It is contended by venture capital firm a16z that ecosystem-locked tokens, analogous to airline miles, could represent the means for builders to establish secure, disposable digital economies unaffected by the distraction of volatile trading.
a16z Says ‘Arcade Tokens’ Could Boost User Growth and Power Crypto Economies
A blockchain-based analogue to airline miles ought to be utilized by a greater number of crypto projects to augment their user base and energize their economies, as suggested by executives from venture capital firm a16z.
In a dispatch disseminated on Thursday, it was declared by a16z that one of crypto’s most undervalued token types is designated as “arcade tokens.”
A comparatively consistent worth is sustained by these tokens within a specific software or product ecosystem, resembling airline miles rewards, credit card accruals, or in-game currencies. They facilitate users to execute specific functions within that ecosystem, instead of being retained for volatile trading.
“Though arcade tokens aren’t for every use case, they represent a critical building block in the evolution of crypto networks.”
“Just as stablecoins facilitate new forms of commerce, and network tokens permit decentralized apportionment of value and governance, digital economies can be energized at scale by arcade tokens,” was stated by a16z researcher Scott Duke Komimers, chief technology officer Eddy Lazzarin, and others.
How Arcade Tokens Are Being Used
One such initiative, as referenced by a16z, is represented by the hospitality-tech startup Blackbird and its native FLY token. The project debuted a Web3 payments platform for restaurants in mid-$2024, with FLY intended to recompense users and incentivize the uptake of the service.
“Blackbird’s FLY token permits users to exchange it in any participating restaurant, and that redemption activity is administered on a purpose-built blockchain layer fueled by a network token,” was contained in the dispatch, as it indicated other use cases:
“A decentralized computing network might, for example, use a network token for security and incentives among compute providers, while using an arcade token to establish network effects among the customer base.”
“Frequent flyer miles and rewards points, for example, can cultivate brand loyalty and can be employed to procure flight and upgrade purchases; digital gold may allow items in a video game to be bought or sold,” was elucidated by them, further stating:
“Instead of granting holders ownership rights in the underlying ecosystem, arcade tokens grant holders the ability to access or use certain applications or services; crucially, their market value is designed to be programmatically bounded.”
It was also maintained by the dispatch that significant benefits can be supplied by arcade tokens for “spend-centric economies or physical-world amalgamations.”
Several advantages are presented by the use of arcade tokens, including price consistency and functionality, which enable users to comprehend their expenditure, facilitate straightforward accounting, and streamline tokenomics for originators.
Stablecoins and Digital Assets Compared to Arcade Tokens
It is additionally emphasized by the dispatch that while stablecoins can be employed for analogous purposes, other prospects are afforded by the adaptable movement of arcade tokens.
For example, arcade tokens can fundamentally be generated on request by originators to sustain ecosystem expansion, such as stipends, user and developer aid, while also encouraging users to remain within the economy, rather than utilizing the funds elsewhere.
It is specified, however, by the dispatch that adoption is not requisite for every initiative, as utility is absent in speculative environments or when a network or platform already possesses a firmly established token and ecosystem.
“For example, layer one blockchain networks that have their own network tokens generally do not need arcade tokens to function,”
they argued.
