In the blockchain industry, many practitioners believe that blockchain projects without Tokens lack a soul. The "Token" here usually refers to the Token issued on the public chain, which users can withdraw to a decentralized wallet and trade on the chain or centralized exchanges. However, in fact, for the vast majority of blockchain projects, whether it is Token economics design, exchange operation, or the integration of technology and public chain, they have not yet reached a sufficiently professional and mature level.
More importantly, the issuance and application of Tokens face a complex regulatory environment globally. Direct issuance of Tokens by start-up teams not only brings huge compliance pressure, but may also lead to loss of control in operations. Therefore, a more prudent choice is to first use a points system to incentivize users, and then gradually convert the points into Tokens and migrate them to the blockchain to complete the asset-ization after the ecosystem is stabilized.
The Value of Points: From Incentives to Transition
The advantage of the points system is that it provides a low-cost tool for projects to verify the market, while avoiding the legal risks in the initial stage of Token issuance. Through points, the team can provide rewards to users within the application, enhancing user stickiness and activity. When the points mechanism gradually matures, it can be tokenized, endowed with more value, and realized on-chain circulation.
This model not only enhances the operational flexibility of the team, but also establishes user trust and an ecological foundation through the points system, laying the foundation for the future Token economy. For example, a blockchain platform that focuses on community autonomy, through points incentives, encourages users to vote and participate in governance tasks, and introduces on-chain Tokens after the points system is stabilized, allowing users to more intuitively feel the value and role of the Tokens.
Take the recent Token issuance of HashKey Group as an example. HashKey Group was founded in 2018 and is a leader in the digital asset financial services sector in Asia. HashKey Group is known for its comprehensive Web3 ecosystem layout, covering core areas such as trading, investment, Token services, and infrastructure. Its main businesses include HashKey Exchange and HashKey Global, where HashKey Exchange, as Hong Kong's first licensed virtual asset trading platform, provides users with compliant and secure trading services; while HashKey Global serves global users, providing diversified digital asset trading services and holding a Class F license from the Bermuda Monetary Authority.
HSK is the core Token of the HashKey ecosystem, designed to support its vast business network and enhance user participation. The total supply is fixed at 1 billion, and HSK was launched through a private distribution, avoiding the legal and compliance risks that may arise from a public sale. This distribution method directly links the value of the Token to the activity of the ecosystem, making it more sustainable. In practical application scenarios, HSK is endowed with multiple functions. On the exchange, HSK can be used to pay platform fees, and holders can enjoy discounts on trading fees, significantly reducing trading costs. In addition, as the core tool for community incentives, HSK promotes user participation in ecosystem building and increases community activity through various reward programs. Holders of HSK can also have priority access to new products and services launched by HashKey, further enhancing the user experience. This diversified application design makes HSK not only a functional Token, but also a key driver for promoting the synergistic development of the ecosystem.
The Token issuance model and application scenarios of HASHKEY provide valuable reference experience for start-up teams. In the Token issuance and promotion process of HASHKEY, they have adopted the following strategies:
1. Ecosystem Incentives and Distribution
HASHKEY's Tokens were not sold publicly, but were distributed through internal ecosystem incentives. This model avoids the risk of violating securities regulations, while effectively expanding the base of Token holders through the reward mechanism.
2. Task-driven Airdrops
Users receive Token rewards by completing specific tasks. This approach not only enhances user participation in the ecosystem, but also promotes community activity and brand promotion. For example, HASHKEY has rewarded Tokens through ecosystem activities to incentivize users to share and promote ecosystem content.
3. Combination of Business and Technology
HASHKEY's Tokens have integrated multiple functions in practical applications, such as participating in governance, paying fees, and exchanging ecosystem services. This Token economic design is in line with business logic, while also promoting the in-depth application of blockchain technology in the financial field.
This gradual model from points to Tokens not only allows HASHKEY to avoid unnecessary compliance risks, but also enhances user trust and stickiness in the project.
A Win-Win Path of Compliance and Business Verification
The path from points to Tokens is not only the key to project legalization, but also a necessary step for business verification. As a Web3 entrepreneur, if Token issuance is also on your future roadmap, perhaps starting with points may be a more suitable development path. We can analyze it from the following four aspects:
1. Market Verification of User Incentives
Whether it is the traditional centralized points or the decentralized project Tokens for the future, the core issue to be solved is the user acceptance. The core value of the early points system lies in the fact that it provides a low-cost tool for project parties to test the market. Through the points reward mechanism, the team can observe the user acceptance and stickiness of the project. For example, a decentralized knowledge sharing application can design points reward rules: users receive points for uploading high-quality content, and can receive additional points if the content is liked or collected. This form not only attracts early users to participate, but also accumulates project data, providing real evidence for the subsequent Token economic model design. The data on points consumption also reflects the user's preference for different payment services. This market verification not only improves the operational efficiency of the project in the early stage, but also points the way for the subsequent Token design.
2. Timing of Tokenization
Realistically speaking, Tokenization is a natural extension of the points system, but the timing of Tokenization needs to be combined with the user base, ecosystem building, and technical readiness. Initially, using the points form to incentivize user participation in minting and trading, and then gradually transitioning to Tokenization after the points system matures, this strategy effectively avoids the problem of Token oversupply or user loss due to "unfinished technology and unhealthy ecosystem". For example, an NFT project, on the first day of its Token launch, achieved a daily trading volume of over $1 million, after its points system had been running for a year. This grasp of the Tokenization timing provides important reference for start-up projects.
3. Balance of Compliance and Financing
Many teams mistakenly believe that Tokens are the only tool to attract investment. But in fact, financing models can be more flexible. For most blockchain start-up teams, it is entirely possible to adopt equity financing in the early stage to obtain funds, and if the project has future Token issuance needs, the two parties can clearly stipulate in the shareholder agreement that Tokens will be allocated to investors when the project reaches a certain stage. This approach not only meets the team's funding needs, but also avoids the compliance risks of direct Token sales. In addition, many start-up projects have set up overseas companies (such as Hong Kong or Singapore) to introduce qualified investors or investment funds, while combining the points reward mechanism to increase user stickiness. This not only ensures financing compliance, but also can improve the project valuation through the verification of user data and business scenarios. This approach meets the funding needs while avoiding the compliance risks of early Token sales.
4. Verification of the Linkage between Technology and Application
The verification of the linkage between technology and business scenarios is the key to the successful Tokenization of a project. For example, a blockchain project focused on green energy trading, in the early stage, used points to incentivize household users to upload electricity consumption data and energy-saving measures, accumulating a huge energy data pool. In the technology verification stage, the platform exchanged environmental protection Tokens with points, combining the off-chain energy data with on-chain smart contracts, completing the transition from points to Tokens. The advantage of this model is that points are not only a user incentive tool, but can also provide real-scenario data in the testing of technical applications, helping the team identify problems and adjust strategies. After multiple rounds of adjustments to the model, they formally established a public risk pool through Tokens. This strategy significantly reduces the risk of failure after launch.
Through the above strategies, the team can not only steadily promote the compliance of the project, but also effectively verify its business value and user demand, laying a solid foundation for the future Token economy.
Summary by Mankiw Lawyer
From points to Token, it is not only an evolution of business models, but also a startup path that combines market validation and compliant innovation. Against the backdrop of an increasingly complex global regulatory environment, startup teams should abandon the "one-step" token issuance fantasy and adopt a gradual strategy, starting with points, accumulating data and optimizing mechanisms through market validation, and then converting successful experiences into asset-based applications on the blockchain.
This "progressive tokenization" model not only reduces the legal risks in the early stages of the project, but also makes the process of verifying business value more natural and efficient. Blockchain entrepreneurs can only find their breakthroughs in the complex and changing market environment by constantly experimenting and optimizing within the framework of compliance. Internet startups emphasize small steps and quick runs, but in the exploration of the blockchain field, steady and steady may be the true meaning of "fast".
