Welcome to The Ask, where each week Crypto Investor interviews essential voices doing the work to make crypto ‘mainstream.' Exchange lightly edited.

This week we spoke to WhaleShark, founder of $WHALE, currently the largest social token in the world. The early crypto adopter’s token is backed by his $40 million+ NFT collection. On Friday, he will launch another social token with gaming group E1337.

What’s the layout of the social token ecosystem?

WHALESHARK: I think that ERC-20 based tokens are very good for communities. So, I would say, $WHALE isn't a social token. It's a community token. And I would say creator coins are labeled as such because, honestly, they allow individuals to commercialize their social media influence. So, I would say that things like Rally are building and Roll are building — I think those are more oriented towards larger communities. And Bitclout: It will appeal to the individual creator.

Why did you set up $WHALE as an asset-backed token?

WHALESHARK: I had collected all these NFTs back in 2019 to 2020. I just wanted to have a way to share it with the community. I wanted to do it in a way that didn't (infringe) upon SEC regulations, so that's why it's backed by these NFT assets. We have virtual tables that allow the community to interact with the entities in the vault, as well as have some mechanisms that allow the growth of the vault to be realized in the price growth of the token. I think it's a very slippery slope for some other tokens that are doing direct fractional ownership. Until I guess there's very, very clear SEC regulations and security regulations, we're going to keep this type of type of virtual cabling to realize some of that value within the token price. If one day the SEC says fractionalized ownership is definitely not a security, (I would be) more than happy to try and (securitize) the $WHALE token and the vault.

Are there things people should be vigilant about without firm regulation?

WHALESHARK: There are some projects that offer a dividend, there are some projects that offer a payout. Anything that offers a direct dividend on holdings of social tokens, it's a security right? The only reason why it's not shut down is because the projects are just too small for the SEC to go after. Then after that you have the social tokens where you see true fractionalized ownership, right? Like, one-to-one to fractionalize ownership of NFTs. That's a gray area at the moment, Nobody knows how that's going to run … It is very difficult to navigate the space with such a gray area.

What do you worry about?

WHALESHARK: We saw a lot of action in the growth of social tokens in February and March.The thing is I worry that people really underestimate the amount of effort it takes to manage a social token well. So what we see is a lot of people say ‘Hey, I'm just going to create a social token, I'm going to build a community and then the price is going to moon.’ People don't understand that it's a multidisciplinary effort. It’s economics, monetary policy, game theory, community building, branding. And if you don't have a good grasp on all of these different facets, it's very, very hard to have a successful project. Also, I'm worried that a lot of people will enter the space, a lot of people will build social token communities and, at the end of the day, very similar to NFTs you'll see 0.01% of those projects actually remain and move on to the mainstream.

Welcome to The Ask, where each week Crypto Investor interviews essential voices doing the work to make crypto ‘mainstream.' Exchange lightly edited.

This week we spoke to WhaleShark, founder of $WHALE, currently the largest social token in the world. The early crypto adopter’s token is backed by his $40 million+ NFT collection. On Friday, he will launch another social token with gaming group E1337.

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