LOYALTY 2.0 or why Liquid Bonus® is useful to retail

Juli @ Liquid Bonus
7 min readFeb 22, 2018

This presentation has been prepared and made for Retailer Conference 20 FEB 2018 in Moscow

This presentation is aimed at highlighting the problems of the legacy loyalty ecosystem in retail and to offer new ways of improving it by means of decentralization and combining of centralized proprietary loyalty programs and their coalitions into a single global unified ecosystem.

Review of the reasons which, in our opinion, preventing from further progressive development of business associated with loyalty and discount systems


High cost of ownership is caused not just by technologies (they are being improved and become cheaper every year), but rather by centralization and closeness of legacy loyalty systems. Every program shall bear the costs for the creation and deployment together with operation, which will never allow making loyalty systems a truly mass product, affordable for smaller market players.

Expiration of points — an extremely unpopular measure that hurts service expansion, but this is inevitable for every retailer at least until there is an alternative way of limiting deferred liabilities.

E-cash and card transactions help to simplify the presentation of privileges to consumers and redemption process, but transition to cashback inevitably leads to the loss of the loyalty “game” with consumers, thus loosing the key success factor of any loyalty program. Banks and payment systems are in love with cashback, but is it so useful to retailers !?

Mastering cashback as a replacement of bonus points leads to direct competition between retailers which, instead of paying-back for their investments in loyalty programs, throw their marginality into the furnace of price wars

CONSUMER LIMITATIONS restrain the evolution no less than the factors described above

The relentless pressure of program proposals has already led to loyalty market saturation — to such an extent that it affected the ability of consumers to effectively use their subscribed programs.

The complexity of signing-in and adaptation is due not so much to the complexity of working with a single program, as to the problems faced by a consumer who has to repeatedly go through the same procedures

Control — it is already impossible for average consumer to effectively accumulate and timely reward bonus points of numerous loyalty programs

If the current trend will not change very soon, and the number of proprietary centralized loyalty and discount programs will continue to grow at the same pace, then the percentage of active users will drop down to 30% by 2020.

This will cast a doubt on the feasibility of creating new legacy loyalty programs.

Comments to the basic set of properties necessary for making possible the decentralization of loyalty ecosystem:

Any customer-specific data, business algorithms and methods, as well as operating conditions of existing loyalty programs should remain confidential in case of their joining the global decentralized loyalty ecosystem;

Economic viability and unification are also the determining factors of success.

It is essential that the consumer abstraction from numerous proprietary loyalty interfaces is not proclaimed mandatory, but it will be a rescue for those consumers who have already accumulated so much fatigue that they are potentially ready to ignore any other loyalty proposals.

LIQUID BONUS® — is an independent, universal and compatible instrument allowing to minimize or compensate the most of the friction and problems inherent in existing centralized loyalty systems.

Every Interface (Gateway) between the existing legacy loyalty programs and external decentralized Liquid Bonus® ecosystem will be fully controlled and operated by an appropriate participating program, which will be able to setup and change input/withdrawal transaction fee and other condition(s) if and when necessary.

Direct use of Liquid Bonus® tokens shall make it possible to increase the customers involvement in the loyalty ecosystem. This applies consumers who can more effectively manage the accumulation and redemption of privileges through the unified compatible user interface, as well as suppliers and smaller retailers unable to setup and operate legacy loyalty system.

The global ecosystem of loyalty without the intermediary Liquid Bonus® infrastructure is looking like the global cellular communication ecosystem before the introduction of automatic roaming service. At that time, all mobile network operators worked autonomously, providing communication services solely to their regional subscribers. Some of them have later managed to sign direct agreements with other operators thus only covered subscribers were benefitting from a manual roaming service (roaming by prior application). In fact, such transitional business model is very similar to the modern loyalty coalitions that do not eliminate the main friction of centralized systems thus remaining “local” by either geographical or business feature.

The global ecosystem of loyalty having the intermediary Liquid Bonus® infrastructure shall be very similar to the modern mobile ecosystem having an automatic roaming service as unified and transparent service. Indeed, when going to another country, we never think of which mobile operator provides communication service. But it often happens that subscribers connect & call through competitive network, operated by a company which is in direct competition to the home network operator. Nevertheless, this seemingly ambiguous situation does not prevent subscribers from getting the telco service & paying for it, and at the end of the day, it turns to be not so ambiguous for mobile operators profiting from a seemingly contradictory business.

Blockchain was chosen as core technology for implementing a decentralized loyalty ecosystem, not as a tribute to fashion, but primarily as a

-technology that enables trust to a lot of non-trusting Parties and doing it without a trusted Arbitrator who must have 100% confidence of all participants.

-open technology, allowing to ensure confidentiality to every participating Party (otherwise regulators would never blame crypto-currencies for non-transparency of participants)

technology that has an excellent properties for multiple peers and communities

Organization of the global Liquid Bonus® ecosystem in terms of its operation and development should be implemented as an Association of Participants. All decisions will be made on the basis of consensus. By the way, this method of decision-making process has been built in our blockchain software as an algorithm.

After its commercial launch, the global, decentralized, compatible blockchain Liquid Bonus® Loyalty system will be operated and developed by its associate members.

I have got the following questions at the conference: “Which role the developer of the system sees in its operation and further development? and Where is your commercial benefit from the creation of this Liquid Bonus® Loyalty ecosystem?”

Currently FINSTICK Innovations bears the whole burden of financing the development of the Liquid Bonus® Loyalty ecosystem. We intend to return our investment through the initial LiqBo tokens offering (the further issuance of LiqBo tokens will be carried by Participants on the basis of consensus). In addition to it, FINSTICK Innovations intend to remain a part of the Liquid Bonus® Association by operating one of the Liquid Bonus® Core Nodes (thus entitled for getting a proportional part of operating fees). We also intend sell technical consulting and system integration services which are among FINSTICK Innovations core business activities.

Currently, the valuable stake of the pre-mined LiqBo tokens is already being offered to investors and companies that are interested in early participation, including the process of integration, pilot and launch of the decentralized Liquid Bonus® Loyalty ecosystem