Points Programs in Crypto Consumer Apps - Second Part

In this second installment, we will delve into the distinctive features and advantages of points programs in crypto consumer apps (Crypto Consumer Apps). These programs offer an infinite supply of points, encourage specific behaviors, and allow for a flexibility in rules that is not possible with traditional tokens. Additionally, we will analyze why opting for a points program can be beneficial for reaching a large number of users, enhancing the user experience, and rewarding activities both on and off the blockchain. Finally, we will discuss various launch strategies that projects can consider for their growth and success.

FEATURES OF POINTS

First, let's explore the distinctive features of loyalty points typically used in these cases:

1. Infinite Supply: Points represent gamified reward units with an unlimited supply. Unlike tokens, points do not follow a tokenomics model, meaning they are not subject to economic principles like programmed scarcity or controlled inflation.
2. Behavioral Incentives: Points are used to encourage and reward specific behaviors related to the use of a service or platform. Their primary goal is to stimulate user growth and engagement. Unlike tokenized DeFi protocols, which seek TVL (Total Value Locked) and buy liquidity, points are not intended for those purposes.
3. Rule Flexibility: In points models, it is accepted that rules can be modified at any time without the need for long-term commitments. Unlike tokenized projects that often have a Whitepaper as an immutable contract, points projects can adjust their criteria according to the changing needs of the project. This allows for greater agility and adaptability without generating the same legal or reputational issues that can arise from modifying the terms of an established contract.
4. Transition to Proprietary Tokens: In some cases, points can serve as a precursor to the issuance of proprietary tokens. For example, the EigenLayer protocol assigns points to users as part of its participation strategy, with the intention of later granting them tokens as consideration. However, it is important to note that the issuance of proprietary tokens may be more suitable for financial protocols than for applications aimed at the early majority of users, such as Crypto Consumer Apps. In these latter cases, the focus is on utility and fun, and the issuance of proprietary tokens may not be the best strategy for attracting and retaining users.

WHY OPT FOR A POINTS PROGRAM?

1. Massive Reach: Points programs aim to reach millions of users. In the case of non-financial applications, most users are looking for fun or utility on the platform.
2. Focus on User Experience: It's crucial to consider that many users lack financial knowledge, so incentives must be designed to be attractive and fun. These points are used to motivate simple actions, such as posting a weekly message or changing the profile picture, which should be approached from a playful perspective.
3. Rewards for Offchain Activities: Points programs allow for easier rewards for activities performed off the blockchain (offchain), such as sharing content on social media. This approach is especially useful for platforms like the decentralized social network Farcaster, which explores the possibility of rewarding actions like following profiles on traditional social networks.
4. Growth-Oriented: The founders of these applications are more focused on social growth and consumer adoption than on increasing Total Value Locked (TVL). Their main goal is the growth of the platform and the expansion of their user base, while governance tokens are intended for a different type of user.

EXPLORING LAUNCH STRATEGIES IN CRYPTO CONSUMER APPS

Launch strategies play a crucial role in the success and adoption of a project. Here are various strategies that Crypto Consumer Apps projects can consider for their launch and growth:

1. Focus on Communities: Projects emphasize the development of strong communities. Currently, Crypto Consumer Apps seek support from growing communities, following a model similar to "play to earn" games, which rely on Guilds and Scholarship models to expand.
2. Points Only, No Airdrop or Governance Token: Some applications see no need to launch a token and simply opt not to. Instead, they focus solely on the points system as a tool for user loyalty and engagement.
3. Governance Airdrop: Some applications consider the possibility of conducting an airdrop of a governance token. In certain cases, especially where the protocol is financial, points are used as a measure of each user's weight for receiving tokens. In other cases, the intention is clearly to distinguish between regular users and investors.
4. Points First, Then Airdrop: Many Crypto Consumer Apps projects opt to establish a rewards system with the promise of a future airdrop instead of launching a token immediately. This strategy generally starts with the implementation of a points system. These points can be used to reward users and set clear rules about their participation in a future airdrop, which might include governance elements. Depending on the type of asset, they serve to distinguish between users and investors.

As we wrap up this second part of the article on points programs in crypto consumer apps, get ready for the third and final installment. In it, we'll dive into how point interoperability, low transaction costs, and creating additional economic value can positively impact blockchain applications. We’ll also discuss pricing models and strategies for providing liquidity to points, along with various approaches to maximizing the benefits of onchain points programs. Stay tuned!