Written By
Community Wizard

Exploring the Web3 Tipping Economy

January 11, 2022

Even at this early stage, we know that web3 is driven by community: groups of people working towards common goals and experimenting with how best to use blockchains to collaborate. The decentralized economy favours asynchronous, global collaboration that empowers participants to have control over how they allocate their time, expertise, and labour. Everyday, new tools are emerging that enable this new style of work. 

This article focuses on how one of these tools, tipping, can incentivize participation and grow strong web3 communities.

What is Tipping?

Under traditional financial systems, tipping is a gratuity paid to a person who has provided you with a service. We tip waiters, taxi drivers, housekeepers, and others who help us perform tasks we ourselves do not have the time or expertise to do. Tipping in web3 follows a similar pattern. The main difference, of course, is that the tipping practices align with web3 values and the transfer of funds occurs using blockchain infrastructure.

In web3, tipping occurs when a community member contributes their skills & expertise to a project. Community contributions worthy of a tip might take many shapes, from answering questions in a Discord server, to writing an article, or contributing some code to a project through github. 

Depending on the nature of the project, tips might come in the form of governance tokens, an NFT airdrop or free mint, or simply a currency like ETH, MATIC or USDC.

How to Use Tipping to Build Community

The blockchain space is rooted in open-source contributions, and much of the creativity and building taking place here happens because community members are keen to contribute to DAOs, projects, protocols, and companies that they believe in. 

These participants do not necessarily expect to see a financial benefit from contributing, but are driven to pitch in because they want to see the projects they care about succeed. Rewarding these contributions with recognition in the form of a tip is highly motivating for contributors, makes them feel ownership over the projects they participate in, and encourages them to continue providing support. 

By tipping contributors, you build trust among the community members who are putting time in to improve your project, ensuring they stick around, help set a tone for future participants, and foster the type of behaviour that is valued in your community. This is a reciprocal system that can help build a solid foundation for a positive community culture. 

For newer projects, DAOs, and start-ups, community recognition does not have to be financial. You can start building your early community and retain motivated, productive community members if you make sure to acknowledge and celebrate when someone adds value to the community. This can take many forms, from simple thank you messages, to Discord roles & titles, POAPs, or more public shout-outs. 

Integrating Tipping with the web3 Ecosystem

There are many dAPPs, protocols, and smart contracts in existence that can help you leverage tipping to build your web3 community. When it comes to community management at Zapper, for example, we use a tipping tool stack that includes Collabland, PoolTogether, POAPs, and Coordinape. 

Collabland plays a critical role in the dynamic of our Discord server. The Collabland bot verifies NFT ownership & automates the distribution of special roles based on which Zapper NFTs a user owns. This enables us to host events and activities targeted to specific groups within our server, making these types of initiatives more manageable for us, and special for folks who have invested in Zapper by earning or buying an NFT. We also use the lesser-known Collabland tipbot to allow server members to tip one another in Discord using the command !tip @user.

PoolTogether is a protocol that enables users to take tips they have earned for contribution in a community and reinvest those tips back into prize pools. Prize pools are smart contracts written so that people can deposit funds into the pool, receive an equal amount of tickets in return, and be entered into a draw to win prizes taken from the value of tokens deposited in the pool. 

We also commonly award POAPs to users for participating in community calls and other events. POAPs (Proof of Attendance Protocol) are free NFTs that are meant to act as shared on-chain memories between attendees. Over time, community members who participate in events organized by Zapper will have a portfolio of POAPs that demonstrate their involvement in enriching the community. On our end, we will have the opportunity to build new initiatives on top of the POAP system that allow us to target and engage with our most active community.

Finally, we are beta-testing the use of Coordinape with two highly active groups in our Discord server: Myrmidons and Hoplites. These groups are made up of a few dozen folks who are very active in the Zapper Discord, knowledgeable about our product, and helpful to community members. They often answer questions about our dashboard before we have a chance to respond. To demonstrate our appreciation and track contributions by individual Myrmidons and Hoplites, we use Coordinape to allow these members to distribute points to one another based on their activity. If a Myrmidon solves a particularly tricky problem for a user, other Myrmidons are empowered to tip that individual to acknowledge their contribution.

Hopefully this article has given you ideas on how to set up a unique tipping economy within your own web3 communities that can help grow your projects! Appreciation is a powerful tool, and if done thoughtfully, recognizing appreciation using emerging web3 tooling is a novel way to build and retain strong communities.

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