Zora's Token Plummets 50% Amid Criticism, Shifts to Memecoins

Onchain social network Zora, known for enabling artists, musicians, and other creatives to monetize their content onchain, faced significant backlash following the launch of its ZORA token. The token's price plummeted shortly after its release, with users and observers criticizing poor communication, token distribution, and utility models. This incident occurred amidst a broader decline in interest in the onchain creator economy and a shifting perspective on the usefulness of blockchain tools like non-fungible tokens (NFTs) for creatives.

The ZORA token launched on April 23, but the official announcement came two hours later, leading to widespread confusion. The token's price dropped by over 50% within those two hours, from $0.037 to $0.017, and continued to fall to around $0.013. The tokenomics also drew criticism, with 45% of the supply reserved for the team and investors, and only 10% allocated for the user airdrop. Zora initially stated that the token had no governance rights or equity ownership, but later announced additional functionalities within the network. Despite the criticism, some users appreciated the financial rewards and the project's efforts to value digital artifacts.

Zora’s token launch reflects a broader shift away from the traditional NFT model for creators, moving towards memecoins. Posts on Zora are now minted as instantly tradeable memecoins, known as “content coins,” with creators earning a percentage of the supply and trading fees. This shift is seen as an attempt to capitalize on a new class of creators who focus on viral and memetic content. However, NFT sales have significantly declined compared to their 2021 peak, and many creators have left the NFT space due to its perceived shortcomings. Music-related NFTs, once prevalent on platforms like Zora, have been particularly affected.

Several builders of popular creator platforms have moved on to other projects, citing a hyperfocus on speculation as a reason for the decline in NFT interest. The team behind music NFT platform Sound.xyz shifted its focus to a new platform called Vault, which uses blockchain technology but keeps it hidden on the back end. This sentiment was echoed by music artist and builder Latashá, who noted that the language and jargon of Web3 often boxed creators in, and that the technology should be used as a tool rather than a focus.

Despite the shift away from NFTs, many builders and creators still believe in the power of blockchain technology. Vérité, an independent artist, expressed a desire to find new ways to solve problems facing artists and audiences, regardless of the form. Adam Levy, host of the Mint podcast and founder of Blueprint, remains firm in his belief in NFTs, pointing out that cryptocurrency is still in its early stages of adoption. Renata Lowenbraun, CEO of independent music Web3 platform Infanity, compared blockchain to the internet, arguing that NFTs had a “false start” but will eventually have amazing applications for creative ventures. Latashá believes that the future lies in artists building their own platforms, moving away from dependence on centralized platforms.

The future of the Web3 creator economy is uncertain, but it is clear that it will involve road bumps along the way. However, if the builders and artists are to be believed, these road bumps lie on the path toward greater artist independence. The onchain creator economy is evolving, with creators and builders adapting to new models and technologies to monetize their work and connect with audiences. The ZORA token drop may symbolize a shift in the creator-driven NFT model, but it does not necessarily signal its end. The road ahead is filled with challenges, but also with opportunities for innovation and growth in the creator economy.