REALITY CHECK: POAP Economics

Patricio Worthalter (POAP Founder) joined the Community Call last week and provided a reality check for many. You can listen to his comments here.

While Issuers and Collectors have enjoyed POAP being free since inception, this is because of subsidization from both Patricio’s personal funds and the POAP Inc treasury.

While it’s common for products to be free in the early days to help fuel growth, we the community need to understand that using protocol that preserves human memories comes with real costs.


As a starting thought exercise, please provide your insight into the following questions.

  1. Should Issuers pay for drops? Why or why not.

  2. Should Collectors pay for drops? Why or why not.

  3. Should POAP Inc continue to pay for drops? Why or why not.

  4. Additional comments or insights you have.


The best responses have a chance to be recognized as great thinkers on POAP Economics.
34 Likes

yes , costing will be more beneficial to the system as time progresses .

[image]

3 Likes

I think all Web3 projects are interested in keeping POAP free for Collectors. It is the easiest way to onboard new users and open new wallets.

We can achieve this through the donation system of Web3 projects. Or yes, you could introduce a new biz model in which Issuers pay for drops. But in this case please don’t forget to create an environment to keep the model free.

For instance, I am a young researcher who introduced POAPs at my local university. And because it’s free I could experiment with it. I opened 20+ wallets and inspired a few people to join me in exploring Web3 etc.

10 Likes
  • How much cost POAP to maintaine it?
4 Likes

I agree that it is the best way to introduce the web3 world, however I want to add that this is a business model, at least I see it that way. And we have to see how cost effective it is for POAP to keep paying for the use of the web!!!. What do you think? You could create a donation system as you say. For now who pays for it as far as I can see is the Founder and the treasury.

2 Likes

I think a freemium model is the best option, where big events can pay for the drop and smaller being free so the adoption for smaller communities is easier.
From the collector side, I think they should never pay it for it, or provide an easy way to pay (debit credit cards, L2 payments, etc.)

8 Likes

1- If they have to pay, maybe the talks will be reduced and only those who have the backbone to bear the expenses will pay. That would not help the small devs who may have a lot to say.
2- Likewise if POAP collectors are made to pay for them, many may not pay if they have no economic value.
3- They should look for a mixed situation where 50% can be paid by the generator of the talk and 50% by the attendees, and make the POAP have an economic value that can serve for example to be invested as collateral. I think this would be an interesting win win situation for everyone.

My opinion on this issue is going to depend heavily on how much POAP is actually spending in transaction fees. I don’t know how much POAP is spending, and I don’t know how significant that number is in comparison to the current/future treasury. I think it is definitely smart to start experimenting with ways for POAP to earn revenue but for now users not needing access to their wallet and not needing to have money ready to go on Gnosis chain is hugely beneficial for growth. When I am at a conference and I meet someone who is not familiar with POAP, they almost always become skeptical when a stranger asks them to mint an NFT. Being able to say “No, you don’t need to sign anything, you can just type in your ENS” always makes people more willing to start using POAP.

In my opinion, keeping POAPs free to mint for as long as it is not a significant burden on the POAP treasury is the best way to continue to grow POAP.

If POAP does want to start experimenting with charging for POAPs, keeping minting free for end users should be the priority. Charging event organizers seems to me to be the best path forward. My first instinct is a tiered structure. 0-50 claim codes are free. 51-100 is 10 dollars, 101-300 is 50 dollars etc.

2 Likes

Hi there,
I am not against charging the Poap. However, it has recently started to prefer oats and similar free and community-based projects instead of using poap in serious projects. Poaping for a fee will dissuade many users from their love of poap. It can also put the poap at a disadvantage against such serious and big competitors in the market. I can recommend this. 2 types of poop can be offered. The first is normal, the second can be a much higher quality and niche poap.

  1. gold (Free)
  2. Platinum (paid)
    Thus, we leave the choice of poap to the decision of real users and poap lovers.
    Thanks

In my opinion, the free mode is better because some people who are eager to participate in the project but do not have the money to pay will be deprived of it, and people with more money will benefit more.

1 Like

I hope that only rich people will not be able to use your facilities and that all people will be able to participate in all programs equally and fairly.

1 Like
  1. Should Issuers pay for drops? Should they? No. Should they be allowed to? Yes. Issuers should have the ability to pay for the drops. In many cases this is someone’s first NFT and is a great way to onboard someone to the space.
  2. Should Collectors pay for drops? Should they? No. Should they be allowed to? Yes. Ideally it would be great if they didn’t have to pay but if I want something, I shouldn’t expect it for free. This can be a great way for a project to reward creators, raise money for a project, reward participation and deter sybil. Why not give them the option?
  3. Should POAP Inc continue to pay for drops? Only if it can and decides to do so. In the case where it cannot afford to pay, they could seek other ways to generate funds to subsidize the cost (create POAP sponsors), or other ways to distribute available funds (match funds, vote on projects to pay for, etc).
  4. Additional comments or insights you have. Why not have POAPs with properties/characteristics? Sellable: Yes/No, Free issue: Yes/No, etc. I have also heard the POAPs that you have to buy called Premium POAPs. Seems like a great way to distinguish between the two…

While the current use of PAOP may not be what was originally intended, lets not lose sight on how incredibly successful POAPs have been. There is alot to be thankful for!
[/quote]

Last week’s community call really made many people feel uncomfortable, because users’ usage habits have been formed, and sudden changes will make many users feel confused. Anyway, now we have this topic, it’s good to argue, communicate, and finally reach a consensus here. Let me talk about my personal opinion here.

  1. Should Issuers pay for drops? Why or why not.

    As the initiator of the entire drop, the Issuer should pay. The specific amount of payment should be determined according to the specific number of poap claimed. First, the payment will be charged according to the number of link application, after the expiration date, the unclaimed poap payment will be returned.(Application payment-unclaimed payment=specific payment)

  2. Should Collectors pay for drops? Why or why not.

    This needs to be decided by the issuers, because each issuer creates a poap for different purposes. To expand the influence of their projects and attract more users, some issuers hope that the cost of claim is as low as possible; some issuers want to accurately identify their loyal users and do not want their poaps claimed by farmers , they can ask for a certain cost for claim, so that most farmers can be eliminated. In any case, issuers have already paid for the creation of poap, which is their right to choose.

  3. Should POAP Inc continue to pay for drops? Why or why not.

    Change requires a process and cannot be done overnight.in short term, the development of poap still depends on POAP Inc treasury.Until poap explores a good profit model and succeed,then POAP inc doesn’t need to pay for drop anymore.

  4. Additional comments or insights you have.

    In any case, going from free to paid is a difficult and dangerous decision for a business. If you can, please do it gradually and don’t rush it. Whether creation costs of issuers or the claim costs of users, it needs to be calculated accurately and cannot be set too high to avoid user resistance. Try to choose some layer2 network payments (polygon, Arbitrum, optimism, zksync, etc.) to help issuers and users save costs as much as possible. At the same time, as always, review the quality of poap creation and listen to the voice of community.

    Best wishes to POAP :two_hearts:

4 Likes

Hi

I have been collecting poap for while,i have joined more than 200+ community calls,attended most of poap community calls , here are my

I understand it’s not sustainable to issue poap for free, not a good business model , but poap always have been a tool for community building and have fun,

So If poap stops paying for fees there a huge issue like for new people those cannot pay fee or not interested pay anything for poap, for me i will pay couple of $ for a poap bcoz it’s has become a addiction/hobby for me but not the case for new people, i can assure you that not many people will willing to pay for every poap, that’s ok, but we need understand how much our community has grown? How many people are willing to pay?, putting fees in collector head will stop the growth of poap ,i mean new people. for people like me it’s will be difficult to collect 4-5 poap every week, putting fees on collector’s heads creates a barrier and it will be difficult to grow our user base to 1 billions of people

If issuer pay the fees for mint that’s will be great if that issuer trying to create a community, and for some issuer if they have enough user base they can charge fees for poap,

Also in last poap community call paying fees in Eth mainnet is big no no for me, don’t give bs excuse that i guess all user have Eth in their wallet, collecting one poap for 8-10 gwei cost me .50$ fee, use polygon or something

I will say main question is what is our path forward do we want it to be exclusive collection or general collection ? Create a gov proposal and let community decide (using community call poap on poap.vote)

Thanks :pray:

  • Should Issuers pay for drops?
    Issuers should pay for drops, but starting at a certain drop size (let’s say, 100). POAPs below this threshold should be free to issue as well.
    This is to charge only big corporate users who want to create POAPs for big events, while keeping the experience fun and free for the little guy.

  • Should Collectors pay for drops?
    Collectors shouldn’t pay for drops, or at least this should be something the issuer should decide. This is because POAPs being free is one of the most important drivers for its adoption. When an issuer creates a drop and someone mints a POAP, there’s more value for the issuer than for the collector.
    If an issuer chooses to charge collectors, POAP.xyz should take a bite of that to fund free POAPs.

  • Should POAP Inc continue to pay for drops?
    Yes, but only in cases mentioned above (small drops)

3 Likes

POAP people, thanks for all you do!

I expect a great many users gravitated towards POAP based on the fact that they are free to issuers and to collectors. Conversely, obviously the protocol does no good if it collapses under its own weight and cannot service users.

For us, as a startup looking to increase adoption of web3 in specific business verticals, POAPs low price point and standardization is why we have chosen them as our Ethereum Identity Space token. We do not charge for the service we provide, and if there were a charge, we would of course be forced to either:

  • pass that cost on to consumers of our services, and or
  • convert to a different token with a better cost/utility benefit
    These are simple practical considerations driven by economics of course.

I think these questions are quite hard to answer without any context at all in terms of the current costs to POAP per token issuance, per token claim, etc.

Having personally interacted with POAP staff on several occasions, I am reminded of how much it costs to maintain that level of service. I would love to continue to benefit from that high level of service, and from the POAP protocol; so greater detail and clarification here is definitely needed. Certainly, knowing or having some sense of the cold hard economics will help users answer these questions more accurately.

Best Regards,
Michael

1 Like

POAPs being free to collect is an incredible tool for onboarding folks into Web3. There are of course plenty of use cases and situations in which collectors would happily pay a small fee to claim. This seems like a decision that would need to be made by the issuer so any costs associated with a drop should first look to the issuer to cover. While I am sure everyone would love it if POAP inc continued to pay, I don’t think any of us would want that at the expense of the sustainability and continued functionality of the entire protocol. Perhaps an easy way to begin offsetting the costs is to offer an opportunity to donate/contribute at the same time that issuers are setting up their drops. Many will be happy to contribute and you might be surprised at how generous some will be.

Hi everyone :upside_down_face:

I’m not sure about who should pay for the drops, part of the success of POAP is due to it’s accessibility. It would be sad to see people leave due to costs of issuing or minting.

Since POAPs are public good it would be interesting to experiment different ways of fundraising.
Examples: Gitcoin Grants / Buttons to donate on the claim page & issuer page / Sponsors

It still makes sense that large companies pay for their drops (Adidas, Tinder, Toblerone, Yuga Labs…). They gain brand visibility with their POAP campaigns.

It would be useful to see a chart of the current costs of POAP drops as I believe that the network fees on Gnosis Chain are really low and most of the costs of minting POAPs lies in: Infrastructure, security, support, development, documentation.

Other thoughts:

Royalties: Another way of supporting the costs of the protocol would be to charge royalties on sales (for example 5% on Opensea). But for this to work the 0.1 Ξ migration fee should be reduced to increase volume of sales. It’s controversial though as part of the community wants soulbound tokens.

If it’s chosen that collectors pay for mints, I find it rather unpractical to pay each mint and would rather buy a package (10, 50, 100… mints).

1 Like

I think it should be free for real users of poap community. I don’t think paying is the solution to eliminate farmers. They pay for poaps and sell them more expensive. We should find another way

1. Should Issuers pay for drops? Why or why not.

Issuers should be the ones paying possibly by implementing a sliding scale. A campaign similar to mailchimp seems like it would integrate well. Free for the small gathering events say 25 or less. Sliding scale upwards.

Pitfalls, will ANYONE pay or will it just become a flea market of free events. Leaves is with what is the reason they want to pay in the first place? Usually inclusiveness or profitability. Some bigger names have used poaps as gates to their communities, maybe it’s more about strategic partnerships i.e. NFL/MLB and onboarding the masses.

2. Should Collectors pay for drops? Why or why not.

I honestly don’t think collectors should pay for the drops, this is a benefit of attending an IRL event. People who show up to these events help us mold the future, being recognized with your POAP is a badge of honor.

3. Should POAP Inc continue to pay for drops? Why or why not.

For mass adoption and bigger growth I agree that POAP should move away from paying for the majority of the POAPs and use fund earned to facilitate whatever free ones remain.

4. Additional comments or insights you have.

This was a cool exercise, thanks for allowing me to play.

1 Like