In Bonding Curves we discovered the ability to make a market around a token without a liquidity provider. We do this by bonding some
Base token to a
An interesting result of this bonding is that the
Target token has a price directly correlated with the
Base token. When the
Base token becomes worth more in absolute terms, so does the
Up until now, Social Tokens have been about the individual. Through a Social Token, content creators, artists, and projects can monetize and provide utility around their token.
A Collective is a group of Social Tokens bound to the same
Base token. A Collective acts as a network of Social Tokens facilitating group cooperation. This allows holders of Social Tokens to pool their resources and align their direction success with the
Creating a collective is easy, at minimum you need to provide a mint.
Most collectives themselves are bonded to SOL. Let's create a simple collective bonded to SOL.
We can fetch that data:
Collectives contain a rich set of configuration. To understand the configuration, first we must understand some concepts.
Claimed vs Unclaimed Tokens
A token can exist in either a claimed or unclaimed state. This allows the collective to create tokens for people that have not yet joined strata, and allow them to later claim the token and its associated royalties.
A claimed token is associated with a wallet. It is, in effect, owned by a user. That user retains the ability to update their token within the rules of the Collective. This includes changing it's metadata and royalty percentages.
Unclaimed tokens are associated with an spl-name-service name. That name may or may not exist yet. A nonexistent name is just a PDA that will eventually be filled in when the user owning the name creates this name.
An example of this is Wum.bo Unclaimed Twitter Tokens. Every twitter handle hashes to a PDA under a Wum.bo managed Twitter Top Level Domain (TLD). When claiming a token, a user authenticates via oAuth, and the Wum.bo TLD approves the creation of that name with that owner.
The owner of a created name can then issue a call to claim their token. The protocol will ensure that they are the owner of the name, then will migrate the unclaimed token and its royalties to the user.
Open vs Closed Collectives
An Open collective allows anyone to join, so long as they follow the rules (configuration) of the collective. A Closed collective requires the authority of the collective to sign off on the creation of new social tokens.
Closed Collective Management
A closed collective allows finer grained control over who may join the collective. This could either be manual, forcing the authority to run commands to create new tokens. This could also be automated via another program or a service that creates pre-signed transactions.
Let's create a collective with a more fine-grained config:
Movement and Curve Changes (not yet implemented)
Social tokens are bound to a collective via the collective's base token. But what if you want to leave one collective for another? How can this happen in a way that is fair to both token holders and the token owner?
Let's take an example of a token
OPEN collective with 1000 tokens and 100
OPEN tokens in the
Reserve. The owner is switching to
COOL collective, where they estimate
1 COOL = 2 OPEN.
The process is as follows:
Step 1. Initiating the Transition
The Token Owner opens an account with an equal worth of the new collective token to the reserves of their bonding curve. This means they open an account with 50
Step 2. Grace Period
The original curve is swapped with a fixed curve. This mean all holders can now exchange tokens at a rate of
Note that this may be a lower price than the curve before the transition. This is the strictest "fair" distribution of what's in the reserves.
For 1 week, users can either
- Exit the bonding curve at 0.1 OPEN per A
- Wait 1 week to have their token change basis to
COOLunder the new curve
Step 3. Migration
The owner of the token is given control of the original reserve account, and the
COOL reserve is put in its place. If it were true that
1 COOL = 2 OPEN and nobody sold during the grace period, the owner of the token would receive
100 OPEN which they could then sell to recoup the cost of the
There is no way to tell if 50
COOL is actually worth 100
OPEN, or if holders want to be part of the new collective. Throughout the grace period, a fair market value will be discovered. If
COOL is not worth the amount proposed, users will exit during the grace period. The token owner will get less than
100 OPEN even though they put in
Same Collective Curve Changes
A token owner may choose to initiate a transition within the same collective to change the shape of the curve. Maybe they would like to increase or decrease the slope, or change growth characteristics.
In this case, no collateral is required; however the grace period still functions the same. Users have the opportunity to exit the curve for a week for their fair share.
This prevents rugging by changing the curve shape. For example, a malicious token owner could change the curve to a steep exonential then sell all of their tokens.