Crypto rewards aren’t new, they have a fascinating backstory. They can be used to foster loyalty. And, they can be utilized for “behavior change intervention.” In fact, crypto takes digital rewards to a whole new level, says Lurpis Wang, the CEO of Bifrost.
The economic incentives driving human behavior play a critical role in the adoption of blockchain technology. This can be demonstrated by the various loyalty and incentive programs implemented in the blockchain industry.
Tech companies have long offered engineers and developers bounties for uncovering bugs in software. Ethereum has long offered bounty programs. Crypto proponents believe blockchain technology can take such practices to the next level.
Crypto Rewards: Bounty Hunters
An early example of incentive-based activity in the crypto industry took place during the Initial Coin Offerings mania of 2016-2017. So-called “bounty hunters” from all over the world shared media content in exchange for tokens.
Bounty hunters earned rewards for completing actions. They could take part in several reward programs simultaneously. The best-paying programs naturally attract the most erudite and entrepreneurial of the bounty hunters. Projects employed bounty programs most often in order to create buzz for their ICO.
Loyalty Incentives In Crypto
Tokens could also be used in traditional brand loyalty programs. Loyalty customers drive a big chunk of business. The better the loyalty program, the better the customer experience. Crypto proponents believe blockchain can revolutionize loyalty incentives. A Deloitte study found that blockchain could help make loyalty programs increasingly customer-friendly. They can do this by reducing costs, making the earning and using of points a real-time experience, and secure.
The publicly listed digital assets manager Bakkt found that 72% of loyalty program members purchased cryptocurrency at least once in the past six months. More than half said they understood the value of earning crypto-based loyalty points. Various projects and companies have deployed crypto-based loyalty programs. Among them are crypto-based “cashback” programs, DeFi staking rewards, credit card rewards, NFT appreciation rewards, and more.
Behavior Change Interventions
Bounty programs and loyalty incentives are just the tip of the iceberg when it comes to token-based incentives. A token economy can act as a behavior-management system in which targeted or desired behaviors are conjured and reinforced with tokens.
Outside of the crypto context, such incentive programs have involved tokens which can, at a later time, be exchanged for rewards. Using tokens to reinforce certain behaviors is called operant conditioning. It is often deployed in elementary school settings.
Historically, such behavior change incentives have seen many objects used as tokens. These include tickets and poker chips or figurative bonus points, stamps, tally marks, etc. It must be clear which behaviors to reinforce, and how tokens can be earned or lost.
Many such arrangements operated similar to Chuck E. Cheese, where one earns a certain number of neutral tickets or tokens. They can later be exchanged for a desired prize, such as toys, money, privileges, etc.
Beyond loyalty and incentive schemes, blockchain-based tokens are increasingly adopted to have an effect on social outcomes. This has been defined in academia as “behavior change interventions.”
Tokenized behavior change interventions could assist vulnerable populations, improve supply chain management, form a basis of central bank digital currencies, and more.
Crypto Rewards: Tokens as a Driver of Change
Behavior change interventions are understood as “coordinated sets of activities designed to change specified behavior patterns.” A token at the heart of a token-based economy must be designed to influence the drivers of behavior change in real-world ecosystems.
Individuals and organizations must want to adopt the activity-monitoring activities and all behaviors encouraged by the system’s tokenomics. This is especially considering that such tokens require considerable change in social behaviors.
Many challenges exist for token-based behavior change interventions. For instance, interoperability will be a major concern. Social impact practitioners, token engineers, crypto-economists, and experts from related fields will help to identify the principles, protocols, tools, and ethics around tokens as tools for behavior change.
Managing behavior change interventions requires inventive new token designs with a focus on the interdependence of digital and social ecosystems. Engineers, crypto economists, and behaviorists must continue to test token designs and integrated behavioral measures to further desired social outcomes.
Furthermore, behavioral change interventions show promise when it comes to changing behavior towards targeted behaviors as it relates to many of the existential questions facing humanity today. Examples are responding to climate change and implementing the Environmental Sustainability Goals (ESGs) demanded by governments and corporations.
The Importance Of On-Chain Incentives
The best type of crypto-based incentives are entirely on-chain crypto-based incentives, because that’s where transparency and security lies. Users want transparency so they know they are being appropriately awarded. And, they want to ensure the network on which they are essentially working is also secure.
Crypto technology represents a novel and exciting mechanism for digital rewards, whether that be in the form of bounties, loyalty, behavior change interventions, etc. We are already seeing a number of long-term crypto loyalty schemes.
Crypto Rewards: Blockchain Projects Offering On-Chain Incentives
GYSR – This platform for on-chain incentives developers can launch pools to reward investors who undertake certain blockchain-based activities like providing liquidity in a pool on a decentralized exchange or staking their NFTs.
Bifrost Rainbow Boost – Bifrost’s recently launched Rainbow Boost Program seeks to incorporate airdrops, NFTs, and whitelist privileges. The Rainbow Boost tags, credits, and incentivizes Bifrost chain participants. Their addresses receive so-called Raindrops upon completing actions deemed beneficial to the overall network.
Kultur-Token – This project offers rewards in a token-based economy for taking part in cultural-based activities.
Cycle4Value – This blockchain-based system offers rewards earned in a token economy for the number of kilometers one rides on a bike.
Optimism Collective – A blockchain-based governance platform on which participants can vote on the allocation of incentives, with the idea of funding public goods.
Crypto Rewards: How Crypto Revolutionizes Loyalty And More
If companies wish to succeed in the digital age, they will need to issue rewards to customers. Crypto-based incentive programs could potentially reduce costs, increase transparency, security, and more. Incentives can empower participants with ownership over the network. And it can encourage them to take an active role in developing the network through verifiable on-chain action.
The more deeply involved users are in the network, the more value they tend to create for the network itself. By developing a fair way to quantify the encouraged on-chain behaviors, incentives can be designed to build a better community consensus.
Lurpis Wang has over 5 years of blockchain product and development experience as Sina Weibo early full-stack engineer and the leader of blockchain cross-borders. Lurpis is the co-founder and CEO of Bifrost, CEO & Founder of Liebi Technology, and a founding member of PAKA Fund LP. e is a Web3.0 Bootcamp Instructor. Over the past couple of years Lurpis and his team launched liquid derivatives of assets such as KSM, DOT, MOVR, and more, whilst their Slot Auction Liquidity Protocol has already helped secure 10 Polkadot and 11 Kusama parachian slots for various projects (including Moonbeam). Lurpis is dedicated to building a fully decentralized cross-chain future.
The information provided in independent research represents the author’s view and does not constitute investment, trading, or financial advice. BeInCrypto doesn’t recommend buying, selling, trading, holding, or investing in any cryptocurrencies