Blockchain: Token-based rewarding models

Kiril Ivanov

Founder of 2BUIDL

 


Participation in communities is always not an easy task to solve. People join different communities but still not active in them, due to a variety of reasons.

Member’s engagement becomes a particularly valuable aspect for business: attracting new customers costs 16(!) times more than keeping an existing one. Such an acquisition applies extra costs on marketing, advertisements, etc.

The longevity of relations is another aspect — people tend to repeat actions within a community if they already did so. For a business, this is what a “returning customer” means. Statistics tell us that a customer typically returns in 30% is cases after they make the first purchase. After the second one, the chance of returning goes up to 40%. After a third one, it raises to 50% accordingly.

So, how to incentivize new customers, existing ones, and advance active participation during the relationship? Let’s see if Blockchain tokenized incentives can serve us here.

Liquid (stable) tokens

This model supplies a quick gain of loyalty. This type of a token (ERC-20 in Ethereum blockchain) is transferrable, so can be moved to friends and family, which raises the value of it in the eyes of the customer. Rewarding can happen as an outcome of (a targeted) airdropping, or sent directly to a customer based on personal activity, like promoting news in social media, following a communication channel, etc. (those sorts of rewarded bounties I’ll cover in the next article). Also, this model acts pretty usefully as a ‘cashback’ reward. Having fluid nature implies that it has a particular (explicit, or not) value underneath, letting people trade it, sell it, or even build secondary markets with it.

This model acts pretty usefully as a ‘cashback’ reward. Source: shutterstock.com

Example: I’ve got 5 tokens as a cashback on my kebab buying, I can sell it back to the kebab shop for 5 cents, or sell it to a (former) friend of mine for 10 cents (he can get a kebab for 10 tokens), or pay for one day in a sport club (would cost me 1 EUR usually)

To summarize: quick gain, effective instantly, plays well attracting new customers.

Discount (stake) token

This type of token represents a ‘membership’ right. Such tokens are not transferrable and usually stick to the (digital) identity of a personality (NFT, ERC-721 in Ethereum blockchain, with disabled ‘transfer’ functionality). Customers can get it as a reward for longlasting relationships, and grow much quicker for being a ‘good’ customer (whatever it means for this particular business). In some cases, people can take a shortcut and gain it paying for a commercial membership, in fiat.

Such tokens are not transferrable and usually stick to the (digital) identity of a personality. Source: shutterstock.com

This model can have a leveling concept, like ‘Bronze’>’Silver’ >’Gold’>’IDDQD,’ effectively giving customers ‘eminent’ status. Leveling, in its turn, keeps a customer from breaking up the relationship; otherwise, this valuable achievement will burn down.

Summary: suspended effect, extremely useful in lengthening customer relations

Bonding curve token

The use of this model is a follow up on the ‘Dynamic Token Bonding Curve’ concept. The primary idea is to build the conditions where early and consistent contributors get higher appreciation than the later ones.

At every moment the contributors can sell their portion back to the bonding curve. Source: shutterstock.com

Active early adopters are inherently valuable when a business starts an initiative (new product, new service, new shop) and wants to level it up in no-time. According to the model, contributors will build up a portion in the stake (early ones faster), funded by a community leader (business) either initially or naturally over the time, as a result of profit sharing. At every moment the contributors can sell their portion back to the bonding curve taking their piece of the fund.

Summary: useful for existing members, raising continuous participation dramatically.

Profit sharing token

This model is similar to the previous one, but with the more predictive outcome for the members. The approach is a variation of STO (Security Token Offering) but with no real security behind. The rewards are the promise of profit sharing to the community members.

Typically used for business with no, or limited, tokenomics present so that people will get either fiat, or old fashioned gift cards, or discounts.

So-called Blockchain revolution is slowly and surely coming here in 3–5 years. Source: shutterstock.com

Blockchain tokens? Why not my favorite database?

Although, Blockchain adoption is not there yet, and so-called Blockchain revolution is slowly and surely coming here in 3–5 years (based on the forecast from Kiril Ivanov), we at 2BUILD like to be innovative and slightly ahead of time.

There are several Blockchain tokenization benefits, to name a few:

  • Expected global asset’s tokenization, enabling previously non-liquid assets to be split into little and more liquid parts.
  • Liquidity of those assets opens the possibility for new open marketplaces, with access for every citizen.
  • Enormous possibilities for new investment models, with low entry bar and programmable transparent governance models.
  • The Blockchain also provides a standard protocol for interaction between the parties involved. No more need for specific integrations or custom APIs.

2BUIDL smartphone app. Source: medium.com

We at 2BUIDL make the business-tailored tools to enable customer relations 2.0, improving customer participation and, effectively, sales.

SEE ALSO: Ethereum meta transactions

facebook