Tokenomics vs. Traditional Monetisation: A New Challenge for Product Managers

Introduction: The Shifting Paradigm of Digital Economics

Product managers are no strangers to the evolution of monetisation strategies. Traditionally, businesses have relied on subscription models, one-time purchases, advertising revenue, and SaaS-based pricing to drive growth. However, the emergence of Web3, decentralised finance (DeFi), and blockchain-based ecosystems has introduced an entirely new economic framework: Tokenomics.

Tokenomics refers to the economic structure and incentive models of blockchain-based systems that utilise cryptographic tokens as their primary mechanism for value exchange. Unlike traditional monetisation methods, which depend on direct user payments or external advertising, tokenomics relies on network effects, decentralised incentives, and community participation to sustain its economic model.

This shift presents both opportunities and challenges for product managers, who must now rethink how value is created, captured, and distributed in digital ecosystems. In this thought piece, we explore how tokenomics differs from traditional monetisation and what this means for the future of product strategy.

1. The Core Differences: Tokenomics vs. Traditional Monetisation

1.1 Value Creation & Distribution

?? Traditional Monetisation: Revenue typically flows from users to businesses in a straightforward exchange—whether through subscriptions, transactions, or ad revenue.

?? Tokenomics: Value is often distributed across multiple stakeholders, including early adopters, community contributors, and liquidity providers, creating a more decentralised financial ecosystem.

1.2 Incentives & User Engagement

?? Traditional Models: Incentivisation is top-down, where companies offer loyalty programs, discounts, or limited-time offers.

?? Tokenomics: Incentives are built into the economic system, such as staking rewards, governance voting rights, and yield farming, ensuring ongoing engagement from users.

1.3 Ownership & Participation

?? Traditional Monetisation: Users consume content, products, or services but have no real stake in the company’s growth or success.

?? Tokenomics: Users own digital assets (tokens or NFTs), which may appreciate in value over time, providing a vested interest in the product’s success.

2. The New Challenges for Product Managers

The introduction of tokenomics fundamentally alters how product managers must think about pricing, engagement, and user retention. Here are some of the most pressing challenges:

2.1 Designing Sustainable Token Economies

Unlike fixed subscription pricing, token-based models are highly dynamic and influenced by market volatility, liquidity, and speculative trading. Product managers must carefully balance supply and demand to ensure their tokens retain long-term value.

Key Considerations:

? How many tokens should be issued? (Token supply design)

? What mechanisms ensure value accrual? (Burning, staking, rewards)

? How do we prevent pump-and-dump scenarios? (Regulation & governance)

2.2 Regulatory & Compliance Complexities

Token-based economies operate in a regulatory grey area in many countries. Issues around securities laws, tax implications, and consumer protection must be considered to ensure compliance.

Key Considerations:

? How will regulations impact our token structure?

? Are we issuing a utility token or a security token?

? How do we communicate risks to users?

2.3 Managing Volatility & Market Dynamics

Unlike stable pricing in SaaS or traditional products, tokens fluctuate in value due to external market conditions. This presents challenges in:

? Setting the right price point for transactions

? Ensuring stable revenue forecasting

? Preventing token devaluation from excessive sell-offs

3. Opportunities: Why Product Managers Should Embrace Tokenomics

Despite these challenges, tokenomics introduces unique opportunities that product managers can leverage to create new monetisation models:

3.1 Community-Driven Growth

In Web3, users act as stakeholders—meaning they are financially incentivised to promote and participate in the ecosystem. This creates organic growth loops and reduces customer acquisition costs.

Example: Play-to-Earn (P2E) gaming ecosystems like Axie Infinity leverage tokenomics to drive user participation, where players earn in-game assets with real-world value.

3.2 Programmable Revenue Models

Tokens can introduce flexible and innovative pricing mechanisms that adapt to demand. For example:

? Dynamic Pricing: AI-driven token valuations based on real-time demand.

? Revenue Sharing: Users earn a share of platform profits by staking tokens.

? Fractional Ownership: Tokenisation allows users to own a fraction of high-value assets, such as real estate or art.

3.3 Enhanced User Engagement & Loyalty

Unlike traditional loyalty programs, which are often rigid and limited, tokenomics gamifies engagement through:

? Governance Rights: Users vote on platform changes (e.g., DAOs).

? Earning Mechanisms: Rewards for contributing content, staking, or referrals.

? NFT-based Exclusivity: Users unlock special features based on token ownership.

4. The Future of Monetisation: Hybrid Models?

As tokenomics evolves, we may see hybrid monetisation models emerge, where businesses combine traditional pricing with token-based incentives. Product managers should explore:

? SaaS + Tokenomics: Subscription services that offer discounts or exclusive features to token holders.

? Freemium with Token-Based Upsells: Basic access remains free, but tokens unlock premium services.

? NFT-Based Access: Token-gated content, events, and services.

Conclusion: The New Role of Product Managers in the Token Economy

Product managers must adapt their strategies to embrace tokenomics without neglecting proven traditional models. The future lies in understanding user incentives, balancing economic sustainability, and navigating regulatory landscapes.

As Web3 adoption accelerates, the role of the product manager will evolve from simply designing features to crafting entire economic ecosystems.

?? What are your thoughts on tokenomics vs. traditional monetisation? Let’s discuss below! ??