, or investors.

They merely happen to find themselves on the same information-harvesting platform, yet are lacking any form of real empowerment when it comes to acting coherently and coordinating effective action as collectives.

This is why, due to the platform’s value for a large number of attendees and low friction in the current user experience, the “customers” and “users” of Meetup.com are “locked in” when it comes to:

  • Profile and social identity
  • Groups and social graph
  • Events and event types

The problem timeline

"Any fool can know. The point is to understand." — Albert Einstein

If we would try to put a timeline together it would look something like this:

In the Ethereum space there are a few initiatives trying to implement Meetup.com alternatives but as of today none are yet complete replacement solutions. And here’s the good news: they don't necessary have to be in order for the ideas to be validated, work, and gain traction.

However, it will most likely take at least a few more months before they are ready for adoption by an over 1+ million users in the Ethereum community. We invite all those projects to explore an integration with Ethereum World and take this chance to imagine an alternative from a new perspective in the meantime.

First of all, let’s remember that Meetup.com is a 2002 concept. Probably the website would have looked and worked differently if it was created in 2019. So let’s take this opportunity to articulate what a “Community 3.0” platform would look like if it was designed “by the Community, for the Community.”

To get the ball rolling, a “good alternative” would (but not be limited to):

  • Provide users self custodial identities and interoperable profiles by default.
  • Ensure that the relationships established on the platform are in the hands of the users with the social graph encoded in an interoperable format by default.
  • Facilitate Ether-based forms of value transfer with easy ways to crowdfund anything from events to research and development.
  • Use transparent protocols and open technologies for community governance.
  • Be FREE to use both for the people organizing the events and the event attendees.
  • The valuation of the system should be determined through the value provided to organizers and attendees - an externality currently not measured (not just how much we can cope with paying).
  • Aiming to maximize the value added to participants while minimizing operational costs.
  • Be open source and governed by community processes in a transparent way.
  • Facilitate a diversity of Ethereum community events from workshops to parties, from global hackathons to art nights from discussion panels to livestreamed rap battles.

Web2 lessons and what can/should we do moving forward?

"Do what is right, not what is easy nor what is popular." — Roy T. Bennett

Judging from the articles on the financial state of WeWork we can expect either a desperate move, a bankruptcy, or both, which ultimately will threaten the future of the communities living on Meetup.com.

As it stands, if Meetup.com pushes this through, all those affected will find it very hard to act in a synchronized fashion and avoid a splintering of their groups, facing to lose a coherent way to reach their community or in some cases may even lose a source of income.

This case is a great example for what is wrong about Web2 and its business model(s), highlighting the adverse side-effects Web2 centralization has on communities in general.

In fact, Meetup.com is in many ways a classic "Web2 success story" involving a grassroots platform, a cult of personality, infinite growth ambitions, and company acquisitions powered by questionable fiduciary decisions and opaque governance processes.

Yaay! Billions and unicorns!

The reasons/reasoning can differ but the “success stories” are usually the same - the communities end up at the mercy of the service owner which usually has the main goal of making as much profit as possible.

When “trying” is not enough and things indeed “change” but for the worse. Quote Source

While the platform operator claims to work “with” the community, in fact it remains a de-facto feudalistic system with a (benevolent, sometimes) dictatorship at the helm. Every community relying on any centralized Web2 social network owned by a for-profit entity is affected by this spectrum of problems.

Well, apparently missed a few millions people affected by WeWork through Meetup.com. Quote Source

This is why we are concerned that old Web2 mistakes are being repeated, even when looking at various Web3 applications. The value of Ethereum-based projects needs to be defined in a different way than traditional Silicon Valley startups.

Instead of focusing on a business model that locks customers in and sets them up against the mercy of a single platform operator, we need to begin to ask seriously the question to ourselves how technology should evolve focusing on creation of sustainable value for creators and users.

The “prize” should not mean: endless power and wealth for a single platform operator for generations to come, but rather: “can we create and maintain a useful tool, evolve it and adapt it to the communities that benefit from it while enabling the creators to receive a fair share of the value created to make a living?”

We argue for a paradigm shift departing from the traditional business model of the Web today that is first locking in users (often called “we are looking for a business model”) and then seeking a rent off their dependency on the platform (often called “we found a business model”) - be it the social graph of Facebook, the popularity of Meetup.com for events or another model that builds on top of the monopolization of personal data, relationships, and social interactions.

On the bright side, recently we have seen a revitalization of Ethereum DAO initiatives seeking to create systems to hold and use community resources via transparent structures such as MolochDAO, MetaCartel, Giveth, and many others.

In the bigger picture, DAOs may be vehicles of co-funding as well as vehicles of ongoing collaboration and governance. A departure from the classic "firm" concept with top-down decision making to a new flexible form of organizing enabling self selection and supporting the self-actualisation of its participants. Just in time for dealing with a situation like this.

Kevin Owocki summarized this beautifully:

On top of this, just around the time WeWork was making the infamous Meetup.com pricing change “test,” Vitalik highlighted in a panel discussion:

“something else we've underestimated is the importance of community. Two years ago I was a believer that if you built good tech they would come. We now see that without investing in community the good tech won't come, or it won't be that good.”

So, what can and what should the community do about this? Case in point, now the Ethereum Meetup communities' future is uncertain. How can we ensure a better future considering the resources and abilities at our fingertips?

What if we aim to solve big problems like this instead of piling up untested features, sometimes without clear answers to: “what problem is X feature solving?”

Vitalik’s observation is particularly interesting as it touches directly on the correlation between the technological and social dimensions when looking at the bigger picture. So apparently, if we would focus on cocreating the greatest blockchain community in the world, both the tech and the financial dimensions will be impacted indirectly.

People used to talk about a “flippening” a while ago looking only at the financial axis. But it’s not the only important axis and apparently on the social axis, the gap between Bitcoin and Ethereum is a lot smaller than on the financial axis.

Ending here with this in mind, I will leave you with some ideas in an attempt to inspire you and hopefully get a conversation around this problem/opportunity started:

  • What if the Ethereum community crowdfunds the resources required for developing applications like a Meetup.com alternative while using well working ETH-powered bounties to allocate resources and develop the roadmap?
  • What if the Ethereum community crowdfunds the resources to sustain a network of physical Ethereum hubs serving as co-working and event spaces or even incubators and accelerators?
  • What if the Ethereum community crowdfunds a DAO-like structure enabling self-organizing, self-selection, and self-funding better at ecosystem level? For example this community-driven collaboration vehicle could be also used for crowdfunding and organizing conferences, crowdsourcing events' agenda, sponsoring research, academic initiatives, etc.

It’s intriguing to imagine “what if” Ethereum becomes #1 on the social axis and “Community” was actually Ethereum’s “killer app” all this time... 🤔

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