What Chuck E. Cheese Can Teach You About Tokenomics.
Imagine you’re standing outside a brand new Chuck E. Cheese. $1 Billion in Chuck E. Cheese Tokens in your pocket excited to go in and play the games, win prizes locked inside.
You can’t wait to go in, play and win.
You step inside the entrance. You see the large buck-tooth mouse, the long tables, the lights.
And see it empty…ZERO GAMES
Like there is literally not a single game there.
Are your tokens worth $1B? No way. Not even close.
You ask the person at the front what the deal is. He tells you, oh, we’re waiting for more developers to build the games. We’ll plug them in once we get them. The games are coming soon. Just stick around. Join our telegram and discord to see when the games come in.
But you feel a bit lost and a bit let down. You came all this way for nothing.
The Chuck E. Cheese operator spent all this time building a massive location. Maybe the real estate it’s sitting on is worth something, but those $1B tokens? Zero value. This Chuck E. Cheese just lost a big whale customer. Until there are people streaming in through the front door, turning their cash into tokens and playing the games that location is not worth much.
We’re not really talking about Chuck E. Cheese. We’re talking about the biggest problem facing every Blockchain Layer 1 and Layer 2 project right now:
Too many projects with zero things to do. Too many projects with tokens that can’t hold their value. Too many projects with promises of a speculative future without a solid use case today.
At the same time, we’re here in the beginning of 2022, and there’s a new wave of crypto moon boys. Believers and your word of mouth army that wants, wait for it…
Tokens with utility. No utility to your token? They don’t want it. Square peg no hole situation.
Here’s another thing they want: tokens they can use in a lot of different ways. Lots of utility.
In our current landscape, it’s crucial to develop demand for your token. To do that, you have to start not just with one use case. Instead you need layers of utility. Only then are you going to be able to create significant buy pressure of your token. Then your token price goes up. Then the flywheel starts.
Want to see token utility in action? First let’s talk about 2 crypto Games
DeFi Kingdoms(DFK) $JEWEL: yes, it’s a game, but it’s so much more than that. Built on Harmony, it’s a gamified decentralized exchange with its own token, Jewel. In DFK you can swap Jewel, pool it, provide liquidity and stake. This earn rewards in jewel, with jewel you can buy special upgrades as well as buy/sell Heroes (NFTs). The team is developing virtual real estate. This rockstar team gets it. Building token utility features. Creating buy pressure in the in game economy today and in the future.
Crabada $CRA: built on Avalanche, this game launched in the fall of 2021. This game brings a lot of in-game utility: mining, looting, breeding, buying NFT hermit crabs. The marketplace is ripe with token optionality. But the focus is not just in-game. New partnerships announced this year give players even more utility. 7+ other Avalanche projects will accep CRA. For example, if you owned a Crabada NFT in January, you would have gotten an airdrop. A Crabada jersey NFT airdrop from NFT Soccer Games. The utility across multiple projects is essentially cross-marketing. Cross-marketing amps up buy pressure for not only Crabada’s native CRA token, but the other games’ as well. This is like if Chuck E. Cheese tokens worked at Dave & Busters.
It’s not surprising that games are one of the best ways to create token demand. Many people who are into crypto are also gamers. Even if they aren’t hardcore about it, they understand the appeal. They get it.
Tokens as gas
One of the best examples of utility is ETH as a form of gas. ETH is used as gas on the Ethereum network. ETH token has constantly grown in price as the number of transactions on the network have grown. Transactions use gas. This creates buy pressure for gas. If I want to create a token, mint an NFT, swap or use a smart contract, I am using gas.
But rising gas costs do not come without their own cost. The price of gas for many is so high now that transacting on Ethereum is cost-prohibitive.
Having tokens that are consistently spending as gas or for games will work. Embedded this utility into your tokenomics. And tax it ;-).
A constant influx of new people and constant utility.
When it comes to crypto games, one of the best kinds of crypto games are staking games. Why? They disincentivize sell pressure. By locking up supply of tokens the tokens will not be sold.
Another way incentivize deep liquidity pools is….
We redacted two paragraphs here because it’s our secret sauce to grow your token price. If you want to find out, join our telegram or let’s setup a time to discuss your token project.
Here are two more ways to continue getting that influx of new people and activity:
A partnerships program brings credibility, social proof and engagement to your project. A good partnerships can create exposure. A great partnership will also increase the utility of your token.
Crypto is a very event driven space. We’re seeing marketing led by specific events. Each event can be another event to advertise. Key announcements, feature releases, airdrops are a few examples. Each event triggers growth, especially when they are events that highlight project utility.
If you are with an L1 make sure the tokens on your chain have high utility. Every token should create a staking game to incentivize users to play and lock up their token. Partnership and marketing strategy is super important for token utility pamps price.
If there is anything to take away from this article.
Blockchains need GAMES to maximizes exposure for your chain.
We think about this constantly at AlphaGrowth. We have analyzed over 12,000 tokens and dapps and track over 10K crypto projects to spot the winners. Follow @bryancolligan and join our telegram to get our next data drop: the fastest-growing DeFi crypto games by user count.
And if you need help, get in touch.
If you’re interested in learning about more growth strategies for your project, we encourage you to connect on Twitter @bryancolligan. Join our Telegram for members-only alpha and research from our team.