TaschaLabs’ founder Tascha recently reminded the community about the potential of utility tokens and said they could emerge during the bear market and power crypto adoption further.
“Real businesses are only waking up to the power of tokenization. Death of speculation in bear mkt gives breathing room for real innovations in tokenization to happen.
Companies w/ viable products that manage to integrate utility tokens into existing biz model *early* will be handsomely rewarded, while driving crypto adoption forward.”
She separated utility tokens with precise usage from those that gave their holders a share of company profit and said the real power lies with those that provide clear usage.
Where to incorporate utility tokens?
Loyalty programs with liquidity
The first way would be to enable the liquidation of loyalty points.
In traditional businesses, loyalty points are collected on a personal level and reserved for the person’s usage only. Users often can’t sell or transfer them to somewhere else. Tokenizing a loyalty program would enable users to trade their loyalty points in a secondary market.
The ability to cash out would motivate the users to earn loyalty points. It would make loyalty points more attractive, bringing user growth and more traffic from the existing users.
Only companies with considerable equity can reserve millions for sign-up bonuses in the traditional market. Tokenizing the sign-up bonuses would allow any company to use this powerful marketing method without messing up their limited budgets.
But if signup bonus is in token form, it doesn’t impact company’s current cash position. Instead, tokens given out today subtract from tomorrow’s revenue as users redeem tokens for company’s products & services in future.
— Tascha (@TaschaLabs) June 30, 2022
This method would also enable the company to adjust the redemption rates based on how well their tokens are doing. Moreover, if the tokenization of sign-up bonuses is applied together with loyalty points liquidation, the company can motion a higher incentive to sign up and use.
Broadening stakeholder base
The business automatically grows its stakeholder base by allowing the liquidation of loyalty and sign-up tokens. The tokens circulating in the secondary markets would increase user interactions, which manifests in investors.
What businesses should integrate utility tokens?
Tascha listed a few essential criteria for businesses to assess if they can benefit from incorporating utility tokens or not.
Most importantly, the business in question must have a successful product. Launching tokens for a new product without knowing if it will succeed will crush the system in the case of an inevitable bear market. Tascha notes:
“Reflexivity of token price & opportunistic “users” will give you wrong signal abt product viability. When tide goes out (it will), you find yourself swimming naked.”
Also, as the tokens are issued at the expense of the company’s future revenue, a business with declining marginal cost would be an excellent candidate to launch a utility token system, especially if they are within a market with a. winner-takes-all potential.