How to Use Tokenization to Drive Growth: 7 Lessons From a Company That's Killing It - Tascha Labs

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Jul 21, 2023

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How to Use Tokenization to Drive Growth: 7 Lessons From a Company That's Killing It - Tascha Labs

Get clear on what business you are *really* in

When it comes to driving growth through tokenization, it's essential to get clear on what business you are truly in. While a company may sell a particular product or service on the surface, the key process that drives the bottom line may be entirely different. Take Marriott, for example. On the surface, they are in the hospitality business, but in reality, they are in the real estate business. Understanding this distinction allows companies to innovate and improve their chances of success through tokenization. For founders, it's crucial to think about what tried-and-true business model you can combine with tokenization to create innovation.

Use tokenization to solve the cold-start problem, not the product-market-fit problem

Tokenization can act as a "bridge loan" from users to get a project off the ground. However, for this to be effective, the project needs to be viable and solve a real user problem. The token should not be the sole basis for the project's profitability. Founders should consider how their project would work without a token and if it can still succeed. This concept of progressive decentralization ensures that the project remains viable even without token incentives.

Focus token incentives on KPIs that actually matter

Token incentives are a powerful tool, but they should not be wasted on metrics that don't truly matter. It's essential to identify the key performance indicators (KPIs) that are relevant to your project's growth and profitability. For example, app engagement is a KPI that significantly impacts a project's success. Founders should determine what user actions truly matter for their project's growth and profitability and focus incentives on those.

Bring demand from outside the metaverse

Web3 projects that operate solely within the digital sphere often struggle to generate product demand due to a lack of a vibrant economic ecosystem. To combat this, founders should consider how they can bridge the gap between the real economy and the metaverse. Finding creative ways to bring demand from outside the metaverse can power the product and ensure its sustainability.

Token utility is more important than limiting token supply

While limiting token supply may seem like a crucial aspect of tokenization, token utility is actually more important. Token utility provides users with a fundamental incentive to continue stacking tokens, even without the opportunity to sell. By focusing on creating value and utility for the token, founders can drive growth and ensure long-term engagement.

Protect the project from crypto market cycles in the early stages

While secondary market token liquidity is valuable, founders need to consider how market volatility may affect their core business. It's important to think about the potential impact of market cycles and determine strategies to mitigate risks. Additionally, founders should question whether having their token tradable on exchanges from day one is necessarily a good thing. Protecting the project from market cycles requires careful planning and consideration.

Use staking to distribute value-added, not to solve the token demand problem

Staking can be an excellent way to increase user engagement and loyalty when done right. Sharing the benefits of project growth with users aligns with the web3 ethos. However, staking yields need to come from business profits, not token emission, to ensure sustainability. Founders should focus on creating value and adding benefits to the project before using staking as a means to address token demand.

Actionable Advice:

  • 1. Identify the key process that drives your company's bottom line, and consider how tokenization can enhance it.
  • 2. Evaluate the viability of your project without token incentives. Ensure that it solves a real user problem and can be profitable independently.
  • 3. Determine the KPIs that truly matter for your project's growth and profitability. Focus token incentives on those actions.

In conclusion, tokenization can be a powerful tool for driving growth, but it requires careful consideration and strategic implementation. By understanding the true nature of your business, focusing on viable solutions, and aligning token incentives with meaningful KPIs, founders can leverage tokenization to its full potential. Additionally, bridging the gap between the real economy and the metaverse, prioritizing token utility over supply limitations, and protecting the project from market cycles are crucial factors to ensure long-term success. By using staking to distribute value-added instead of addressing token demand and following the interviewing tips mentioned earlier, companies can harness the benefits of tokenization and drive significant growth in the digital landscape.

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