After Xiao Feng, chairman of Wanxiang Blockchain, proposed the “Three-Token Model” and reiterated that the value and development direction of tokens should not be limited to the market and price, a16z also published an article “Tokenology: Moving beyond ‘tokenomics’”. This article proposes a new term “Tokenology”, arguing that the use cases of tokens should not be limited to the cryptocurrency itself but can involve art, economy, and other fields, and the value standard of Token should be changed from price to application scenario.

In this article, the author will analyze why Web3 Loyalty is essential for NFT from the view of a16z’s “Tokenology”.

“Tokens” have always been a hot topic in the world of blockchain and cryptocurrencies. Beyond Web3, tokens continue to attract the attention of experts from various domains, such as artists, economists, game developers, and so on. In the past 15 years of development, tokens not only represent monetary value, which is still regarded as a key factor of tokens’ value by the mainstream but also other values like social and reputation.

For example, holders of 1 bitcoin and above, blue-chip NFT players, and giant whales, these words usually represent the user’s assets, and they are even more status symbols.

However, among the many types of tokens, there is one type that is more in line with the application needs of the Internet and even the entire society because of its specific image, low threshold for application, and more social attributes. Such tokens are NFTs.

Application Scenarios of NFTs

NFTs can represent ownership, membership, identity, etc., and more importantly, they can enable builders to capture and convey multiple dimensions of value, opening up more design space. This idea will not be limited to the economic environment but can be used to coordinate and organize groups both inside and outside the non-crypto economy to achieve a common goal.

The application of NFT can be roughly divided into the following scenarios:

NFT represents the ownership

As a crypto protocol based on a decentralized ledger, tokens including NFT are defined as “a crypto protocol that can run free and forever without maintenance, interruption or intermediary”, which means that NFT can give holders corresponding digital ownership — because it is decentralized and cannot be tampered with. This is the most basic view of tokens in the crypto world.

In addition, tokens including NFT also represent the values captured and burned by the owner, which are not limited to the token itself.

NFT connects brands and users

NFT can be used as a key tool for promoting the relationship and interaction between brands and users. It can be used as creator tokens or social tokens. On the one hand, it can perform as IP peripherals that can prove fan attributes, such as early users or loyalty users. On the other hand, it also allows holders to directly interact with corresponding brands or artists, which not only increases fan stickiness but also improves the activity of the entire community, making brands or artists more valuable in terms of traffic.

The most well-known case in this regard is BAYC. Since its launch, BAYC has built NFT into an important element of its membership system. BAYC holders are not only looking at the token’s price, they will also be proud of being BAYC holders. They will post their NFTs on social media and keep participating in the discussion about BAYC.

NFT performs as an incentive

NFT is a token with value, allowing projects or communities to incorporate it into the design of the incentive structure to reward users who meet certain rules, thereby encouraging more users to participate in interactions. This design is more commonly seen in Web3 marketing campaigns and loyalty programs, helping projects attract and organize users.

At the same time, a feature of NFT that distinguishes it from other tokens is that projects can issue multiple NFT collections or even dynamic NFTs, and provide classified incentives based on user’s attributes. For example, projects can create dynamic (upgradable) membership NFTs on the Loyalty platform, and set upgrade rules (frequency of interaction, holding assets, etc.), thereby realizing dynamic changes in membership rights and interests, adding fun and attractiveness.

NFT is an asset to help users exchange for equities

NFT holders can also use specific NFTs to acquire goods and services. This function not only allows users to unlock more rights and interests in holding NFT but also encourages them to continue to obtain NFT through different paths. It also facilitates the project to distinguish users with different levels of loyalty or activity, so as to ensure the perfection and fairness of the entire community system.

For example, in the Loyalty system with NFT as the core, users can exchange higher membership rights and even physical rewards through NFT. Another example is decentralized governance. NFT holders can use NFT to vote and participate in the decision-making of the project development.

Although this is a preliminary list of NFT applications, it roughly covers the general needs of the Web3 industry. At the same time, with the gradual growth of the Web3 community, most brands and projects are aware of the importance of user operations. Therefore, combining the above application scenarios, Web3 Loyalty, which can help projects run in multiple dimensions and organize users, was born.

Web3 Loyalty and NFT

The Web3 Loyalty project has created a more complete loyalty system by turning loyalty into NFT, integrating the above four application scenarios to help Web3 projects and communities increase user life cycle value and reduce customer acquisition costs.

Loyalty NFT as Proof

The loyalty NFT can represent the proof that members obtain after completing specific requirements in specific scenarios. At the same time, the project can visualize user data through loyalty NFT, analyze user behavior and asset data on the chain, quickly complete user personas, tap values of users, and save operating and maintenance costs.

Loyalty NFT as Connector

NFT strengthens the connection between brands and users. Building a project membership community around NFT allows users to participate in activities based on NFT, which facilitates the project to identify loyal users more quickly. NFT can also be used as an identity, allowing users to interact and display in social media, forming an effect of “NFT brand equals user identity” and thus promoting continuous exposure and acquiring more users.

Based on loyalty NFTs, it is easier to connect projects and users, whether it is cross-brand, cross-track, or even cross-border and cross-culture, rules can be formulated and enforced with the help of NFT on the chain. All in all, NFT can be used as a common underlying component, making it possible for brands and industries to collaborate.

Loyalty NFT as Assets

By distributing tradable NFTs as loyalty proof, projects can not only directly earn the first income from the initial issuance but also potential subsequent income from royalties. At the same time, NFTs can bind their value to user interests. As holders and traders, users will increase the value of NFT and benefit from it in transactions and continuous contributions.

Summary

In the logic of Web3 Loyalty, NFT is not just an index, but as an underlying programming component. It can create infinite possibilities:

• Web3 brand completes in-depth user operation

• Web2 traditional enterprises have opportunities to transition to Web3

• It can be the key product to attract more new-generation consumption power

In this article, the author has listed some common Loyalty items in this track below. You can build your own NFT×Loyalty solution by creating better user operations.

*The ranking is sorted alphabetically