Economic incentives that drive human behavior play a vital role in the application of blockchain technology. This is evidenced by the various loyalty and incentive programs implemented by the blockchain industry.
Tech companies have long offered rewards to engineers and developers for spotting bugs in software. Ethereum has always offered a rewards program. Crypto advocates feel that blockchain technology can take this practice to the next level.
Crypto Rewards: Bounty Hunters
Early examples of incentive-based activity in the crypto industry occurred during the initial coin offering boom of 2016-2017. So-called "bounty hunters" from around the world share media content for tokens.
Bounty hunters are rewarded for completing actions. They can participate in several reward programs at the same time. The highest-paying projects naturally attract the most knowledgeable and practical bounty hunters. Bounty programs are most often used for project ICOs to create buzz.
Tokens can also be used in traditional brand loyalty programs. Loyal customers drive a large part of business. The better the loyalty program, the better the customer experience. Crypto advocates feel that blockchain can completely change loyalty incentives. A Deloitte study found that blockchain could help loyalty programs be more customer-friendly. They can do this by reducing costs and making earning and using points an instant and secure experience.
Digital asset management company Bakkt publicly listed 72% of loyalty program members who have purchased the digital currency at least once in the past six months. More than half said they know the value of crypto-based loyalty points. Various projects and companies have deployed crypto-based loyalty programs. Including encryption-based "rebate" programs, DeFi pledge rewards, credit card rewards, NFT appreciation rewards, etc.
behavior change intervention
Rewards programs and loyalty incentives are just the tip of the iceberg when it comes to token-based incentives. A token economy can function as a behavioral management system whose goals or expectations are summoned and reinforced by tokens.
In addition to the crypto environment, such incentive schemes also involve tokens that can be rewarded in the future. Using markers to reinforce certain behaviors is called operant conditioning. It is generally found in elementary school settings.
Historically, this behavior has changed incentives, seeing many targets being used as tokens. These include tickets, poker chips or representative reward points, stamps, merchandise logos, etc. It must be clear what behavior is enforced and how tokens are gained or lost.
Much of this arrangement operates like Chuck E. Cheese, where a person gets a certain amount of neutral votes or tokens. It can then be exchanged for desired gifts such as toys, money, privileges, etc.
In addition to loyalty and incentive programs, more and more blockchain-based tokens are being picked to influence social effects. This is defined in academic circles as "behavior change intervention".
Changing impact on tokenized behavior could help the disadvantaged, improve supply chain management, and create the basis for a central bank digital currency.
Crypto Rewards: Use Tokens to Get People to Do What You Want
Crypto rewards: Tokens are agents of change
A behavior change intervention is understood as "a coordinated set of activities aimed at changing a specific pattern of behavior". Tokens based on the core of the token economy must be drivers of behavioral change in real-world ecosystems.
Individuals and organizations must wish to choose the activities governing activities and all behaviors that the token economics of the system encourages. Especially considering that these tokens require a considerable change in social behavior.
There are many challenges based on the impact of changes in token behavior. For example, enforceability will be a major issue. Social impact practitioners, token engineers, crypto-economists, and experts in related fields will assist in identifying tools around token principles, protocols, tools, and ethics.
Managing the impact of behavior change requires creative new token designs that focus on the interdependence of data and social ecosystems. Engineers, crypto-economists, and behaviorists must continue to test token designs and comprehensive behavioral countermeasures to further capture desired social effects.
Furthermore, behavioral change has shown promise when it comes to changing behaviors to target behaviors as it is relevant to many of the issues we face today. For example, addressing climate change and achieving environmental sustainability goals (ESG) required by the government and companies.
The necessity of chain encouragement
The best incentives based on digital currencies are completely based on the incentives of digital currencies on the chain, because this is transparency and security. Clients want to be transparent so they know they are being rewarded appropriately. They want assurance that their network is basically secure.
Cryptographic algorithms represent a novel and exciting mechanism for rewarding data, be it rewards, loyalty, behavioral change, and influence. We see a lot of long-term crypto loyalty programs.
Crypto Rewards: Blockchain Projects Offer On-Chain Incentives
GYSR – The chain encourages the developer platform to start the pool and reward investors for some blockchain-based activities, such as providing circulation or mortgage NFT in the decentralized exchange pool.
BifrostRainbowBoost – Bifrost`s recently launched RainbowBoost program aims to integrate airdrops, NFTs, and whitelist privileges. RainbowBoost tokenizes, credits and incentivizes Bifrost chain participants. After completing an operation deemed beneficial to the entire network, their addresses will receive so-called raindrops.
Kultur-Token – The project rewards token-based economic activity.
Cycle4Value – Blockchain-based system brings rewards for cycling miles in a token economy.
OptimismCollective – a blockchain-based governance platform where participants can vote to incentivize distribution, with the idea of funding public goods.
The Crypto Awards: How to Revolutionize Crypto Loyalty and More
If companies want to succeed in the digital age, they will need to reward customers. Crypto-based incentive programs can reduce costs, increase transparency and security. Incentive countermeasures can give participants ownership of the network. It can encourage them to play an active role in network development through verifiable on-chain actions.
The more customers participate in the network, the more they focus on creating value for the network itself. By developing a fair way to quantify incentivized chain behavior, incentives can be designed to build better community consensus.
