According to executives at venture capital firm A16Z, more crypto projects should consider using the blockchain-based equivalent of airline miles to expand their user base and power their economies.

In a report Published On Thursday, A16Z reported that the least volatile token types of crypto are called “arcade tokens.”

These tokens maintain a relatively stable value within a specific software or product ecosystem, similar to airline miles rewards, credit card points or in-game currencies. They enable users to perform specific functions within that ecosystem rather than guesswork.

“While arcade tokens are not for every use case, they represent an important building block in the evolution of crypto networks.”

“Just as stablecoins have unlocked new forms of commerce, and network tokens enable decentralized value sharing and governance, arcade tokens can power digital economies at scale,” said A16Z researcher Scott Duke Comemers, chief technology officer Eddie Lazarin and others.

Using Arcade Tokens

According to A16Z, one such project is hospitality tech startup Blackbird and its parent FlyToken. The project launched a Web3 payments platform for restaurants in mid-2024, designed to reward customers and encourage adoption of the service.

“Blackbird’s $fly token allows customers to redeem it at any participating restaurant, and that redemption behavior is managed on a purpose-built blockchain layer powered by a network token.”

“For example, a decentralized computing network may use a network token for security and privileges among account providers, while an arcade token may be used to establish network effects in the customer base.”

“For example, frequent flyer miles and rewards points can encourage brand loyalty and can be used to purchase and upgrade. Digital Gold lets you buy or sell items in a video game,” he explained: ”

“Instead of giving holders ownership rights in the underlying ecosystem, arcade tokens give holders the ability to access or use certain applications or services. Importantly, they are designed to have market value. Committed to the program.

The report also argues that arcade tokens could provide significant utility for “cost-based economies or the integration of the physical world”.

Related: Demand for Tokenization No Longer Linked to Bitcoin: Galaxy Executive

Some of the benefits of using arcade tokens include price stability and usability, making it easier for users to understand what they are spending, simplifying accounting, and tokennomics for issuers.

Stable coins and other assets vs. arcade tokens

The report also highlights that while stablecoins can be used for similar purposes, the flexible dynamics of arcade tokens present other opportunities.

For example, issuers can essentially “print arcade tokens” to support ecosystem growth, such as grants, user and developer subsidies, while also encouraging users to stay within the economy rather than spend funds elsewhere.