Glossary

Community Takeover (CTO)

Easy

Community Takeover (CTO) in crypto is a situation where the original devs abandon the project and the community of users takes over.

What Is Community Takeover (CTO) in Crypto?

Community Takeover (CTO) in crypto refers to a situation where the original creators or developers of a crypto project abandon or exit the project, but the community of users and token holders steps in to take control of its development and future direction.

This phenomenon, often seen in the world of memecoins and smaller crypto projects, demonstrates the power of decentralized communities in the crypto space.

Key Characteristics of a CTO in Crypto

The process of a community takeover in crypto typically begins when the project's original creator or development team abandons the project. This can happen for various reasons, including exit scams or "rug pulls" where developers run away with investor funds, loss of interest or motivation in continuing the project, or disagreements within the development team. In response, the remaining community of token holders and users decides to continue developing and growing the project themselves.

During a CTO in crypto, the community often organizes through social media platforms and community forums, establishing new leadership structures or decision-making processes. They may also take over project social media accounts and marketing efforts to maintain the project's presence and attract new users.

How CTO in Crypto Works

When a community takeover occurs, it usually follows a series of steps. First, the community recognizes that the original developers have left the project. This realization often sparks active members to rally support and organize efforts to continue the project.

The community then works to regain control of essential project resources like social media accounts and websites.

Once the initial mobilization is complete, the community establishes new decision-making processes to guide the project's future. This may involve creating a DAO or implementing a voting system for major decisions. 

Finally, the community collaborates to maintain and improve the project's technology and ecosystem, often relying on volunteers with relevant skills and expertise.

Real-World Examples

More recently, in July 2024, the Solana-based memecoin Billy (BILLY) experienced a community takeover. After the original developer sold all their tokens shortly after launch, community members stepped in to run the project's social media accounts and drive its growth. 

Despite the developer's abandonment, BILLY achieved a market cap of over $100 million, becoming the second-largest token launched through the Pump.fun platform.

Challenges and Considerations

While community takeovers can breathe new life into abandoned projects, they also face significant challenges. Without a central leader, communities may struggle to organize effectively and make timely decisions. 

Additionally, the community may lack the necessary technical expertise to maintain and develop the project's technology, which can hinder progress and innovation.

Funding is another major hurdle for CTO crypto projects. Continuing development and marketing efforts can be difficult without the original team's resources, often relying on community donations or volunteer efforts. 

Lastly, convincing exchanges and investors to support a community-run project can be challenging, as questions about legitimacy and long-term viability may arise.