After Wanxiang Blockchain Chairman Xiao Feng proposed the “Three-Generation Coin Model” and reiterated that the value and development direction of tokens should not be limited to the market and price, a16z also released an article “Tokenology: Moving beyond ‘tokenomics’”. The article introduces the new term “Tokenology” and believes that the use cases of tokens should not be limited to the cryptocurrency industry itself, but can cross-border into many other fields outside of the circle, such as art and economics, and shift the value standard of tokens from scalars (prices) to vectors (application scenarios).
In this article, the author will analyze why the Web3 Loyalty track uses NFT as a key element based on a16z’s “Tokenology”.
In the field of blockchain and cryptocurrency, “tokens” have always been a hot topic. It has not only penetrated into every corner of Web3, but also attracted more experts in other fields, such as artists, economists, game developers, and so on. In the development of the past 15 years, tokens no longer only represent monetary value (of course, mainstream still regards it as a key factor in value expression), but also represent certain social and reputation values.
For example, holders of one or more bitcoins, blue-chip NFT players, whales, these words usually represent users’ assets and are also symbols of identity.
However, among many types of tokens, there is a type that is more suitable for the application needs of the vast Internet and even the whole society because of its concrete image, low application threshold, and more social attributes. This type of token is NFT.
NFT Application Scenarios
NFTs can represent ownership, membership, identity, etc. More importantly, they can capture and convey high-dimensional values for constructors, opening up a richer new design space. This concept will not be limited to the economic environment, but can be used to coordinate and organize groups inside and outside the non-cryptocurrency economy to achieve common goals.
In the context of social development, NFT applications can be roughly divided into the following scenarios:
Proof of ownership
As a cryptographic protocol built on a decentralized ledger, tokens, including NFTs, are defined as “cryptographic protocols that can run permanently for free without maintenance, interruption, or intermediaries”, which means that NFTs can give holders corresponding digital ownership-because they are decentralized and cannot be tampered with. This is the most basic view of tokens in the encrypted world.
However, in addition, they also represent the owner’s acquisition and destruction value, which is not limited to the tokens themselves.
NFTs can be used as a key tool to coordinate the relationship and interaction between brands and users – they can serve as creator tokens or social tokens, on the one hand as IP peripherals that can prove fan attributes, such as early user holdings or loyal user holdings. On the other hand, they can allow holders to interact directly with the corresponding brand or artist, not only increasing fan stickiness, but also enhancing the activity of the entire community, making the brand or artist more traffic-valuable.
In this regard, the most well-known case should be BAYC. Since its birth, BAYC has already made NFTs an important element of its membership system. The vision of BAYC holders is not only limited to the BAYC price. They are also proud to be BAYC holders and will show off their NFTs on social media and participate in discussions about BAYC.
NFTs are tokens, so their value allows projects or communities to incorporate them into incentive structure design to reward users who comply with the rules, thereby encouraging more users to participate in ecological interaction. This design is more common in Web3 marketing campaigns and loyalty programs, helping projects coordinate user activities.
At the same time, the significant characteristic of NFTs that distinguishes them from other tokens is that projects can issue multiple NFT series or even dynamic NFTs, and classify incentives based on user attributes. For example, projects can create dynamic (upgradable) member NFTs on the Loyalty platform and set upgrade rules (number of interactions, assets held, etc.) to achieve dynamic changes in member benefits, increasing fun and competitiveness.
NFT holders can also use specific NFTs to obtain goods and services. This function not only allows users to unlock more rights and interests of holding NFTs, but also motivates them to continue to obtain NFTs through different channels; it also facilitates projects to distinguish users with different loyalty levels / activity levels to ensure the completeness and fairness of the entire community system.
For example, in the NFT-based Loyalty system, users can exchange NFTs for higher member benefits, even physical rewards. Another example is in decentralized governance, where NFT holders can use NFTs to vote and participate in decisions about the development of the ecosystem.
Although this is a preliminary list of NFT applications, it roughly covers the needs of the Web3 industry. Meanwhile, as the Web3 community gradually grows, most brands and projects are aware of the importance of user operations. Therefore, based on the above application scenarios, Web3 Loyalty was born, which can provide multidimensional services for project operation and coordinate users to increase user lifecycle value and reduce customer acquisition costs.
Web3 Loyalty and NFT
The Web3 Loyalty project has created a more perfect loyalty system by NFT-izing loyalty, integrating the above four application scenarios to help Web3 brands and communities increase user lifecycle value and reduce customer acquisition costs.
As a loyalty certificate, loyalty NFTs will represent the proof that members can obtain after completing specific requirements in specific scenarios. At the same time, the project can visualize user data through loyalty NFTs, gain insight into user on-chain behavior and asset data, quickly build user profiles, mine value, and save operation and maintenance costs.
NFTs act as the glue between brands and users, strengthening their connection. Building a project membership community around NFTs can allow users to participate in more brand activities based on NFTs, making it easier for projects to identify loyal users. NFTs can also serve as identities, enabling users to interact and display socially, forming an “NFT brand = username badge” effect, ultimately leading to sustained exposure and fission effects for NFT brands.
Based on loyalty NFTs, it is easier to connect project parties and users – whether it is cross-brand, cross-track, or even cross-border and cross-cultural, rules can be established and executed based on on-chain NFTs. In summary, NFTs can serve as a universal underlying component, providing possibilities for brand and industry collaboration.
Distributing tradable NFTs as loyalty certificates, project parties can not only earn the first revenue directly from the initial issuance, as well as potential royalty revenue in the future; at the same time, NFTs can bind their value with user interests. As holders and traders, users will increase the value of NFTs and benefit from them through transactions and continuous contributions.
In the logic of Web3 Loyalty, we find that NFTs are no longer just a scalar, but as a basic programming component, they can create infinite application possibilities through different combinations of changes:
- Deep user operation for the completion of the Web3 brand
- The opportunity for traditional Web2 enterprises to transition to Web3
- The key products to attract more consumption power from the new generation
If necessary, the author has compiled the more common Loyalty projects in this track. You may want to learn and establish your own NFT×Loyalty program according to the following table to create better user operations.