This week, as Token2049 kicked off in Singapore, a crypto YouTuber going by “Professor Crypto” proudly announced he had received the Best Content Creator award at something called the “KOL Awards.” KOL stands for “Key Opinion Leader,” a term used in marketing for hiring influencers in a particular niche market, and that’s been a controversial (and overused) strategy for growing crypto.
But Professor Crypto’s announcement seemed odd: almost no crypto professionals or major players had ever heard of him, and he seemed to have a very limited track record. Within a day, thanks to sleuths including the legendary ZachXBT, it became clear that “Professor Crypto” had engaged in massive astroturfing, including thousands of purchased followers and bot-generated engagement on social media. Just a day after announcing a supposedly major award, Professor Crypto had deleted posts, blocked detractors, and seems to be in a bit of an image crisis spiral.
While not all “Key Opinion Leaders” are as outright fraudulent as Professor Crypto appears to have been, his sham exemplifies their risk. The KOL business model, based on paid and frequently undisclosed endorsements, motivates them to create engagement at any cost. Honesty seems like a much lower priority – and it’s the entire crypto industry that’s paying the price.
Sometimes that price is quite literal. In early July this year, the Polkadot network released a treasury report revealing that it had spent more than $87 million dollars in the first half of the year. That’s a lot of money, but what really got people worked up was that almost half of it, $37 million, went to “Outreach” efforts including advertising, sponsorships, events – and “influencers.”
Influencers in crypto are exactly what you think they’d be in other industries – YouTubers, TikTokers and the like who have managed to attract big followings, and who take direct payments for coverage (or more accurately, promotion) of projects or tokens. Most infamously, the YouTuber BitBoy (born Ben Armstrong) was caught taking payouts to pump tokens, without disclosing those relationships.
KOLs represent a breakdown of coordination: between influencers and their audiences, and more importantly, between influencers and the entire industry
In part because of the legacy of figures like BitBoy, influencers in crypto have recently pushed to rebrand themselves as “Key Opinion Leaders.” That sounds a lot classier – but it’s the same old wine in new bottles. Despite the rebrand, the way they work hasn’t changed much: Key Opinion Leaders are also paid to say positive things, rather than to seek out the truth.
That’s why the pile of Polkadot money going to influencers upset people. It gives the impression that the crypto industry is more about appearance and salesmanship than substance (and in fact, Polkadot’s development budget went down during the same period).
Key Opinion Leaders and similar figures can have a negative impact because their business model, which awkwardly straddles journalism and public relations, creates deep conflicts of interest. They are not, in short, primarily motivated to do what is best for their audience.
Journalists broadly depend on readers for revenue, so their business goal is to produce high-quality, trustworthy information. To support that goal, news organizations are generally very careful to insulate reporters from financial details, like who’s buying ads. That information could influence their coverage to be more positive, or more negative, than the facts support.
At the other end of the spectrum are PR spokespeople or copywriters who are openly affiliated with a project and speak on its behalf. They get paid directly by projects – and that’s fine, because the relationship is clear and open. They’re representing a company or project’s perspective, so you know they’re going to put the best possible spin on statements, and should be regarded with fair skepticism.
The problem with Key Opinion Leaders is that they’re paid spokespeople who look like journalists. They have their own shows or platforms, and they cover a wide variety of topics – but they choose at least some of what they talk about, and what they say, based on where their money is coming from.
Legally, influencers are supposed to disclose paid relationships, but that has not always been the case. BitBoy is far from the first crypto talking head to be caught taking money to promote projects without disclosing that relationship. Perhaps worse, Armstrong has also been caught “pumping and dumping” – that is, hyping up a token, then selling his holdings into the price bump caused by his own coverage. Tokens are often given to “Key Opinion Leaders” as incentives, making the “pump and dump” practically inherent to their business model.
That’s the real core of the KOL misdirect – audiences think they’re getting objective advice from experts. But what they’re really getting is an advertisement disguised as journalism. And that’s where the trouble really starts.
In the Ethereum space, we talk a lot about crypto as a coordination tool – specifically, as a way to coordinate people to work towards shared goals. But KOLs represent a breakdown of coordination: between influencers and their audiences, and more importantly, between influencers and the entire industry.
A KOL’s goal is to get well-paid for talking positively about a thing, while what their audience wants is the truth about that thing, whether it’s positive or not. In short, KOLs are antagonistic to their audience’s interests, whether the audience realizes that or not.
Even more than that, though, I think KOLs are antagonistic to the success of the entire cryptocurrency project. Honest builders should all want information going out to the public to be accurate, because it leads to sustainable adoption and trust of the entire sector.
It’s understandable that projects are individually motivated to pay KOLs to say only nice things about *their* project. But the end result is that everyone is just paying to have nice things said about them – and nobody is telling the plain truth.
That means many would-be crypto adopters wind up led down dark alleys and robbed at metaphorical gunpoint by bad actors like Bitboy. “Professor Crypto” was just a particularly egregious example of a KOL who clearly didn’t care about crypto’s long-term success at all.
Not only the new users, but investors and projects feel trapped and forced to use KOL marketing when the poser detection alarms go off instantly when we see the garbage content KOLs put out. This has resulted in many builders and investors becoming jaded about our own sector, leading to feelings of isolation and desperation.
It’s a race to the bottom that everybody loses.
You can’t grow a new financial system if the most prominent publicly available information about it is a bunch of Pepsi commercials. That’s one reason we’re doing things differently as we prepare to launch Last Network, a sustainable incentives EVM chain.
Instead of paying social media talking heads to chatter about Last, we’re building a coalition of industry and community figures whose track record, ethics, and ideas align with ours. On the industry side, we’re blackmailing inviting friends we’ve made through many years of building to build trust and help us get the word out. As our community continues to grow in the lead-up to launch, we’ll also encourage regular old crypto lunatics who are obsessed with Last to help educate and welcome others into our ecosystem.
We’ll have more details about those programs soon – and we hope others will follow in our footsteps. More projects unplugging from the KOL cycle would be good for the entire crypto industry: At the very least, it would have saved Polkadot some money and Professor Crypto from whatever upcoming run-ins he has with various three-letter agencies.
Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.