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

In the blockchain industry, many practitioners believe that projects without tokens lack core value. However, for most blockchain projects, whether it's the design of token economics, exchange operations, or the combination of technology and public chains, they have not yet reached a sufficiently mature level.

More importantly, the issuance and application of tokens face complex regulatory environments globally. Direct issuance of tokens by startup teams not only brings enormous compliance pressure but may also lead to operational loss of control. Therefore, a more prudent choice is to first incentivize users through a points system, and once the ecosystem is stable, gradually convert the points into tokens and migrate them onto the blockchain to complete assetization.

The Value of Points: From Incentives to Transition

The advantage of the points system is that it provides a low-cost tool for projects to validate the market while avoiding the legal risks associated with the initial token issuance. Through points, the team can offer rewards to users within the application, enhancing user stickiness and activity. As the points mechanism 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 establishes user trust and ecological foundation through points, laying the groundwork for future Token economies. For example, a blockchain platform focused on community autonomy incentivizes users to vote and participate in governance tasks through a points system, and after the points system stabilizes, introduces on-chain Tokens, allowing users to more intuitively feel the value and role of the Tokens.

Taking a large digital asset financial services group that recently issued tokens as an example. This group was established in 2018 and is a leader in the digital asset financial services field in Asia. The group is known for its comprehensive Web3 ecosystem layout, covering several core areas including 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 a diverse range of digital asset trading services, and holds a Class F license from the Bermuda Monetary Authority.

The core Token design of the group's ecosystem aims to support its vast business network and enhance user participation. The total supply is fixed at 1 billion pieces 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 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. In addition, as a core tool for community incentives, it promotes user participation in ecological construction through various reward programs, enhancing community activity. Users holding Tokens can also gain priority access to new products and services, further improving the user experience. This diversified application design makes the Token not only functional but also a key driving force behind the collaborative development of 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
2. Task-driven airdrop
3. The Integration of Business and Technology

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

Win-Win Path of Compliance and Business Verification

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

1. User incentive market validation

Whether it's traditional centralized points or future-oriented decentralized project tokens, the core issue to be resolved is the user acceptance problem. The core value of early points systems lies in providing project parties with a low-cost tool to test the market. Through point reward mechanisms, teams 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 high-quality content, and additional points can be rewarded when the content is liked or favorited. This form 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 users' preference for different payment services. This market validation not only enhances the operational efficiency of the project in its early stages but also points the way for subsequent tokenization design.

2. The timing of tokenization selection

Pragmatically speaking, tokenization is a natural extension of the points system development, but the timing of its selection needs to be combined with the user base, ecological construction, and technological preparation. Initially incentivizing users to participate in minting and trading through points, and gradually transitioning to tokenization after the points system matures, this strategy effectively avoids the issues of "imperfect technology and unhealthy ecology" leading to token oversupply or user loss. For example, a certain NFT project achieved a daily trading volume of over one million dollars on the first day of its token launch, one year after its points system was operational. This grasp of the timing for tokenization provides important references for startup projects.

3. The balance between compliance and financing

Many teams mistakenly believe that tokens are the only tool to attract investment. However, financing models can be more flexible. For the vast majority of blockchain startup teams, early-stage funding can completely adopt equity financing to raise capital. Based on this, if there is a future need for token issuance, both parties can clearly stipulate in the shareholder agreement that when the project reaches a specific stage, a certain proportion of tokens will be allocated to the investors. This approach not only meets the funding needs of the team but also avoids the compliance risks of direct token sales. In addition, many startup projects introduce qualified investors or investment funds by establishing overseas companies, while also combining points reward mechanisms to increase user stickiness. This ensures compliance in financing and enhances project valuation through user data and commercial scenario validation.

4. The linkage verification of technology and application

The linkage verification between technology and business scenarios is the 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, 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 in technology application testing, helping the team identify issues and adjust strategies. Only after the model has undergone multiple adjustments does it officially establish a public risk pool with tokens, significantly reducing the risk of failure after going live.

Through the above strategies, the team can not only steadily advance 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 Token is not just an evolution of a business model, but also an entrepreneurial path that combines market validation with regulatory innovation. In the context of an increasingly complex global regulatory environment, startup teams should abandon the fantasy of "one-step 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 the legal risks in the early stages of a project but also makes the process of validating commercial value more natural and efficient. Blockchain entrepreneurs can only find their breakthroughs in a complex and changing market environment by continuously experimenting and optimizing within a compliant framework. Internet entrepreneurship emphasizes small, rapid steps, but in the exploration of the blockchain field, steady progress may be the true meaning of "speed."