Great Debate Is Speculation a Feature or a Bug of Social Products

Is speculation a feature or a flaw for social products?

The Variant team of encrypted VC recently debated whether speculation is a viable strategy for building new consumer social networks.

This is particularly timely given the launch and rapid growth of in August. The app’s model is for users to purchase each other’s “Keys,” which are priced using a joint curve and offer weekly airdrops of tokens to incentivize user participation. This satisfies both users’ desire for financial gain and provides an opportunity to enter creator group chats. This is not the first consumer crypto app to attract new users with speculation; apps like Blur, BitClout, Brave, and LooksRare have all used some form of speculative interest to guide user behavior or increase liquidity. Additionally, many other types of crypto networks and markets use token rewards to overcome the cold start problem and attract early adopters.

Below is a discussion from the Variant team on their internal Slack.

Li Jin (Co-founder):

It’s really interesting to see the divergence in opinions on the speculative nature of for me. It feels like a divide between two different camps.

Jack Gorman (Data Scientist):

Here are the data findings: the top 500 addresses account for about 43% of the total transaction volume, indicating that a few large holders are driving’s revenue. In terms of active days for buying, selling, and trading keys, 68% of addresses only traded keys within a day (though it’s still early and they may come back in the future). Additionally,’s usage (browsing the app rather than just trading keys) is much better.

A potential concern is that relies too heavily on patterns established by other apps, where large holders may continue to trade and accumulate rewards, but most users will leave if they don’t make a profit. One way to overcome this is to provide other features that users are willing to spend on, rather than just focusing on profitability.

Mason Nystrom (Investment Partner):

In social apps, speculation should be a feature, not a core product. The product should be the content. When speculative aspects are included in social products, speculative activities should complement the social experience. The path to profitability through social capital varies depending on the network. Some directly link payment to social capital: YouTube and TikTok pay people directly as their subscribers, views, and traffic increase. Other social networks like Twitter and Instagram provide distribution channels for creators and leave monetization up to the creators themselves. Similarly, different types of speculative assets (such as social tokens and NFTs) will impact the content and social experience offered by SocialFi apps.

Caleb Shough (CFO/COO):

Controlled speculation is positive for idol and invitation-based social networks. The former because it more directly delivers value to creators and lowers the barrier to entry for all creators. The latter because a free and open market may be the best way to assess the value of someone’s attention, which may be more desired compared to current social systems like LinkedIn.

But for densely connected social networks where people primarily communicate bilaterally with their close or adjacent social groups, speculation hinders growth. In these types of networks, money creates noise. It devalues social relationships, ultimately making them fleeting and shallow unless they are tightly constrained by social norms (such as club fees).

Jesse Walden (Co-founder):

I like the distinction between these two types of networks:

Idolatry and invitation-based (or professional) networks, which provide more opportunities for building and guiding value creation more efficiently due to profit incentives;

Interest-based and relationship-based networks, which weaken higher-level social/experiential motivations.


Yes, this distinction resonates with me. I think it also influences how speculations or monetization methods are added to networks.

Idolatry and invitation-based networks: direct speculation and profit (e.g., profiting from relationship monetization and speculative content within the network). Interest-based and relationship-based networks: indirect speculation, aesthetic profit (e.g., speculation on social handles of social accounts).


Speculation is introduced as a feature to drive liquidity; however, for new relationships or social networks that aim to foster new relationships (as Caleb pointed out, different from idolatry networks), it is a drawback. When financial incentives come into play, they distort participants’ motivations and often outweigh any intrinsic motivation. When applied to social networks, participants attracted by speculation and relationships formed due to speculation are distorted compared to relationships formed without financial incentives.

This distortion effect is less important for networks that rely on liquidity (such as DIMO, Helium, DeFi, NFT markets) because all liquidity increases the utility of the network. However, new social networks guided by speculation may face the fundamental risks of non-permanent relationships, lower-quality content, and transient connections.

I can also argue the opposite of what I just wrote: perhaps new social networks with speculative characteristics are just different from previously existing social networks, and this is not a bad thing, just different. Relationships triggered by speculation are different from the intrinsic relationships seen on traditional social networks. Instead, their key feature is financial motivation, namely holders: this is a transactional, utilitarian relationship. I buy this person’s key because I trust them and believe it will perform well, closely related to the concept of LianGuaitronage+.

Dan Roberts:

I largely agree with Li’s point. If the main attraction for users is based on the promise of financial returns, it is difficult to avoid transience in all aspects: shallow posts, fleeting users—they won’t stay once they can cash out.

I am a content creator, so for me, the ultimate question is the quality of content on social platforms – and of course, whether it is fun to use. Financial incentives can get people in the door, but if there isn’t enough content to engage with, it’s not enough to keep them there. Buying someone’s NFT or “key” to show that you like/support them is not enough to interest me.


Perhaps a better distinction is between games and social networks. Speculation-driven social products may be more like games/casinos/gambling rather than social networks.

Tina Dai (Investment Partner):

If speculation is integrated into the project’s lifecycle too early, then speculation becomes a problem. It changes the problems that startup companies face from a cold start problem to a hot start problem, but ultimately there are still significant problems that need to be solved. The hot start problem is that speculation limits the time window for the project to find PMF (Product Market Fit).

When the project has found some version of PMF and built something useful and interesting, speculation can become a growth tool, providing external incentives for users seeking attention, who will continue to stay when they discover the practicality of the product.

Medha Kothari (Investment Partner):

In my opinion, speculation is a good way to onboard new users in a social network, but it also needs to be considered and balanced.

In social media, speculation is advantageous for:

  • Capturing the value created by celebrity fan and creator fan relationships. Users with existing influence (whether on other social networks or in the real world) have disproportionate benefits compared to long-tail users.
  • Encouraging top earners to create content; it forces these users to continue posting high-quality content, providing value to speculators.
  • Free market decision-making about the value of content; speculation acts as a filter for “good” content.
  • Creating explicit communities of super fans, which also serves as a funnel for content distribution.

It is not very effective for:

  • Maintaining meaningful two-way relationships.
  • Capturing the value created in real life, where one person “cares” about another person (and anything that person puts out) for non-financial reasons.
  • Encouraging long-tail users to create content (because they won’t make money/be speculated on).

Derek Walkush (Investment Partner):

When the noise level of speculators and bots in a social network is high enough to erode the quality of the network, it definitely needs to be balanced. Who wants to use a social app where over 80% of the activity can be seen as fake transactions? (Using NFT market as an analogy here.) In social networks, the impact on end users may be worse, as NFT transaction volume is not as “visible” as social information flows.

The counterpoint is that these applications are not actually social, but rather transaction protocols for social assets. In fact, you may see this in NFTs, for example, applications like Context, but these assets are essentially social, making it easier for the social product layer to grow organically.


What do you mean by “essentially social” assets compared to NFTs?


Good question, this is certainly a vague question, so I would love to hear everyone’s feedback on my reasoning: social tokens are explicitly tied to status, while NFTs can be seen from this perspective, as well as from the perspective of financial assets, art, cultural symbols, etc.


I think what you mean is that historically, social tokens have little intrinsic value, while NFTs have other intrinsic values (such as art, PFPs, membership tokens, etc.).

In other words, the speculation around social tokens is to guide the investment portfolio, rather than the traditional social relationship graph.

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