TeeToken.com is a unique online retailer of Ethereum T-Shirts, for every T-Shirt bought by a customer, we award them with 100 TeeTokens, These tokens can be used to claim a reward in Ether at the end of one year since the sales campaign started.
We wanted to do something with Ethereum that moves beyond the convention of:
- Announce Project.
- Raise Capital in Ether.
- Make Contributers Wait Till We’ve fulfilled Our Promise.
- Deal With Contributor Frustrations.
- Making Sure Token Issuances Abide By Regulations.
However, our budget and grit weren’t willing to endure all of the above which come at serious time and financial costs, the teams that put up with are commendable.
Yet, the Blockchain remained intriguing and we wanted to play…Somehow.
Did our token really have to grant license to use or benefit from the development of complex mechanisms built on top of Ethereum? Yes…there was no way around it, Ethereum is in itself very intricate but the least we could do is keep it as simple as possible for anyone to fiddle around with the system.
It’s a daunting task for blockchain veterans to get the uninitiated up to speed with everything that’s happening in the cryptosphere.
An AHA! moment came about by just asking ourselves a few questions…
Instead of evangelizing the future potential of Ethereum, why not invite users to experience Ethereum in its current state for themselves?
The simplest way to do this is to just give away Ethereum tokens for FREE!
But why would people value free tokens?
Maybe if those tokens represented a reward of sorts, users may be inclined to go through the trouble of learning how to interact with a smart contract…hmmm
How would the value of that reward be calculated?
Let’s tie it to the value of sales generated by a consumer product (T-Shirts)
How would the reward value be represented?
In a simple state, smart contracts can be coded to function as containers of Ether which can be claimed by users who interact with the contract.
So…we came up with the following:
Issue a finite number of tokens: 10 Million
Our total token issuance represents a reward equal to 20% of the revenue generated by a sales campaign.
If revenue= $100, 10M Tokens = $20.
If a user owns 100 Tokens, their claim is = $0.0002 (equivalent in Ether) ONLY IF we were to fund the smart contract at the exact time a sales campaign has ended.
What if we purchased ether at intervals based on sales frequency?
Let’s explore a scenario:
· A sales campaign runs for one year. In the first 2 months we generate a revenue of $5000. 20% of that is $1000 which needs to be converted to Ether
· The price of Ether is $300 and we acquire 3.3 ETH which we secure till we have to fund the smart contract at the end of one year.
· In the consecutive months we generate $10,000 in revenue, $2000 needs to be converted to ETH
· The price of Ether has risen to $500 and we acquire 4 ETH.
· The sales campaign ends and we fund the smart contract with 7.3 ETH.
If we purchase Ether at different intervals during a sales campaign and account for the reward in USD, We are effectively locking in the price of Ether for TeeToken holders. They are hedged against the price volatility and may even profit.
A situation where the price of Ether drops drastically also holds true, however, the patrons of our service would have received an awesome T-Shirt anyway, the TeeToken economics are a value-added service which at the very least would be worth a little under $1 BUT they get to interact with an Ethereum smart contract and speculate on the price of Ether…isn’t that neat?
Moreover…we give away 100 TeeTokens per T-Shirt…IF we’ve given away all 10M TeeTokens, the revenue generated from every consecutive T-Shirt sale accrues to those who already hold TeeTokens.
Note: We may have over-issued the number of TeeTokens for our pilot campaign and are working out an economic model that serves our customers better.
Realizing that all we’ve done is turn Ethereum into a loyalty platform with the core reward being Ether resulted in an unintended consequence, more on that later in this article.
Rewards Systems:
To summarize how these systems are put in place, there are two broadly accepted definitions:
A Closed-Loop Rewards System: Commonly associated with a store card that is issued to the patrons of a business so that they may collect points over time and redeem them for fractional discounts on future purchases from the same store.
An Open-Loop Rewards System: Attributed to almost any card that bears the logo of Visa or Mastercard on it. These cards can be used practically anywhere and are not bound to being used only in the enterprise that they were issued in. These cards allow us to spend conventional currency and earn other “currencies” in the form of points that may be redeemed for goods, services and conventional money. In essence, credit card reward points share an exchange rate with common currency.
With the rapid ascent of crypto, we figured…lets replace the card with an Ethereum Smart Contract.
A contract that stipulates:- Buy from us and receive a reward in Ether.
If Ethereum is great at issuing tokens, then why not define those tokens as a claim for an amount of Ether determined by the revenue generated from a sales campaign?
We were certain that if our toes had to dabble in this ecosystem, it would be with the highest levels of risk aversion, which would mean selling a product or service that is tried & tested with control over its supply chain.
Our T-Shirts are manufactured at a facility that screen prints 5 Million+ T-Shirt Impressions A Year, Ships to 80 Countries Worldwide and holds long standing contract with brands like Hard Rock Cafe.
Distributed Ledger…Meet Distributed Online Fashion.
The online T-Shirt business has already gone through its own type of decentralization, we modified the model to fit the context of our goals
Designers = TeeToken.com || Manufacturer = TeeDesignshop.com
- A Tshirt graphic is crowdsourced from designers.
- The manufacturer and designer agree on a profit share before preparing a virtual representation of the design so that it may be marketed on social media.
- Customers place a preorder request by sharing their payment details.
- If enough people place pre-orders (The minimum pre-order quantity is 3) the manufacturer charges all pre-order customers and proceeds to ship that design. (see: Teedesignshop.com)
Note: A bulk of our initial feedback has been negative about the requirement of pre-ordering a design. We are shifting away from this model towards holding inventory very soon.
Buy A Tshirt — — Receive 100 Free TeeTokens — — Claim an Ether Reward. Simple.
Where Do We Go From Here?
Why not use Ethereum as a reward token printing machine that ANY enterprise can interface with their supply chain?
Ethereum is still an early stage software, A hammer that wants to be a Swiss army knife, but for now…Rewards might be the nail.
This is extraordinary because we can merge Ethereum smart contracts with ANY goods or services business that at present (NOW!) can generate revenue.
That revenue can be shared in Ether with all business patrons as incentive to promote the product and/or speculate on the price of ether.
Ethereum tokens are borderless, this opens up a business to binding its revenue streams to charitable causes, for example:
- 10M teetokens were issued.
- 1M TeeTokens will be gifted to good will missions, these charities are included into our revenue stream in a permissionless manner.
It’s as simple as sending email to involve an organization or individual into our revenue stream….Think about that!
Note: The only non profit that has accepted our TeeTokens for free was Code to Inspire
There are issues with this, lets try and address them:
- Low returns for Token holders, rebates are only a partial refund of the total spend that a customer has made —
Granted. These returns are not very attractive, however:
- The least a buyer can expect is an awesome T-Shirt.
- A FREE Ethereum token with the opportunity to acquire a next generation digital asset.
- Smart Contract audits are expensive and not conducive to small businesses taking on such risk. — Maybe the Ethereum Foundation could formalize and audit smart contracts which serve the needs of businesses that want to offer discounts in the form of Ethereum Tokens?
Can you imagine Ethereum as the base platform for loyalty points issued by just about any business? We can!
To automate the issuance and distribution of an Ethereum Token which represents a potential reward in Ether at conventional Point of Sales Systems interests us very much.
An Unintended Consequence
One of the key disputes with Ethereum Token sales is whether they should be considered securities under the eye of the SEC.
Simply put, loyalty/reward points do not fall under the scrutiny of securities law, I have studied the all-encompassing Howey test for awhile now and reward points are not issued against an investment of money with the expectation of profits.
With Ethereum, the lines are blurred when we consider that ERC20 Ethereum tokens are tradeable on decentralized exchanges. Nevermind that their value is insignificant, the opportunity to speculate on the sales of a single tangible product does present itself and could result in some interesting market behavior.
Inonit /TeeToken.com are the result of many years of observing the blockchain space and the nagging itch to do something which makes a mark.
A lot of love has been poured into serving the Ethereum community with a service that defies all norms and reshapes the standards by which people use the platform.
We’ve interfaced Ethereum with physical manifestations of itself in the form of premium quality T-Shirts and are proud to have done so!
Do support the Teetoken project if you feel it aligns with your values. If not, please tell us why and how we could do better.
Share your thoughts with us: im@inonit.org and do hit the clap button if you enjoyed this article.
TeeToken.com is a unique, LIVE, tangible product business that gives away reward tokens for every T-Shirt sold.
Inonit Ltd is a firm HQ’d in Mauritius which likes to tinker around with distributed incentive systems.
