Compared to token rewards, on-chain integration offers teams greater flexibility and room for adjustments
With the gradual maturity of the industry, venture capitalist Archetype believes that in addition to token airdrop rewards, using onchain points may also be a promising marketing tool. Unlike tokens, onchain points can provide more flexibility to project teams and are easier for users to understand.
Onchain points have already been experimented with in the crypto industry, such as Blur’s point leaderboard and Rainbow’s issuance of points as rewards for transactions in their wallet. These point projects are mostly offline, similar to traditional Web2 point programs.
However, conducting experiments with onchain points could be an interesting endeavor. It allows for ownership distribution, resistance against Sybil attacks, or improvement of DeFi market functions in a trustless manner within a blockchain environment.
Gamification mechanisms can enhance product user engagement and improve various product indicators such as customer acquisition rate, activity rate, retention rate, conversion rate, and referral rate. For example, language learning app Duolingo utilizes gamification features like leaderboards and points to keep users engaged in learning languages.
While using tokens as rewards can be beneficial for product development and has been widely adopted in the crypto industry, it has drawbacks. Tokens can minimize the flexibility of issuers while maximizing users’ speculative behavior. Additionally, high transaction costs on the blockchain often lead to rewards flowing to users willing to pay high fees, which may not necessarily be the most valuable new users.
On the other hand, onchain points offer more flexibility, adjustability, and control for issuers. They can be adjusted without immediately impacting market dynamics, product mechanisms, or user behavior. Furthermore, onchain points can be unlimited in supply, and their usage and redemption methods can be modified according to project strategies. The tradability of points can also be determined by issuers.
Compared to tokens, onchain points are easier for users to understand and operate. Users may struggle to comprehend the meaning of tokens due to their price volatility and may question whether they should treat them as investments or expendable resources for accessing products.
While onchain points may have lower composability compared to tokens, they still possess some level of composability. They can be viewed as globally accessible and quantifiable proofs that can be issued to others on the blockchain. Onchain points can be integrated into various protocols, serving as a powerful marketing tool for identifying cross-product users and attracting potential customers through discounts and airdrops.
Onchain points also offer transparency and auditability for source and distribution, which is crucial for communities seeking fairness. Additionally, they can serve as a low-cost means to reduce the risk of controversial airdrop distributions until better disclosure methods are implemented. The blockchain allows for clear guarantees on the current distribution and redemption options for users, adding potential value to onchain points that traditional offchain points lack.
Furthermore, onchain points can potentially enhance a project’s ability to resist Sybil attacks by quantifying identity proofs. The gamification of narratives is not a new concept, and numerous cases and studies have proven its ability to cultivate positive user habits, motivation, and brand loyalty.
In conclusion, onchain points present unique applications that differentiate them from traditional points or tokens, making them a worthwhile direction for project teams to explore.
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References:
– Reddit, the US version of PTT forum, is rumored to launch a blockchain-based point system.
– FTX Update: Abandoning plans for platform relaunch, court approves repayment of customer assets at “bankruptcy price”.
