Inside the FTX Crypto Cup
Inside the FTX Crypto Cup
A case study in NFT community design
The last couple of years have seen NFTs explode as a consumer facing use case of crypto & web3. Total NFT sales in 2021 were estimated at ~25 billion dollars. OpenSea quickly became the leading marketplace for discovering & trading NFTs because of its slick web2-like UX & web3-esque take rate of 2.5%.
The exponential growth of NFTs hasn’t gone unnoticed. Large exchanges like Coinbase & FTX were quick to launch their NFT marketplaces. These players can connect to a massive customer base that already uses their exchange & wallet services. It is rumoured that the coinbase NFT marketplace waitlist was larger than OpenSea’s MAU. At the other end of the spectrum we have marketplaces like Rarible which are prioritising decentralisation & community governance early on. The team at multicoin capital has a great blog post on why the future of NFT marketplaces will be more community-centric.
Tech giants like Instagram, Twitter & Shopify have started integrating NFTs into their products. Brands across media, sports, films, luxury fashion, etc. have also honed in on the opportunity to better engage & monetise with their fan base. TechCrunch reported that Instagram is expanding NFT support to 100 countries. Shopify is allowing sellers to build and monetise their community through NFT gated experiences.
However, they’ve garnered a fair share of criticism. Many of these efforts come across as just another merchandising opportunity. A way to monetise existing IP without really adding much value. The “million dollar monkey picture” meme has dominated the narrative in the NFT space. The internet is littered with stories of people who paid obscene amounts of money for jpegs which are now worthless. This narrative misses the big picture of what’s brewing behind the scenes.
I like to think of the utility of NFTs along a spectrum. At one end, you have plain-vanilla digital collectibles. These are a digitised version of art, with no intrinsic utility. It just so happens that their authenticity is being measured through a blockchain instead of by a single issuing entity. At the other end of the spectrum, NFTs are a gateway for building shared experiences across brands, digitising real world assets & enabling internet communities to organise in ways that weren’t possible. It is important to recognise that the journey to the other end of the spectrum is not automatic or overnight - it will require a series of intermediate steps.
For the real power of NFTs to be unlocked, it needs more than the issuer to provide it utility. Because if a single brand or entity wants to engage with their customers, current platforms are probably more efficient at enabling that. NFTs are superior when they contain information unique to a user & that information is worth carrying across the internet. What that means is some other application needs to read that information and build experiences on top of it. Communities need to find ways of organising & decision making around the shared brand. These things don’t have much precedent. It is foolish to expect them to happen organically & in a decentralised way from day-1.
The best NFT communities will be those which are backed by real world utility & careful community design. They may look centralised to begin with & that’s ok. Someone has to set the rules, do biz dev & drive early traction. A lot of the early utility will not necessarily “need NFTs” but could be achieved through coupon codes and partnerships. It would be incorrect to write off these projects because of this. Instead, think of it as a necessary intermediate step.
In this essay, we’ll take you through one such community that I stumbled upon, the FTX Crypto Cup - Key Holders. Quick disclaimer: think of this essay as fan-art, it does not represent an official statement or views of the organisers. This is not a sponsored post.
With that, let’s dive in.
About the Tournament
Some background before we get into it, what is the FTX crypto cup? It is one of a series of Meltwater Chess Tournaments operated by Chess24. It was initiated in 2021 when over-the-board (or IRL ;) chess was put on hold because of Covid-19. It saw participation from the top players including 5-time world champion Magnus Carlsen. The final event in 2021 saw 1.7m hours watched & ~80k viewers at peak. The tournament offered a total prize pool of ~$1.5m.
In late 2021, they partnered with Chess Champs to announced their first set of NFTs. I won’t go into all the details , you can check out the collection on OpenSea here. What was really cool about this one was that they didn’t just sell boring photos. They took moments from games & minted high quality highlights/video packages. Just checkout this absolute beauty I picked up from the 2021 FTX Crypto Cup.
They also issued the trophy to the tournament winner as a 2/2 NFT. The second copy of that trophy sold for 7 ETH. The winner got to virtually meet and play a game with Magnus Carlsen along with an on-chain copy of the final game. They also did a “get rekt” edition where you could win an NFT and play against a GM (just fyi it means a whole other thing in chess).
The 2022 FTX Crypto Cup
Their NFTs of 2021 had some really cool media & real utility - which is already more than what you can say for most NFT projects. However, they were missing one important element - community. It seems like the team was determined to change that this time around.
A Free NFT drop. Instead of selling NFTs, anyone could just claim them into your FTX wallet. I personally love this approach. It casts a wider net because the cost to join is practically zero. It sets lower expectations & gives you more room to experiment and fail at community building. Because you’ve removed price from the equation, the odds of getting people who care about chess are significantly higher.
Community Design. This free NFT drop resulted in a discord community of 1.5k members. The next step was building engagement & reputation. Typically NFT communities create “badges” for whales (hold more than “x” NFTs) or early holders (first 100) and give them a special place within their servers. This is sub-optimal & also irrelevant in this case. The engagement needed to be around chess. The team designed daily puzzles, fantasy leagues & other contests to engage & recognise their most loyal members.
Token-gated space. The first house-keeping step was to recognise “key-holders” and restrict all activity to them.
Daily Puzzle. Now that we have a dedicated “token-gated” space, let’s look at engagement & reputation systems. First up, is the daily puzzle. This was a pretty simple chess puzzle with 3 options to pick from. Each correct answer earned you “30 XP”. There was chatter that this was getting too easy, so the admin threw in a real doozy (check the image below)
Fan Tournaments. They conducted multiple fan tournaments on lichess. The winners received cash prizes & XP. These were higher effort & involvement than the daily puzzle.
Fantasy League. Given this was a community formed around an active chess tournament, a fantasy league is an obvious choice. The team was remarkably clever at keeping this incredibly simple - you just needed to pick one of the 8 players. You could claim XP for each day that they were top of the leaderboard . Notice the word “claim” , even if your player was on top you had to visit the discord and click a button. Small tweak but effective at driving daily visits.
Fall of the King. Another daily contest where you had to guess the square the losing king would end up at for one of the matches. You earn XP if you guess correctly or the game ends in a draw.
NFT Giveaways. And finally, some blue chip NFT giveaways.
You’ll notice they had activities across a spectrum of effort to maximise the surface area for engagement. The fantasy league just required you to select a player and claim XP once a day if your team won. The puzzle and FoK required some mind-space to solve daily. The fan tournaments needed a couple of hours.
Monetisation. Just like last year, you could buy a copy of the tournament trophy. It sold for 1.5 ETH & was backed by a host of lifetime chess memberships easily worth more than that.
Quantifying Engagement
Bringing it all together. All of this XP has created a sort of “ fan engagement score” within the discord. Not to brag but here’s my score.
Today, this is not linked to my NFT and is gated within their discord. In fact, none of this actually needs an NFT at all. But imagine a world where this score continuously updates to my “Crypto Key” NFT. It can be a part of my public profile through my Twitter & Instagram DPs. Other chess apps can offer me services based on this. That brings us to this next section.
Request for Proposal
We want to help take this community forward. A simple but powerful way to do this is allow members to export their reputation on-chain. We’re inviting instagrant applications from teams that can build a website that enables this.
Allow members to connect their discord
Confirm that they are verified-holders. If it is not possible to do this from discord then you may require them to also connect their FTX NFT account.
Once confirmed, read their reputation score and convert it into a beautifully designed NFT on the Solana network. This score includes their XP, Level & Rank. These attributes should be visible on the NFT and part of the metadata.
Allow them to claim it for free.
Build support for all major Solana wallets.
Support a seamless experience for users new to crypto, i.e. make the mint work with their custodial FTX NFT account & keep it gasless.
Ensure a periodic sync between their discord reputation score & the NFT metadata. Ideally this should be eternal but ~ 1 year time period is acceptable too.
Apply for a Solana foundation instagrant for up to $10k to build this and hear back within 48 hours.
Closing Thoughts
The most ingenious thing about this community is how they’ve used effective discord automation to build real engagement around their NFT community. This keeps the cost of building low, e.g. it wouldn’t make sense to build a full-blown app for this, it could never scale. It allows for quick experimentation around the core premise without being saddled by ideological or development constraints. Think of this as the web3 community design “no-code” toolkit.
A key piece of this puzzle is making the transition to web3-native communities. This requires user data & assets to move on-chain so that anyone can compose on top of them. Apps like FRIDAY are building products to enable this. I’m personally really excited about having a group of chess lovers to hang out with & very bullish on communities that prioritise member experience above all.
Thanks to croblumatic for his feedback on this essay.
You can read this essay on-chain here via wordcel.club.
Disclaimer: This post is not financial or investment advice. It is meant for informational & educational purposes only. Please do your own research about risks and compliance before buying, investing/ or trading.