KOLs: Definition, Characteristics, and Industry Influence

Some KOLs create educational content, share insights, and help their followers understand the complexities of crypto, while others can be harmful by promoting questionable projects.

In this article, we’ll explore who KOLs are, how they differ from influencers, how they collaborate with projects, and why their influence in crypto is so divisive. You’ll learn about the risks of partnering with KOLs, how their actions can impact retail investors, and some notable cases involving them.

Read on to discover how to recognize trustworthy KOLs and avoid those motivated solely by profit.

Who Are Key Opinion Leaders?  

KOLs (Key Opinion Leaders) are influential media personalities who shape public opinion through their social capital and authority. Unlike general influencers, KOLs focus on professional expertise and specialized knowledge, making their opinions particularly valued in niche markets. 

Messaging Flow from KOLs to the Audience. Source: activecampaign.com

In the crypto industry, KOLs play a role in building trust around projects, engaging with users, promoting narratives, and growing audiences. They act as a bridge between projects and their communities, helping to raise brand awareness.

Opinion leaders have existed long before the internet.

Historically, they were respected experts in fields like medicine, politics, science, and culture, with perspectives that shaped public sentiment. Before the digital age, they delivered public lectures, authored books, or published articles in academic journals.

With digital technology, their influence expanded online. Today, KOLs connect with audiences through social media platforms like X and Instagram, turning their expert opinions into effective marketing tools.

How KOLs Differ from Influencers  

KOLs and influencers share similar functions, but their approaches and goals differ significantly. Influencers typically promote products for payment, often basing their endorsements on sponsored contracts. Their primary focus is financial gain, where the size of their following and engagement rate take priority over the quality or depth of their knowledge.

In contrast, KOLs are valued for their expertise in specific fields. Their audiences appreciate them not for advertising, but for unique insights and real-world experience.   

Meme: KOL vs Influencer. Source: The Coinomist

In an ideal scenario, a KOL’s aim is to educate and share valuable perspectives with their audience, publishing honest reviews of projects that genuinely align with their views. However, in reality, the boundaries are often blurred: many KOLs, especially in the crypto industry, receive payments for promoting tokens and projects.

This sometimes leads to undisclosed sponsorships, creating trust issues and breaching advertising transparency laws. While KOLs strive to maintain credibility, the pursuit of financial incentives often pushes them closer to traditional influencer behavior.

KOL Marketing  

KOL marketing has evolved over time. While KOLs once worked on a straightforward “pay-for-service” basis, today they can participate in funding rounds under more favorable conditions.

Instead of direct payment, projects might offer KOLs a stake in their tokens, early access to asset sales, and discount rates. According to CoinDesk, this approach is widely used by founders of major projects, investors, and traders.

While such arrangements can create mutually beneficial conditions, they also introduce potential conflicts of interest with the audience.

The key question is whether the general public is aware of these behind-the-scenes agreements.  

When influencers fail to disclose such arrangements, they mislead their audience, many of whom rely on these endorsements to make financial decisions

says attorney Ariel Givner.

This raises important legal and ethical questions about whether KOLs should be transparent about their agreements with projects.

From a consumer standpoint, lack of transparency can lead to uninformed decisions based on incomplete or biased information. To prevent this, KOLs should educate retail investors about their work practices and the potential risks tied to their endorsements.

Ultimately, creating an environment where transparency and honesty are core values protects investors and maintains trust in the industry.

Legal Ramifications for KOLs: The BitBoy Case

BitBoy, a prominent blogger with over a million followers, became the focal point of a scandal involving the promotion of meme coins. He aggressively marketed various projects, many of which turned out to lack real value and were classic Pump & Dump schemes.

This opinion leader frequently failed to disclose his financial gains from these promotions. Such tactics misled investors and created a risk of financial losses for ordinary users.

BitBoy soon faced legal consequences for his actions. The Commodity Futures Trading Commission (CFTC) launched an investigation into alleged fraud involving BitBoy’s promotion of 15 tokens, including his personal meme coin, BEN.  

Humanity Protocol Taps KOLs to Challenge Worldcoin  

Humanity Protocol, a startup aiming to unseat its major competitor Worldcoin, is leveraging KOLs to boost its marketing efforts, as reported by CoinDesk in May 2024.

According to an investor presentation, Humanity Protocol secured $1.5 million in funding from angel investors and KOLs. As part of their agreement, these opinion leaders committed to promoting the project on social media for six months. Their responsibilities included engaging with at least three tweets weekly through likes and comments, publishing three tweets specifically about Humanity Protocol, and participating in at least one Twitter Spaces event hosted by the project.

KOLs were divided into categories based on their field of influence:

• Traders were asked to acquire Humanity Protocol tokens to showcase their commitment to the project.
• Video bloggers were tasked with creating two videos: one presenting Humanity Protocol as a key competitor to Worldcoin and another covering an upcoming airdrop.

This approach uses the SAFT (Simple Agreement for Future Tokens) model, allowing startups to offer tokens rather than company equity, thereby creating unique incentive structures unavailable to typical retail investors.

The practice of paying KOLs to endorse projects has sparked concern among users, as it reveals that influencer recommendations may be driven by financial motivations rather than genuine personal support. This transparency brings to light that the opinions shared by influencers may be influenced by promotional agreements rather than firsthand experience.

Polkadot Spends Half of Its 6-Month Budget on KOL Partnerships  

In July 2024, Polkadot released a report showing that it spent over $87 million in the first half of the year, with half of this directed toward partnerships with key opinion leaders (KOLs). This spending pattern hints at a shift in the crypto industry, where it seems that marketing strategies are taking precedence over building genuine project value.

Polkadot’s Expenditure on Outreach. Source: polkadot.network

The significant funding directed toward KOLs has sparked questions about the industry’s development priorities. The report also noted that Polkadot’s development budget was cut during this same period, suggesting a shift from real innovation to marketing tactics.

The community is left questioning: are companies more invested in their image and drawing attention than in creating meaningful products?

Why KOLs Inflate Their Social Media Metrics  

At the Token 2049 conference in Singapore, crypto influencer Professor Crypto won the “Best Content Creator” award, even though he was virtually unknown. Later, it was revealed that his social media activity—likes, followers, and views—was largely fake, generated by bots.

Related: Bots in Crypto: Their Roles, Impacts, and Detection Methods

This approach created the illusion of popularity and authority, boosting his value as a KOL for projects and regular users alike.

There are two main reasons for inflating social media activity:

1. To attract attention to paid promotional offers.
2. To create a facade of trust and expertise.

Fake engagement serves those looking to sell advertising services, as projects are often willing to pay more for promotions, believing the KOL has a sizable, engaged audience.

The lack of transparency surrounding these methods misleads users. Many may trust KOL recommendations, unaware that opinions could be bought, which presents risks for investors.

As a result, Professor Crypto faced backlash from genuinely influential figures in the industry.

One notable response came from prominent blockchain investigator ZachXBT, who reacted to Professor Crypto’s post celebrating his award. ZachXBT accused him of using thousands of bots and suggested these actions might violate U.S. Federal Trade Commission regulations. 

Ситуація з Professor Crypto підкреслює необхідність більшої прозорості та відповідальності серед KOL. Користувачі повинні бути обізнані про те, як формується авторитет лідерів думок, і усвідомлювати, що високий рівень залученості та кількості підписників не завжди є показником якості або надійності інформації, що надається.

Як відсіяти несумлінних KOL  

Інвесторам важливо вміти розрізняти надійних експертів від несумлінних агітаторів. Неправильний вибір KOL може призвести до фінансових втрат і розчарування, тоді як правильний — до поліпшення знань і усвідомленості на ринку.

Щоб відсіяти несумлінних KOL, необхідно звертати увагу на низку факторів:

• репутація — хороші KOL демонструють довгострокові відносини з проєктами. Якщо KOL часто змінює партнерів або рекламує сумнівні токени, вам варто насторожитися;
• прозорість взаємодій — надійні KOL розкривають інформацію про свої партнерства та фінансові угоди. Якщо KOL уникає цього, найімовірніше — його цікавить тільки грошова винагорода;
• контент — якісні KOL надають освітній контент, а не лише рекламні меседжі. Якщо KOL ділиться лише посиланнями на свої пости або відео без глибокого аналізу, можливо, він орієнтований на прибуток, а не на допомогу своїй аудиторії.

Також використовуйте інструменти для аналізу активності KOL, на кшталт Social Blade або HypeAuditor, щоб перевірити, чи не накручують KOL активність на своєму акаунті.