Forget Speculation: Why Are Arcade Tokens More Important Than You Think?
Arcade tokens are one of the most underestimated kinds of cryptocurrency, according to a report released on Thursday by a16z. These tokens have a comparatively stable value within a certain software or product ecosystem. They work similarly to in-game currency, credit card points, or airline miles. Instead of being kept for conjecture, they allow users to carry out particular tasks within that ecosystem.
Though arcade tokens aren’t for every use case, they represent a critical building block in the evolution of crypto networks. Just as stablecoins unlock new forms of commerce, and network tokens enable decentralized value-sharing and governance, arcade tokens can power digital economies at scale,
the report
Arcade Tokens vs Network Tokens: Blackbird’s Innovative Model
The hospitality-tech business Blackbird and its native FLY coin are one such endeavor, according to a16z. In the middle of 2024, the project introduced a Web3 payment system for eateries. FLY was created to incentivize users and promote service uptake.
Blackbird’s $FLY token allows users to redeem it in any participating restaurant, and that redemption behavior is managed on a purpose-built blockchain layer powered by a network token,
the report
Other examples of utilization are also mentioned in the research report.
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 encourage brand loyalty and be used to make flight and upgrade purchases; digital gold can let you buy or sell items in a video game. 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.
the report
The Power of Arcade Tokens for Physical-World Integrations
Additionally, the report made the case that arcade tokens can offer significant benefits for physical-world integrations or spend-centric economies. Usability and price stability are two advantages of utilizing arcade tokens. This simplifies tokenomics for issuers and makes it easier for users to comprehend what they’re spending. The research also emphasizes how arcade tokens’ fluid dynamics offer additional opportunities, even though stablecoins can be utilized for identical reasons. For instance, issuers can effectively create arcade tokens on demand in order to fund the expansion of the ecosystem through grants and developer or user subsidies. Moreover, rather than spending the money elsewhere, this strategy encourages people to remain in the economy.
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