As Web2 apps succumb to concerns about ad-based business models, data misuse, and one-sided financial rewards, developers are increasingly looking toward a new paradigm that puts them back in-step with their communities: token economies. Token economies are systems which use crypto assets to align incentives between application developers and their community members. These systems readily embrace principles like decentralization, ownership, and rewards, and have a wide variety of use cases and benefits.
From kickstarting the growth of an app to helping developers align incentives to better measuring community engagement—token economies have much to offer. Far from a one-size-fits-all fix, token economies are customizable and can help reinforce brand identity and loyalty. The permissionless, open source, no-fee, multi-chain RLY Protocol makes it easy for developers to create token economies that suit their application and community.
A wide range of sectors stand to benefit from RLY Protocol-enabled token economies, including: social apps, SoFi, gaming, media and entertainment, brand loyalty programs, NFT communities, metaverse apps, and many more. We describe several benefits of token economies below.
1 .Entice and Engage Your Community
Developers can easily catalyze the growth of their apps by offering tokens to new members. Providing members with tokens gives them ‘skin in the game’ and social recognition as a member of the community. Likewise, providing members with tokens encourages them to take an active interest in the application’s growth and success, making them more likely to onboard friends and family.
Similarly, developers can offer new tokens to community members as a means of enticing them to engage. For example, Taki, a micro-blogging social network for Asia, rewards community members with Taki tokens for creating and engaging with content. Members can swap TAKI for UserCoin tokens, which represent the value and influence of the app’s content creators. Members can also reward creators by giving Gold Taki—akin to ‘likes’—which requires the giver to pay two TAKI. That TAKI is then split between the content creator and the community members that hold the content creator’s UserCoin, extending benefits to multiple stakeholders. This incentives system encourages the creation of quality, engaging content that does not rely on an ad-based business model.
2. Provide Unique Experiences
With token economies, developers can leverage custom, branded tokens to reinforce brands. For example, RLY Protocol-enabled messaging platform Hotline offers a Hotline coin as well as branded sub-tokens for individual creators on its platforms, which enable payments between creators and communities.
The utility of sub-tokens, which allow developers to create token economies with sub-economies, is not limited to creator economy applications, however. A variety of applications stand to benefit from them—for example, consider a gaming platform. The platform could have its own token—let’s call it GAME—while creating sub-tokens for the individual games offered on its platform, such as SOLITAIRE or CHECKERS, that are bonded to GAME and therefore benefit from its liquidity.
Likewise, another independent project, US-focused creator economy app Rally.io exemplifies the utility of branded tokens. Rally.io has launched hundreds of social tokens for creators and their communities, and community members can redeem the coins for products, services, and experiences. Developers can also use tokens to create exclusive experiences via token gating, meaning only token holders can access bespoke experiences, such as real-life events or a private Discord channel.
In all of these examples, sub-tokens provide the opportunity for discrete, unique micro-economies which will fuel growth for a specific group.
3. Unlock Insights & Analysis
Token economies provide developers with unique opportunities to garner insights about their communities. Making the most of the blockchain’s transparency, developers can analyze token flows and discern the extent of community members’ engagement by examining which members are exchanging and holding tokens. This helps developers identify key value paths and provides nuanced information that can lead to better engagement with community members.
4. Allow Your Community to Govern, For More Loyalty & Scale
Developers can nurture community loyalty by allowing community members to use their tokens to vote on key governance choices. Implementing community governance practices increases decentralization, which in turn creates trust between community members and developers. Likewise, community members are able to propose the features and changes they desire, making development and scaling more efficient and streamlined.
RLY Ecosystem DAO is one example of decentralized governance in action. The DAO is a decentralized autonomous organization operated by RLY token holders who govern and distribute funding to RLY Network participants. This provides token holders with a voice in determining who creates value for RLY Network and how the ecosystem should develop.
5. Align Incentives & Share Financial Rewards
Token economies enable community members to share in the upside of the app’s growth. As the app’s community expands, demand for the token(s) will simultaneously grow, creating economic benefits for members who hold the token(s). Likewise, developers can easily distribute tokens to reward community members that contribute value.
Tokens can also replace traditional loyalty points programs. For example, rather than implementing a loyalty program, furnishing retailer Z-Gallerie opted to launch a no-code creator coin with Rally.io to reward ecommerce customers with tokens. Customers who hold a certain quantity of its ZGLD token are eligible for perks or, alternatively, they can redeem tokens for special services or discounts. ZGLD holders can also take advantage of RLY Rewards when their token grows, thus creating compounding benefits. Unlike traditional loyalty points holders, ZGLD holders can benefit from instant liquidity by swapping the token for RLY.
6. Foster Seamless Value Transfer
As token economies mature, they develop the capacity to foster a full economy of peer-to-peer transactions in a community, creating an organic marketplace. This drives additional growth as outsiders seek to access the value of the community via partnerships and other connections, and adopt its token to facilitate these relationships. The use of the token ensures that community members share in the app’s financial success.
We can look to the wider crypto ecosystem for inspiration and external examples of mature token economies which facilitate seamless value transfer. For instance, Bored Ape Yacht Club (BAYC) started as an NFT collection. As the BAYC ecosystem grew and its NFTs became increasingly sought-after, its ecosystem evolved into an economy. BAYC offered holders unique experiences and benefits, such as access to its gated Discord server and free airdrops of its later Bored Ape Kennel Club collection. Likewise, BAYC leveraged its success to secure high-profile partnerships and collaborations with a variety of brands. Finally, BAYC launched APE coin, a token which both provides holders with the right to vote on governance issues and serves as the primary means of accessing new BAYC-related products and services. The token also offered holders a fungible means of sharing in the project’s success.
Start Building With RLY Protocol
Ready to harness the benefits of a token economy? RLY Protocol offers a seamless development experience, with extensive code libraries and Developer Resources which demonstrate how to easily launch tokens, leverage Token Bonding Curves for instant pricing and liquidity, and much more. Developers can also capture financial value from their contributions to the RLY Network by earning rewards in our ERC-20 token, RLY.