From Points to Tokens: The Steady Development Path of Blockchain Projects

In the blockchain industry, many practitioners believe that projects without tokens lack soul. However, for most blockchain projects, the design of token economics, trading operations, and the integration of technology with public chains are still not mature enough. More importantly, the issuance and application of tokens face complex regulatory challenges on a global scale.

For startup teams, directly issuing tokens not only brings huge compliance pressure but may also lead to operational loss of control. A more prudent choice is to first incentivize users through a points system, and once the ecosystem stabilizes, gradually convert the points into tokens and migrate them onto the blockchain for assetization.

The Value of Points: From Incentives to Transition

The points system provides projects with a low-cost tool to validate the market while avoiding the legal risks associated with 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, imparting more value and enabling on-chain circulation.

This model not only enhances the operational flexibility of the team but also establishes user trust and an 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, and after the points system stabilizes, introduces on-chain tokens, allowing users to more intuitively feel the value and role of tokens.

Taking a recent token issuance by a certain group 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 trading platforms, one of which is Hong Kong's first licensed virtual asset exchange, providing users with compliant and secure trading services; the other caters to global users, offering diversified digital asset trading services, holding a Type F license from the Bermuda Monetary Authority.

The core purpose of the group's token design is to support its vast business network and enhance user engagement. The total supply is fixed at 1 billion tokens, launched through a private distribution method to avoid the legal and compliance risks that may be involved in public sales. This distribution method directly links the value of the token to the activity level of the ecosystem, 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 trading fee discounts, significantly reducing trading costs. Additionally, as a core tool for community incentives, it promotes user participation in ecosystem development through various reward programs, increasing community activity. Users holding tokens can also gain priority access to new products and services, further enhancing the user experience. This diversified application design makes the token not only a functional token but also a key driver for promoting collaborative development within the ecosystem.

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

1. Ecological Incentives and Distribution: The Token is distributed through internal ecological incentives rather than public sales. This model avoids the risk of violating securities regulations while effectively expanding the base of Token holders through reward mechanisms.

2. Task-driven airdrop: Users receive 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 dissemination. For example, tokens were once awarded through ecosystem activities to incentivize users to share and promote ecosystem content.

3. Combination of Business and Technology: Tokens incorporate 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 gradual model of converting points to tokens not only allows the group to avoid unnecessary compliance risks but also enhances user trust and loyalty towards the project.

A Win-Win Path for Compliance and Business Validation

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

1. Market validation of user incentives

Whether it is 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 a point reward mechanism, the team can observe user acceptance and stickiness towards the project. For example, an application focused on decentralized knowledge sharing can design point reward rules: users earn points by uploading quality content, and additional points can be rewarded when the content is liked or saved. This form not only attracts early user participation but also accumulates project data, providing a real basis for subsequent tokenized economic models. Moreover, point consumption data also reflects users' demand preferences for different payment services. This market validation not only enhances the operating efficiency of the project in its early stages but also points the way for subsequent tokenization design.

2. Choosing the Timing for Tokenization

Pragmatically speaking, tokenization is a natural extension of the development of the points system, but the timing of its implementation needs to consider the user base, ecosystem development, and technological readiness. Initially, users are incentivized to participate in minting and trading through points, and after the points system matures, a gradual transition to tokenization occurs. This strategy effectively avoids issues of token oversupply or user loss caused by "technological inadequacies and an incomplete ecosystem." For example, a certain NFT project achieved over one million dollars in daily trading volume on the first day of its token launch, one year after the points system was operational. This grasp of the timing of tokenization provides important insights for startup projects.

3. The Balance of Compliance and Financing

Many teams mistakenly believe that tokens are the only tool to attract investment. In fact, financing models can be more flexible. For the vast majority of blockchain startup teams, early-stage funding can completely adopt the method of equity financing to raise funds. 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 develops to a specific stage, a certain proportion of tokens will be allocated to investors. This approach meets the funding needs of the team while avoiding the compliance risks of direct token sales. In addition, many startup projects introduce qualified investors or investment funds by setting up overseas companies, while combining points reward mechanisms to increase user stickiness. This ensures compliance in financing and improves project valuation through the validation of user data and business scenarios. This approach meets funding needs and avoids compliance risks of early token sales.

4. Technical and Application Linkage Verification

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

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

Summary

From points to Token, it is not only an evolution of a business model but also an entrepreneurial path that combines market validation and compliance innovation. In the context of an increasingly complex global regulatory environment, startup teams should abandon the illusion of "one-step completion" in token issuance, and adopt a gradual strategy that starts with points, accumulates data and optimizes mechanisms through market validation, and then transforms 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 methodical approach may be the true meaning of "fast."