Tokens Replacing Loyalty Points
The concept of “Tokens Replacing Loyalty Points” represents a fundamental shift in how consumer incentives can be designed.
1. Limitations of Traditional Loyalty Points
For decades, traditional consumer incentive systems have relied on loyalty points to attract customers and increase retention. But this model has deep structural problems:
No difference between early and late customers: no matter when you join, the value of points is the same, offering no recognition for early supporters.
Unlimited issuance, continuous devaluation: points have no cap; the more they are issued, the faster they inflate and lose value.
Cash flow pressure: customers tend to redeem points as quickly as possible before they lose value, creating liquidity pressure for businesses.
This relationship is zero-sum: what benefits customers harms the business, and what benefits the business devalues customer rewards. A true win-win cannot be achieved.
2. Advantages of Token Incentives
Replacing loyalty points with tokens fundamentally changes the incentive logic:
Scarcity and value potential: tokens have a total supply cap and follow a decreasing issuance curve. As the business develops, their value may rise, directly rewarding early customers and long-term holders.
Reduced redemption pressure: customers are inclined to hold tokens in anticipation of appreciation, rather than rushing to redeem, reducing pressure on business cash flow.
Market-based pricing: tokens can circulate freely in the secondary market, with their price reflecting the market’s expectation of business success, creating a transparent feedback loop between adoption and value.
When business grows steadily and token prices rise accordingly, a dual effect emerges: customers pay more attention and purchase more willingly, while businesses gain stronger motivation. This alignment of interests creates a true win-win.
3. Linking Product Sales to Growth for All
The tradable nature of tokens makes them the core reserve asset of an on-chain business treasury. For the first time, product sales cash flow is directly tied to business growth:
The more products sold → the higher the business cash flow
The higher the cash flow → the more liquidity injected into the on-chain treasury
The more liquidity → the stronger price support for the token
Token value rises → all token holders benefit
For the first time, consumers can truly feel that consumption not only brings product usage, but also generates returns. This further stimulates purchasing behavior, increases product sales cash flow, and creates a positive cycle of mutual growth between businesses and their customers.
4. Comparison: Traditional Loyalty Points vs. Tokens
Issuance Mechanism
Unlimited issuance, continuous inflation, leading to devaluation
Limited total supply, or decreasing issuance by rules, ensuring scarcity
Value Stability
Continuously devalues over time
Potential to appreciate with project development and market demand
Customer Incentives
No difference between early and late customers
Early customers have more opportunities to gain additional benefits
Liquidity
Can only be consumed or redeemed within the business
Freely tradable on secondary markets, with asset properties
Price Discovery
No market price, only determined by the business party
Market-based pricing, transparent and public
Impact on Cash Flows
Customers tend to use loyalty points quickly, causing cash flows pressure
Customers tend to hold long-term, relieving pressure on cash flows
Customer Experience
Expires once used, no asset property
Can appreciate in value, consumption becomes acquiring tangible value, forming positive loop
Business Value Link
Detached from business growth
Treasury-reserved tokens directly link consumption with growth
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