Blockchain-Based Reward Tokens Are Key to Scaling Digital Economies: a16z
a16z is urging crypto builders to take a more in-depth have a look at a little-discussed class of digital belongings: “arcade tokens.”
Key Takeaways:
- a16z says arcade tokens can drive person engagement by providing steady, spendable rewards inside digital ecosystems.
- These tokens mirror airline miles or in-game currencies, enabling loyalty and exercise with out speculative volatility.
- a16z notes that arcade tokens aren’t obligatory for speculative initiatives or layer-1 networks with established tokens.
In a report published Thursday, researchers on the enterprise capital agency argued that these tokens, designed to perform extra like airline miles or credit-card factors than speculative belongings, might change into a foundational instrument for scaling digital economies.
Arcade Tokens Offer Stable, Spendable Fuel for Digital Economies
Arcade tokens maintain comparatively steady worth inside a particular software program or product ecosystem and are meant to be spent, not hoarded.
They give customers entry to capabilities or rewards inside a community, serving to initiatives develop person exercise with out exposing them to the volatility related to most cryptoassets.
“Just as stablecoins unlock new types of commerce, and community tokens allow decentralized value-sharing and governance, arcade tokens can energy digital economies at scale,” wrote a16z researcher Scott Duke Kominers, CTO Eddy Lazzarin and others.
One instance cited within the report is Blackbird, a hospitality-tech startup that launched a Web3 funds platform for eating places in 2024.
Its FLY token acts as a reward asset: prospects earn it by way of spending and may redeem it at taking part eating places.
The redemption course of runs on a purpose-built blockchain layer, whereas a separate community token ensures safety and incentives amongst service suppliers.
a16z argued that this cut up mannequin, utilizing a community token for infrastructure and an arcade token for user-facing exercise, mirrors conventional reward programs that drive loyalty packages.
Airline miles and in-game currencies had been highlighted as analogues that encourage repeat engagement with out giving holders possession stakes.
Crucially, arcade tokens have “programmatically bounded” worth, stopping excessive value swings.
The report additionally pointed to broader alternatives. For “spend-centric economies” or purposes that join to real-world companies, arcade tokens supply value stability, predictable accounting, and easier token design.
Developers may problem new arcade tokens on demand to assist development, whether or not by way of person incentives, grants or developer subsidies, whereas maintaining worth circulating contained in the ecosystem as an alternative of leaking out.
However, the agency cautioned that not each challenge requires them. Highly speculative environments or layer-1 blockchains with established community tokens usually achieve little from including an arcade layer.
a16z and DeFi Fund Urge SEC to Create Safe Harbor for Blockchain Apps
As reported, the DeFi Education Fund and a16z are calling on the SEC to establish a regulatory “protected harbor” for blockchain-based purposes.
In an Aug. 13 weblog submit, a16z stated each teams submitted formal proposals urging the SEC to make clear that builders of decentralized apps shouldn’t mechanically be handled as brokers.
Their request follows years of SEC enforcement actions and Wells notices suggesting that software program interfaces enabling peer-to-peer transactions might fall below broker-dealer guidelines.
The teams argue that the SEC ought to grant a “rebuttable presumption” that impartial blockchain apps will not be engaged in brokerage exercise until confirmed in any other case.
According to the proposal, forcing builders to register as brokers would impose tasks they by no means agreed to, equivalent to taking custody of person belongings or performing as intermediaries, which might undermine blockchain’s core design and introduce new dangers to customers.
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