Spencer Dinwiddie’s Web3 Social Marketplace App Raises $26M in Latest Round
Calaxy, a Web3 social marketplace application co-founded by Dallas Mavericks guard Spencer Dinwiddie, announced a $26 million raise on June 7. The HBAR Foundation and Animoca Brands co-led the strategic funding round, and the $26 million raised will be used on product development, marketing and to build out the team.
Calaxy is attempting to “revolutionize the creator economy” by empowering celebrities, influencers and content creators to establish more direct connections with their most passionate fans (think: top 10%) and to monetize those relationships more equitably than one can on existing Web 2.0 platforms.
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“Economic infrastructures for Web2 social platforms [such as Instagram, TikTok and Twitter] invariably prioritize large brands over creators. Because these platforms derive the majority of their income from ad revenue, [they] have increasingly grown into customer acquisition portals for brands and not the playground for creators that they originally set out to be,” Calaxy co-founder Solo Ceesay said. “There has been a lack of investment into tools designed to improve the ways in which creators can capture some of the value they create.”
JWS’ Take: Celebrities, influencers and content creators who have built large followings on social platforms have historically monetized the audience through indirect brand partnerships. But that is a flawed model. “[The process of orchestrating brand deals is] super inefficient [and] the brands and centralized entities themselves [maintain] a lot of control in that type of ecosystem,” Ceesay said. “Oftentimes creators [are] paid a very small percentage of the value they create.”
Those creators took advantage of tools such as Cameo, Patreon and Only Fans to generate supplemental revenue and reduced their reliance on centralized social platforms that could change their algorithm at any time. But these Web2 solutions have limitations, Ceesay said.
Calaxy set out to build a true creator playground. The platform has the functionalities found on Twitter, Instagram and TikTok, and it also gives creators the ability to deliver familiar creator economy experiences—such as video calls, video messages, live streams and exclusive content—and to customize offerings specific to their audience (think: a famous athlete giving super fans a chance to buy an hour of private training). The application makes the fan connectivity and direct monetization possibilities virtually limitless.
To pay for the products and experiences, fans will use social tokens—personalized cryptocurrencies meant to serve as the backbone of a creator’s own economy—that are either purchased or gifted to them. The Calaxy app, which is slated to go live later this summer, has been designed so that even a Web3 novice creator can create a fungible (or non-fungible) token.
More than 200 creators—including Dinwiddie and Dallas Cowboys running back Ezekiel Elliott, who is an investor/advisor to the project—will launch their own social tokens in coordination with the app’s release. But fans will not need a crypto wallet or metamask to purchase them—a debit or credit card will work. Ceesay explained that part of the app’s value proposition is its ease of use. “We’re trying to create a new world that sits in the middle of Web3 and Web2. We like to call ourselves Web2.5.”
If Calaxy is going to allow fans to use plastic, why is the company complicating the purchase process with cryptocurrencies? Ceesay says that is the wrong way to look at it. He believes the social tokens enable creators to sell goods and experiences to their most passionate fans more efficiently and in a more transparent, more secure and faster manner.
Ceesay said the social tokens also allow fans to “invest into a creators upside early” and give creators a means to incentivize and reward their supporters. In theory, the value of a creator’s token could increase over time. For example, The Tilt founder Joe Pulizzi’s $TILT coin has risen from $.36 on March 4, 2021, to $9.70 just 15 months later.
Social tokens minted on the Calaxy app will initially be pegged one-to-one with U.S. dollars because the company believes that adding volatility to coin prices would only make it more difficult to onboard young fans and folks new to cryptocurrencies. “But in the future, creators will be able to opt into dynamically priced tokens,” Ceesay said. He also noted that having a social token with a public market cap could eventually “open up [opportunities for a creator] to do things in the defi world” too (think: get credit or a loan against it).
Initially, creators will mint and sell tokens that fans can exchange for products and experiences. Among the products will be non-fungible tokens. Calaxy makes it easy for a public figure to create their own NFTs (as opposed to having to hire developers etc.), which should be enticing to creators considering the bulk of Web3 revenues generated to date have come in the form of non-fungible token sales.
But Ceesay believes the only reason NFT sales have dominated Web3 revenues is because there has yet to be a social token project that has received mainstream attention. “[Calaxy is] probably the most popular [among them to date] on the consumer side,” Ceesay noted, and it isn’t even live yet. The absence of an easy on-ramp for adoption and the utility needed to sustain the token’s economy have hampered previous, more protocol specific, efforts. Calaxy Inc. was built on the Creators Galaxy protocol.
There is certainly reason to be skeptical about celebrities, influencers and content creators hawking collectible NFTs or cryptographics. But Ceesay was clear, Calaxy is not just an NFT marketplace; the app is largely about the experiences offered.
FWIW, the co-founder believes the issue with NFTs is the lack of avenues that currently exist to showcase ownership. As those channels are constructed (think: digital art galleries), he says the value proposition for owning NFTs should grow.
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