From Points to Tokens: The Evolution of Web3 Projects

In the blockchain industry, many believe that projects without tokens lack core competitiveness. However, for most blockchain projects, whether it is the design of token economics, operation of trading platforms, or the integration of technology with public chains, they have not yet reached a sufficiently mature level.

More importantly, the issuance and application of tokens globally face a complex regulatory environment. Emerging teams issuing tokens directly not only bring significant compliance pressure but may also lead to operational chaos. Therefore, a more prudent choice is to first incentivize users through a points system, and after the ecosystem stabilizes, gradually convert the points into tokens and migrate them to the blockchain for assetization.

The Value of Points: From Incentives to Transition

The advantage of the points system is that it provides projects with a low-cost tool to validate the market while avoiding legal risks during the early stages of token issuance. Through points, the team can offer rewards to users within the application, enhancing user stickiness and activity. As the points mechanism gradually matures, it can be tokenized, giving it more value and enabling on-chain circulation.

This model not only enhances the operational flexibility of the team but also helps establish user trust and ecological foundation through points, laying the groundwork for the future token economy. For example, a blockchain platform focused on community autonomy incentivizes users to vote and participate in governance tasks through points. Once the point system stabilizes, on-chain tokens are introduced, allowing users to more intuitively feel the value and role of the tokens.

Taking a certain group that issued tokens recently as an example. This group was established in 2018 and is a leader in the field of digital asset financial services in Asia. The group is known for its comprehensive Web3 ecosystem layout, covering multiple core areas such as trading, investment, tokenization services, and infrastructure. Its main businesses include two major trading platforms, one of which is the first licensed virtual asset exchange in Hong Kong, providing users with compliant and secure trading services; while the other caters to global users, offering diversified digital asset trading services and holds a Class F license from the Bermuda Monetary Authority.

The core design purpose of the group's token is to support its vast business network and enhance user engagement. The total supply is fixed at 1 billion tokens and is launched through a private distribution method, avoiding the legal and compliance risks that may be involved in public sales. This distribution method directly links the token's value to the ecosystem's activity level, making it more sustainable. In practical application scenarios, the token is endowed with multiple functions. Within the exchange, it can be used to pay platform fees and provide holders with discounts on trading fees, significantly reducing trading costs. Additionally, as a core tool for community incentives, it promotes user participation in ecosystem building through various reward programs, increasing community activity. Users holding the token can also gain priority access to new products and services launched by the group, further enhancing user experience. This diversified application design makes the token not only a functional token but also a key driving force for promoting synergistic development within the ecosystem.

The group's Token issuance model and application scenarios provide valuable experiential references for startup teams. In the process of Token issuance and promotion, they adopted the following strategies:

1. Ecological Incentives and Distribution

The group's Token was not distributed through public sales, but rather through internal ecological incentive methods. This model avoids the risk of violating securities regulations while effectively expanding the base of Token holders through a reward mechanism.

2. Task-driven Airdrop

Users earn token rewards by completing specific tasks. This approach not only enhances users' sense of participation in the ecosystem but also promotes community engagement and brand awareness. For example, the group has previously rewarded tokens through ecosystem activities to incentivize users to share and promote ecosystem content.

3. Integration of Business and Technology

The group's Token integrates various functions in practical applications, such as participating in governance, paying transaction fees, and exchanging for ecological services. This Token economic design not only aligns with business logic but also promotes the in-depth application of blockchain technology in the financial sector.

This progressive model of converting points to tokens not only allows the group to avoid unnecessary compliance risks but also enhances user trust and engagement with the project.

A Win-Win Path for Compliance and Business Verification

The path from points to tokens is not only the key to the legalization of the project but also a necessary step for commercial validation. As Web3 entrepreneurs, if token issuance is part of your future roadmap, starting with points may be a more suitable development path. We can analyze this in four specific aspects:

1. Market validation of user incentives

Whether it's traditional centralized points or future-oriented decentralized project tokens, the core issue to be addressed is user acceptance. The core value of early point systems lies in providing project parties with a low-cost tool to test the market. Through point reward mechanisms, teams can observe users' acceptance and stickiness to the project. For instance, an application focused on decentralized knowledge sharing can design point reward rules: users earn points for uploading quality content, and additional points can be rewarded if the content is liked or bookmarked. This approach not only attracts early user participation but also accumulates project data, providing a real basis for subsequent tokenized economic models. Moreover, the data on point consumption reflects user preference for different payment services. This market validation not only enhances the operational efficiency of the project in its early stages but also guides the direction for subsequent tokenization design.

2.Choosing the Timing for Tokenization

Pragmatically speaking, tokenization is a natural extension of the points system development, but the timing needs to consider user base, ecosystem construction, and technological readiness. Initially, incentivizing users to participate in minting and trading through points in the points system, and gradually transitioning to tokenization after the points system matures, effectively avoids the issues of token unsold or user loss caused by "imperfect technology and an unhealthy ecosystem." For example, a certain NFT project achieved a daily trading volume of over one million dollars on the first day of its token launch, after its points system had been operational for a year. The timing of this tokenization provides important references for startup projects.

3. Balance Between Compliance and Financing

Many teams mistakenly believe that tokens are the only tool to attract investment. However, in reality, financing models can be more flexible. For the vast majority of blockchain startup teams, it is entirely feasible to use equity financing to raise funds in the early stages. On this basis, if there is a future need for token issuance, both parties can clearly stipulate in the shareholder agreement that when the project reaches a certain stage, a certain proportion of tokens will be allocated to the investors. This approach meets the team's funding needs while avoiding the compliance risks of direct token sales. Additionally, many startup projects establish overseas companies (such as in Hong Kong or Singapore) to attract qualified investors or investment funds, while also incorporating points reward mechanisms to increase user stickiness. This ensures compliance in financing while enhancing project valuation through validation of user data and business scenarios. This method meets the funding needs and avoids compliance risks associated with early token sales.

4. Technical and Application Interaction Verification

The linkage verification between technology and business scenarios is key to the successful tokenization of a project. For example, a blockchain project focused on green energy trading initially incentivized household users to upload electricity usage data and energy-saving measures through points, accumulating a massive energy data pool. During the technical verification phase, the platform exchanged points for environmental tokens, combining off-chain energy data with on-chain smart contracts, completing the transition from points to tokens. The advantage of this model is that points not only serve as a user incentive tool but also provide real scenario data during technical application testing, helping the team identify issues and adjust strategies. Only after multiple rounds of adjustments to the model was a public risk pool officially established through tokens, significantly reducing the risk of failure post-launch.

Through the above strategy, the team can not only steadily promote the project's compliance but also effectively validate its commercial value and user demand, laying a solid foundation for the future token economy.

Conclusion

From points to Tokens, it is not only an evolution of a business model but also an entrepreneurial path that combines market validation and regulatory innovation. In the context of an increasingly complex global regulatory environment, startup teams should abandon the illusion of "one-step completion" for Token issuance and adopt a gradual strategy, starting with points, accumulating data through market validation, optimizing mechanisms, and then transforming successful experiences into asset applications on the blockchain.

This "progressive tokenization" model not only reduces legal risks in the early stages of a project but also makes the process of validating commercial value more natural and efficient. Blockchain entrepreneurs must continuously experiment and optimize within a compliant framework to find their breakthrough in a complex and ever-changing market environment. Internet entrepreneurship emphasizes small, rapid steps, but in the exploration of the blockchain field, a steady and solid approach may be the true essence of "speed."