Examining the Emotional Drivers for ‘Locking Tokens’

Dear Friends and fellow Ludwigs,

Creating, cultivating and maintaining the long term value for our token (BEETS) is one of the key motivations for us at Beethoven X. With this goal in mind, we continuously strive to implement measures that will contribute to the sustainable, long term success of the protocol. This is a focus embedded at the core of “who we are” as a protocol and serves as a guiding maxim as we build into the future. We work hard to optimize and align all of our processes so we can perform at our best and build industry shifting, cutting-edge DeFi products. Equally important for us, in everything we do, is to listen closely to our users and tune in with our beloved Ludwigs.

There are a variety of different strategies that can be employed to achieve a long term, stable value for a token. ‘Locking tokens’ is one of these strategies and is commonly seen as an effective way to keep a token’s value high in the long run. Token lockup refers to a specific period of time during which the tokens cannot be transacted or traded. Typically, these lockups are used to prevent/stagger holders from selling large amounts of a token on the market at any given time. This aims to create a buffer to protect the token value from exposure to large volumes of selling pressure. Accordingly, the initiative for locking tokens serves as a preventative strategy. Aside from the more obvious aspect of functionality, however, the underlying value and associated meaning of locking from a user perspective remains somewhat unexplored. Users’ understanding of what locking might be can be multifaceted and often ambiguous. For example, in some users implementing locking strategies might cause some reluctance as locked tokens become illiquid for a certain period of time and in others it might be interpreted as a sign of the team imposing control over their users.

With the different meanings the concept of locking tokens could have for individuals, we went on a symphonic journey to pick the lock on locking. The goal was to explore the underlying meaning of locking from a user perspective by means of a survey that included both closed and open-ended questions.

What happened next was just mind-blowing! We collected over 500 valid survey responses and remarkably in-depth user feedback that provided us with valuable insight into the thoughts and feelings of our users regarding locking fBEETS. The findings served as a basis to work out the most suitable locking strategy for our protocol — completely decentralized.

In this article you will explore:

1. The emotional value afforded by locking
2. How locking fosters commitment, trust, and organic growth
3. What the prisoner’s dilemma has to do with locking

Throughout this article, we will present to you the main themes that have evolved from the survey data on the meaning of locking.

The Emotional Value Afforded by Locking

Emotional value refers to the additional meaning a user attaches to the concept of locking beyond its functional use or characteristic features. According to the survey results, the emotional value in relation to locking primarily refers to ‘connectedness and affiliation’, ‘peace of mind’, and ‘discipline’.

Connectedness and Affiliation

‘Connectedness’ and ‘affiliation’ were identified as a main category linked to users’ emotional value associated with the concept of locking. As such, participating in locking tokens implies the meaning of being emotionally connected to other users, the community, and the protocol. Users perceive it as ‘caring for each other’, ‘supporting and establishing a deeper connection to the protocol’, and ‘being in this together’. The statement “everyone else is on the ship with me for the long haul” underlines users’ perceived connectedness stimulated by the concept of locking.

Moreover, the concept of locking provides users with a feeling of affiliation. Users state that locking would make them feel like ‘being part of the team and the community’ and that it implies ‘being a long term community member’. Users’ desire to be part of the team and community describes their need to belong to a certain group of people they identify with. Generally, locking seems to foster strong community feelings, as illustrated in the word cloud based on the results of the survey.

Word cloud: The emotional value of locking; perceived connectedness and affiliation to the team and community of the protocol.

Peace of Mind and Discipline

‘Peace of mind’ and ‘discipline’ represent another distinct category associated with locking. The fact that the locked tokens cannot be transacted or traded for a specific period of time provides users with mental support. Users emphasize that it reduces mental stress and helps them regulate their emotions. The reduction of mental stress is clearly expressed in the statements ‘being more relaxed about price volatility’, ‘feeling less pressure to sell’ and ‘not having to worry about timing when to sell’. This goes hand in hand with helping to regulate users’ emotions by ‘preventing emotional selloffs’. Users state that the fact of not being able to reverse their decision in a panic gives them ‘confidence in their decision’ and teaches them ‘discipline to stay invested in a position’. The following quotes highlight the function of mental support of locking: “it gives me a small comfort by just leaving tokens there, no need to worry […] and pretending to know what I am doing”, “protects me from taking stupid trading decisions”, and “stops me from jumping into yet another ‘high yield’ pool”.

The central notion reflected by the category ‘peace of mind and discipline’ can be summarized as ‘sustainability over impulse’. Overall, the results indicate that locking helps the team and protocol to reduce fear, uncertainty, and doubt (FUD).

Emotional Value As a Sign of Users’ Belief in the Protocol

The positive emotional states attributed to the concept of locking indicate users’ belief in the protocol and identification with the protocol. According to the users, the amount of token locked shows how much they believe in the protocol. Users’ identification with the protocol also reflects in their willingness for locking; the higher users’ engagement and identification with the protocol, the higher their willingness to lock tokens for a longer duration of time.

Moreover, users’ engagement is positively associated with locking motivation, i.e., highly engaged users are more likely to be motivated by long term locking goals. For instance; ‘becoming part of the driving force of the Beethoven X community’ and ‘receiving voting power’ represent key motivational factors to participate in locking for highly engaged users.

Locking Fosters Commitment, Trust, and Organic Growth

Commitment and Trust

Another distinct meaning associated with locking is ‘commitment and trust’. According to the results, users interpret locking as a long term trust agreement between the investor, the team behind the project, and the community supporting the project. Importantly, ‘commitment and trust’ associated with locking goes both ways: it not only reflects users’ trust in the team and in the stability, growth, and future of a protocol; it’s also interpreted as a sign of commitment from the team, implying that the project team is aiming for long term achievements. Users describe locking to be ‘the skin in the game’ and ‘approval of fundamentals’.

Moreover, the notion of commitment and trust is also revealed in the subcategories: ‘target group’, ‘user mindset’, and ‘governance’. Users point out that locking attracts a more sophisticated target group; one that does due diligence prior to locking and follows the product development more closely after locking. Similarly, users’ commitment in the protocol also encourages a ‘hodl spirit’ and mindset shift into that of a true long term investor. The long term vision associated with locking reflects in users’ perceived importance of receiving the ability to participate in the protocol governance. Users state that ‘it makes them more involved with casting their votes’ and supporting the protocol.

Organic Growth

‘Organic growth’ is another distinct category related to users’ perceived commitment and trust supported by locking. According to the results and provided that the locking strategy is well-thought-out, locking promotes long term, organic growth and an increase in market share over a long period of time. In return, it entails an expectation of increased performance.

In line with the category ‘organic growth’, users mention the overall increase in value of the token, resulting from a reduction of circulating supply and thus, making the token more scarce. The majority of users agrees that locking fosters price stability and long term growth while, at the same time, being able to maintain a certain level of liquidity.

The Prisoner’s Dilemma: Self-Interest vs. Mutual Interest of the Community

Despite the perceived values, users also raise negative aspects related to locking. Some users suggest that locking could result in a scenario similar to the ‘prisoner’s dilemma’. The prisoner’s dilemma is one of the most well-known concepts in modern game theory. It describes a situation, wherein an individual has to choose between self-interest and mutual interest. Often, and particularly from a long term perspective, the decision to pursue self-interest puts that individual in a losing situation.

With reference to locking, users associate the potential risks of a prisoner’s dilemma with synchronized unlocking times. Users point out the possibility of ‘bank runs’ caused by the scenario of unlocking ‘en masse’ at specific dates or close in time to each other. The likelihood of bank runs could trigger a cascading effect, resulting in mass panic, and eventually ruining the sentiment of a project. As such, users perceive locking as a ‘risk-reward game’ that involves a ‘trade-off’ situation of weighing self-interest against group interest. On a practical level, the trade-off simply refers to ‘being able to take advantage of price volatility’ vs. ‘stable & long term growth of the supporting protocol’. So, the central question is: How can actors be convinced to cooperate and get better outcomes for the whole group instead of acting in their self-interest?

It’s important to note that the game theory assumes that players will always act ‘rationally’ to maximize their own payoffs. In reality, however, this is not always the case. People do not always act selfishly in their own interest — particularly when they feel a strong emotional connection to the group or see themselves as being part of something bigger than themselves. In fact, numerous studies have found that people are more likely to cooperate than the prisoner’s dilemma would suggest.

Based on the results of the survey, and since locking involves some perceived risks, users emphasize the importance of a deliberate locking strategy that shows a deep thought process. According to the users, locking as a ‘risk-reward game’ primarily involves leveraging risks and returns. Therefore, providing users with ‘educational content’ and ensuring a ‘clear communication of terms and metrics of locking’ is key. This includes opportunities to learn more about the process of locking and documentation on the mechanism of locking including: the purpose of locking, what it involves, and what it means for the user and the protocol.

This leads us to the critical question: should Beethoven X implement a locking mechanism, and why have we come to launch the locking initiative at all?

So, to Lock or Not to Lock?

The question as to whether Beethoven X should implement a locking mechanism has important implications for the future of our protocol. Therefore, we believe that all of our community members should get the chance to participate in this important decision. To support the community with this initiative we held an AMA dedicated solely to the topic of locking in addition to the survey. There is also an in-depth community discussion taking place on our Discord to make sure our users have a space where they can express their concerns / opinions on the locking initiative before it is put to vote. At the time of writing this article, the governance vote on locking is currently running on Snapshot and will remain open for several days.

From our side, the motivation for implementing the locking initiative primarily includes:

• aligning the interest of long term shareholders of the protocol
• rewarding long term shareholders
• making use of a tool to reduce gaming of the voting system

The rich feedback collected in the survey and ongoing discussion on Discord clearly indicate however, that users’ thoughts and feelings about locking fBEETS are much more complex than that.

As demonstrated by the survey results, the concept of locking has the power to elicit strong emotions including feelings that range from, ‘peace of mind’ to ‘fear of destroying the sentiment of a project’. From a rational perspective, the picture is somewhat clearer. The survey results suggest an overall positive attitude towards locking. This is particularly evident in users’ intention to lock their tokens with Beethoven X: 75% of the survey respondents are inclined (‘likely’-‘highly likely’) to make use of the locking mechanism, as illustrated in table 1.

Table 1: Users’ intention to lock their fBEETS.

Summary and Outro

Despite the overall positive sentiment related to locking based on the survey results, the notion surrounding the concept of locking remains multilayered and somewhat controversial. There is however, one thing we can say for sure: the concept of locking offers much more than the obvious functional benefits.

From a protocol perspective, the concept of locking goes beyond aligning the interest of long term shareholders of the protocol and offering a preventive strategy for large selloffs. As suggested by the user perspective, the concept of locking:

• affords emotional values including social connectedness and affiliation to the team behind the project and the community supporting the project
• provides mental support and discipline
• fosters feelings of commitment and trust
• promotes organic growth of a protocol

At the same time, the concept of locking does raise certain concerns about undue risks into the future and the potential scenario of a prisoner’s dilemma.

Believe it or not, dear friends, these are just some of the findings of our survey. We also collected insights into the motivational drivers for locking tokens with Beethoven X. But let’s save that for another article.

We hope you found this article insightful. At Beethoven X, we always strive for maximum quality and security of our products when building into the future. ‘Locking tokens’ offers a possible strategy to support that.

We are so proud that you joined us on this symphonic journey to pick the lock on locking. But even more, we are grateful for having such a thriving and engaged community; we literally still marvel at your exceptional support in composing this new piece of music. This is how an orchestra performs harmonic and memorable sounds that will resonate long into the future.

With all the love,

Beethoven X

Disclaimer: The information in this article is for educational purposes only and is NOT intended as financial advice. The information is in no form an endorsement for locking; Beethoven X will not be liable for any investment/trading activity of users.