Tokens and Communities: the existential question in crypto
Can DAOs bring virtue back to scaled organization, or will tokens accelerate economics-only mentalities?
What will be the relationship between tokens and communities? This might be the existential question for crypto, and most people in the space are barely asking it.
Here’s the optimistic version: DAOs use tokens to coordinate communities at scale while preserving the values and purpose that made the community worth joining. Tokens align incentives, fund public goods, and enable governance. Communities get the best of both worlds — the cohesion of small groups and the power of large networks.
Here’s the pessimistic version: tokens insert market logic into every community, crowding out the non-financial motivations that made those communities functional in the first place. Every DAO evolves into a profit-maximizing network wearing community clothing.
I’m worried the pessimistic version is more likely, and here’s why.
Humans are motivated differently in different contexts. In markets, we optimize for self-interest — and that’s fine, markets are designed for it. In communities, we’re motivated by reputation (wanting others to think well of us) and morality (wanting to do the right thing). These motivations are powerful, and they produce behaviors that markets can’t: volunteering, mentorship, generosity, trust.
The problem is that market and community motivations don’t coexist well. When you introduce market incentives into a community context, the market framing tends to dominate and destroy the community framing.
The daycare study from Haifa is the canonical example. Parents picking up kids late were motivated by guilt — a moral/social cost. When the center added a fine (a market cost), late pickups doubled. The moral framing was replaced by a market framing, and the market price was too low. When the fine was removed, the moral framing didn’t come back. Once you’ve established that lateness has a price, it’s hard to re-establish that lateness is wrong.
The same dynamic applies to tokens and communities.
Offer your neighbor $25 to help you move. What was a social interaction — favor, reciprocity, community bonds — becomes a market interaction. And $25 is an insulting price for a market interaction. You’ve damaged both frames at once.
Now scale this up. A DAO launches a token. Contributors who were participating for reputation and shared purpose now have a financial stake. The conversation shifts from “what should we build?” to “what will make the token go up?” Members who were in it for the mission start calculating ROI. New members join for the returns, diluting the culture. The community becomes a market wearing community clothing.
Dee Hock, founder of Visa and a deeply thoughtful person about organizational design, spent years warning about this. Organizations, he argued, are held together by shared purpose and principles. The moment financial logic becomes primary, the organization hollows out — it retains its structure but loses its soul.
Michael Sandel’s work on the moral limits of markets makes the same point from a philosophical angle: there are things that markets corrupt by their nature. When you put a price on everything, you change the character of everything.
None of this means tokens are inherently destructive. It means communities need to be extraordinarily intentional about how they introduce them. A few principles:
Separate the financial and social layers. Not every community interaction needs to be tokenized. Keep spaces where participation is motivated by reputation and values, not financial returns.
Introduce tokens slowly. The daycare study shows that once you introduce market framing, you can’t easily remove it. Start with non-financial coordination and add tokens only where they solve a specific problem that can’t be solved otherwise.
Design for the community you want, not the one token incentives will create. Token incentives will attract profit-maximizers. If that’s not who you want in your community, don’t make token appreciation the primary value proposition.
Acknowledge the tension. The worst outcome is pretending tokens and community values naturally align. They often don’t, and the communities that navigate this successfully will be the ones that face the tension honestly.
The existential question for crypto isn’t whether the technology works. It’s whether communities can introduce financial coordination tools without destroying the non-financial bonds that make communities worth having. The answer isn’t obvious, and anyone who tells you it is hasn’t thought about it hard enough.