Kik Points: Key Learnings from a Centralized Economy

Kik Points was a centralized digital economy that lived within Kik for about 2.5 years, and was highlighted in the Kin Whitepaper (page 10). The whitepaper references some impactful metrics on the project’s aggregate transaction volume, but in the interest of brevity a lot was left out.

Now, I want to take this opportunity to unpack some key insights from Kik Points — the centralized economy — that emphasizes the impact of a decentralized economy.

Genesis of Kik Points

What makes Kik unique is that it is not just a chat app, it’s a chat community. The core function of messaging is relatively commoditized. Platforms like iMessage and WhatsApp serve the function of communication — the key differentiator with Kik is that its username-based. This empowers users to own their digital identity. Kik users connect across different platforms and come to Kik to “hangout” — forming a digital society on Kik. Kik Points was developed to answer a simple question: could Kik give users their first “job” in this digital society?

The product experience was simple. Users got a wallet — they could earn Kik Points by engaging with brands and could spend on digital content.

Not only was there a significant appetite to transact (~300k transactions per day), there was an interesting second derivative impact on the user experience. Kik users who had a wallet comparatively were having a better experience than those who didn’t. Having a wallet and the opportunity to earn and spend generated a high level of intrinsic value. Three key insights illustrated this: higher retention, more friends, and more messages.

These were exciting metrics, but the vision was always bigger. Users have a lot more to offer in the community than just engaging with brands. And they have a desire to spend on more things than stickers, and to do this in more places than just Kik. (Sure, users spend between 30–40 mins per day in Kik, but they also spend another 2 hours on other platforms.) This was the impetus to sunset Kik Points even though it was going well.

The whole is greater than the sum of its parts

A decentralized economy where users are empowered to create value in the places they’re most adept and capture value in the places they get most utility will generate total value orders of magnitude higher than a collection of centralized economies. Centralized digital economies are the equivalent of Starbucks paying their employees in Starbucks Stars — sure the employee may want a daily coffee, but they probably want to spend their earnings elsewhere too.

Just like an employee is motivated to come and work because they have purchasing power for all the things they value, so too does a digital service benefit from users being able to capture value elsewhere. And vice versa — if a digital service is a destination for a user to spend, the digital service will benefit from that user acquiring purchasing power where they can do so most effectively.

It’s a paradigm shift in thinking for digital services that have operated in today’s environment of hyper-competition to monopolize eyeballs and attention. But with the embedded incentives inherent in a cryptocurrency, collaboration actually maximizes value generation. The whole is greater than the sum of its parts — it’s better to be a contributor to a large and infinitely scalable ecosystem than wholly control a smaller ecosystem with a ceiling.

That’s the power of decentralization: New entrants are additive in nature where they would be seen as competitive (and potentially reductive) in a centralized economy.

An Analogy

I like to use a party as an analogy here. (Because who doesn’t like to party?) The goal is to create the best user experience, so users are the party-goers. In the current model of competitive, centralized digital services, every digital service is trying to throw their own party.

One party (digital service) may have great music but bad food and poorly mixed drinks. Another party may have great food but terrible music (country), and so on. Party goers are forced to choose between these parties, or spend a little bit of time at each one. The result is a bunch of small parties where everyone has an “ok” time.

But what if all the party hosts decided to throw a big street party? The host with the good music brings their speakers, the host with the good food feeds everyone, and so on. Now, all party-goers show up to one place and have an awesome time! The DJ is going to get more tips; the bartender is going to sell more drinks; the food vendor is going to sell more food — everyone wins.

In a digital sharing economy powered by Kin, everyone wins too.

Key Learnings

The first learning of Kik Points was that earning the currency made for a seamless user experience and drove recursive behaviour (high DAU:MAU ratio). The second learning was that in order for a user to amplify their digital experience, this frictionless experience needed to extend to all the places a user is spending their time. A decentralized ecosystem of digital services underpinned by a common currency, Kin, accomplishes this for the user. The Kin Rewards Engine aligns the incentives of these digital services such that total value creation is maximized through collaboration.