Crypto Cults: A Framework

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Today’s post is on the topic of cults. Cult brands that is.

Every project in crypto is obsessed with building "community.” The projects that really take off don’t have communities, they have cults.

Communities are people with shared interests and activities. The focus is on the common interest, not on the brand. Crypto Twitter is a "community."

Cult brands on the other hand have an intense emotional bond with the brand, not just around the interests. Apple and Tesla are cult brands. Their customers and followers are devoted to their ideas, not just their products.

In bull markets, the projects that achieve the greatest heights (and valuations) are the ones that achieve cult-like status. The raving followers of these projects can be found constantly promoting the project and aggressively attacking anyone online who is a non-believer.

Here are some examples of past cult projects:

• Hex

• Luna

• Olympus DAO

• Frog Nation

These projects, despite their broken mechanisms, were worth billions of dollars and generated huge returns for those who spotted them early enough.

Today, we offer a framework for spotting crypto cults.

Cults vs. Cult Brands

In historical contexts, groups labeled cults ranged from extremists to the marginalized and persecuted. Many groups labeled as cults formed on the fringes of society or in opposition to cultural norms. Some were characterized by exploitative and manipulative practices, giving cults the negative connotation they have today.

The sociological context of cults is not what we’re discussing today. The concept of “cult brands” in consumer culture is distinct from the concepts of religious and social cults. However, there are many parallels in how both create strong followings and loyalty.

We can set aside the spooky rituals and all agree that, at our core, humans seek a sense of community. People deeply identify with cult brands, becoming not just customers but highly engaged members and strong advocates for the brand. The primary differentiator is that cult brands sport a fanatical customer base rather than typical brand preference.

Features of a Crypto Cult

Crypto cults are unique in that members have a financial incentive in the cult’s success through ownership of the token. This amplifies cult-like behavior as people’s livelihoods become tied to the success of the project.

There are five common characteristics of crypto cults.

1. Cult leader

2. Exclusivity

3. Us vs. Them

4. Signaling belonging

5. Co-ownership

Cult Leader

Despite decentralization being a fundamental principle of crypto, cult leaders remain a core component of the strongest communities in crypto (both past and present).

• Bitcoin: Satoshi Nakomoto

• Ethereum: Vitalik Buterin

• Luna: Do Kwon

The world’s leading cult brands are no different.

• Tesla: Elon Musk

• Apple: Steve Jobs

These leaders aren't just your run-of-the mill influencers. They drive entire movements (and generate billions of dollars!).

These leaders generally have the following characteristics:

1. Charismatic personalities

2. Authoritarian nature

3. Confidence and persuasiveness

4. Visionary thinking

5. Resistance to criticism

Cult brand leaders often embody the lifestyle of a brand and its values, creating a strong association between the leader and the brand.

Elon Musk is a great example of a cult brand leader. He is known for his ambitious, visionary thinking through Tesla and SpaceX. He has a charismatic personality that inspires the general public, and he has no qualms about taking an unconventional and controversial approach. His personal brand is deeply intertwined with that of his companies. He’s a media savvy individual who is able to use his platform to sell his vision to a large audience, and in turn create fanatical customers.

That’s how Elon is able to sell tequila, flamethrowers, and WiFi access, not just electric vehicles. Tesla buyers are not just consumers of a product, they are devoted members of the Tesla community. Elon’s customer base will buy anything and everything he sells, including the publicly traded equity of his companies. Elon’s status as a cult leader rather than the profitability of his companies is why he has a net worth of $230 billion.

Exclusivity

Where most crypto projects try to reach anyone and everyone, cult brands are exclusive.

They are open - but only to the believers. Non-believers need not apply.

And while most crypto projects look at what other projects are doing to find "narratives" to be part of, cult brands are formed through radical differentiation.

To join means to shed your old beliefs and adopt those of the group.

Take high-end watches for example. It’s not enough just to have the money to buy a new Rolex, you have to be “chosen” to spend 5+ figures on a piece of metal. To outsiders, this dog and pony show seems ludicrous. And. Perhaps it is — to the non-believers who aren’t wanted anyway.

Streetwear brands are no different. Clothing brands like Supreme and sneaker brands like Yeezy have used limited supply drops to create urgency and exclusivity, making their items highly coveted and creating rabid customers who will wait in line overnight to buy the latest product.

Us vs. Them

If you truly stand for something, you also have to stand against the things you're not.

To really dial up the feeling of belonging, there has to be a common enemy to fight against.

Take Bitcoin for example. Bitcoin represent ideals such as decentralization, freedom from traditional banking systems, financial privacy, and innovation in financial technology.

The "enemy" in this case is the traditional fiat currency system, which is outdated, overly regulated, and controlled by large financial institutions and governments.

Standing against fiat is not just about preferring a different type of currency; it's about supporting a revolutionary approach to finance that will change the world. Members are part of a movement challenging the status quo.

Other examples include:

• Apple vs. Android

• Coke vs. Pepsi

The existence of a common enemy empowers members and fosters deeper bonds, further solidifying the identity of members as part of the group. Members feel more bonded as they collectively stand against a shared "threat."

The "enemy" provides an external target for explaining why the group's beliefs or actions are necessary. Members rally around a cause. This can evoke strong emotions, further deepening members' commitment to the group.

By having a clear adversary, complex issues are often simplified into a binary narrative — are you with us or against us?

Signaling Belonging

It's not enough to simply be part of the in-group, members need to be able to signal that they are part of it while distinguishing themselves from all the others who are not.

Emojis. Memes. Slang. (3, 3). Bowties. Blue instead of green for iMessages.

These are all ways members show their participation.

Remember, a cult brand represents a lot more to members than simply the products / services.

It's representative of a lifestyle in alignment with their self image, and people have an innate desire to express their self image outwardly.

These signals also connect individuals to a larger community that shares similar values or lifestyles.

Co-Ownership

To give power to the group, it necessitates giving up a degree of control.

A crypto cult brand is stewarded not just by the company, but by its members. Memes and moments exist beyond the centralized entity and core team behind the project.

While crypto founders are often strong advocates of decentralizing their protocols, it's rare for them to decentralize the brand.

And yet, the concept of co-ownership is crucial in transforming a community into a cult brand.

It's more powerful in crypto than anywhere else because members own tokens.

This goes beyond just feedback, engagement, or even the illusion of governance; cult brands give members a real stake in the brand's direction and success.

This means involving community members in key decisions. Members aren't just consumers or users; they're active participants and co-creators of the project’s story and future.

This sense of ownership intensifies their emotional investment and loyalty. It organically creates ambassadors who actually care about a project.

Cult brands move away from a top-down, centralized approach to community building and instead fostering a sense of collective ownership and responsibility.

Finding The Next Billion Dollar Cult

The best part about crypto is that you can actually invest in cults.

The easiest place to start is to search for cult leaders. Note that cult leaders do not have to be the founder or CEO of a project. These leaders simply have to be a public figurehead. In the decentralized world of crypto, this could simply be someone who is a strong advocate of a project! However, it is most powerful when it’s a leadership figure within the company.

A few indicators:

1. Other leaders engage in arguments with the cult leader but are unable to break their “frame” (cult leaders have an authoritarian nature)

2. High engagement on content

3. Cult leader is a good communicator

The next factor we’d look at is community initiative. Are there intensely passionate community members that are obviously unpaid and unrelated to the project? If so, it warrants a closer look.

A good test is to post or study some (harmless) “FUD” about a project and observe 1) how quickly people respond and 2) the nature of their responses. The more angry cartoons that run to a project’s defense, the better. Remember, you’re looking to find emotional bonds. Sometimes that requires studying how a community responds to its enemies.

Signaling is another great sign to look for. Emojis, project NFTs, and memes are common in crypto cults. Solana is likely a project that has achieved takeoff with regards to community-driven branding. Sei is also a project that could achieve cult brand status by the end of the bull market.

Counter-indicators

Projects have become a lot more strategic about community marketing. It takes a bit of intuition to work out what will gain organic traction vs what will remain inorganic and “forced.”

Generally speaking, the projects that don’t take themselves too seriously are the ones who achieve the best results from their communities. Projects that are unwilling to give brand ownership to their communities will not achieve cult-like status. These are the projects that care more about looking good than making real connections with their users.

Do you see any other cult brands developing in crypto?

Let us know in the comments.

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Until next time, anon..

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Disclaimer: None of this is to be deemed legal or financial advice of any kind. These are opinions from an anonymous group of cartoon animals with Wall Street and Software backgrounds.

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