When starting a blockchain business, don’t rush to issue coins first

In the blockchain industry, many practitioners believe that blockchain projects without tokens have no soul. The "tokens" here usually refer to Tokens issued on the public chain, which users can withdraw to decentralized wallets and trade on the chain or in centralized exchanges. But in fact, for the vast majority of blockchain projects, whether it is token economics design, exchange operations, or the combination of technology and public chains, they have not yet reached a sufficiently professional and mature level.

More importantly, the issuance and application of tokens face a complex regulatory environment around the world. The direct issuance of tokens by start-up teams not only brings huge compliance pressure, but may also lead to out-of-control operations. Therefore, a safer option is to first incentivize users through the points system, and then gradually convert the points into tokens after the ecosystem is stabilized, and migrate them to the blockchain to complete assetization.

The Value of Points: From Incentives to Transitions

The advantage of the points system is that it provides projects with a low-cost tool to verify the market while avoiding legal risks in the early stages of token issuance. Through points, the team can provide rewards to users within the application to enhance user stickiness and activity. When the points mechanism gradually matures, it can be tokenized, given more value, and circulated on the chain.

This model not only improves the team's operational flexibility, but also builds user trust and ecological foundation through points, laying the foundation for the future token economy. For example, a blockchain platform that focuses on community autonomy uses points to encourage users to vote and participate in governance tasks. After the points system is stabilized, on-chain tokens are introduced to allow users to more intuitively feel the value and role of tokens.

Take the recent token issuance of HashKey Group as an example. Founded in 2018, HashKey Group is a leader in digital asset financial services in Asia. HashKey Group is known for its comprehensive Web3 ecosystem layout, covering multiple core areas such as trading, investment, tokenization services, and infrastructure. Its main businesses include HashKey Exchange and HashKey Global. Among them, HashKey Exchange, as the first licensed virtual asset exchange in Hong Kong, provides users with compliant and secure trading services; while HashKey Global provides a variety of services to users around the world. It provides professional digital asset trading services and holds a Class F license from the Bermuda Monetary Authority.

HSK is the core token of the HashKey ecosystem, designed to support its vast business network and enhance user engagement. The total supply is fixed at 1 billion, and HSK is launched through non-public distribution, avoiding the legal and compliance risks that may be involved in public sales. This distribution method directly links the value of the token to the activity of the ecosystem, making it more sustainable. In practical application scenarios, HSK is endowed with multiple functions. In the exchange, HSK can be used to pay platform handling fees and provide holders with transaction fee discounts, significantly reducing transaction costs. In addition, as a core tool for community incentives, HSK promotes users' participation in ecological construction and increases community activity through various reward programs. Users holding HSK can also gain priority access to new products and services launched by HashKey to further enhance user experience. This diversified application design makes HSK not only a functional token, but also a key driving force for ecological collaborative development.

HASHKEY token issuance model and application scenarios provide valuable experience reference for start-up teams. During the token issuance and promotion process of HASHKEY, they adopted the following strategies:

1. Ecological incentives and distribution

HASHKEY's tokens are not distributed through public sales, but through internal ecological incentives. This model avoids the risk of violating securities regulations while effectively expanding the base of token holders through a reward mechanism.

2. Mission-driven airdrops

Users are rewarded with tokens by completing specific tasks. This approach not only enhances users' sense of participation in the ecosystem, but also promotes community activity and brand communication. For example, HASHKEY has rewarded tokens through ecological activities to motivate users to share and promote ecological content.

3. Combination of business and technology

HASHKEY's tokens incorporate a variety of functions in practical applications, such as participating in governance, paying fees, and exchanging ecological services. This token economic design not only conforms to business logic, but also promotes the in-depth application of blockchain technology in the financial field.

This progressive model from points to tokens not only allows HASHKEY to avoid unnecessary compliance risks, but also enhances users' trust and stickiness in the project.

A win-win path for compliance and business verification

The path from points to tokens is not only the key to the legalization of the project, but also a necessary step in commercial verification. As Web3 entrepreneurs, if token issuance is also on your future roadmap, perhaps starting with points is a more appropriate development path. We can conduct specific analysis from the following four aspects:

1. Market verification of user incentives

Whether it is traditional centralized points or future-oriented decentralized project tokens, the core issue to be solved is user acceptance. The core value of the early points system is that it provides project parties with a low-cost tool to test the market. Through the points reward mechanism, the team can observe users' acceptance and stickiness of the project. For example, an application that focuses on decentralized knowledge sharing can design point reward rules: users upload high-quality content to gain points, and additional points will be awarded if the content is liked or collected. On the one hand, this form attracts early user participation, and on the other hand, it accumulates project data, providing a real basis for subsequent tokenized economic models. The points consumption data also reflects users’ demand preferences for different payment services. This kind of market verification not only improves the operational efficiency of the project in the early stage, but also points the way for subsequent tokenization design.

2. Choosing the timing of tokenization

Pragmatically speaking, tokenization is a natural extension of the development of the points system, but its timing needs to be combined with user base, ecological construction and technical preparation. Initially, users are encouraged to participate in minting and trading in the form of points, and gradually transition to tokenization after the points system matures. This strategy effectively avoids the problem of unsalable tokens or user loss caused by "immature technology and unsound ecology". For example, a certain NFT project achieved a daily transaction volume of over one million US dollars on the first day after its points system was launched for one year. This kind of timing of tokenization provides important reference for start-up projects.

3. Balance between compliance and financing

Many teams mistakenly believe that tokens are the only tool to attract investment. But in reality, financing models can be more flexible. For the vast majority of blockchain entrepreneurial teams, equity financing can be used to obtain funds in the early stage. On this basis, if the project has a need for token issuance in the future, both parties can clearly stipulate in the shareholder agreement that when When the project develops to a specific stage, a certain proportion of tokens will be allocated to investors. This method not only meets the team's funding needs, but also avoids the compliance risks of direct sales of tokens. In addition, many start-up projects introduce qualified investors or investment funds by establishing overseas companies (such as Hong Kong or Singapore), and combine them with a points reward mechanism to increase user stickiness. This can not only ensure financing compliance, but also improve project valuation through verification of user data and business scenarios. This method meets the funding needs and avoids the compliance risks of initial token sales.

4. Linkage verification of technology and application

The joint verification of technology and business scenarios is the key to the success of project tokenization. For example, a blockchain project focusing on green energy trading initially used points to encourage household users to upload electricity consumption data and energy-saving measures, and accumulated a huge energy data pool. In the technical verification stage, the platform exchanges points for environmentally friendly tokens, combines off-chain energy data with on-chain smart contracts, and completes the leap from points to tokens. The advantage of this model is that points are not only a user incentive tool, but also provide real scenario data in technical application testing to help the team discover problems and adjust strategies. After the model has been adjusted for many rounds, it is officially established through tokens. By making the risk pool public, this strategy significantly reduces the risk of failure after launch.

Through the above strategies, the team can not only steadily promote the compliance of the project, but also effectively verify its commercial value and user needs, laying a solid foundation for the future token economy.

Mankiw Lawyer Summary

From points to token, it is not only the evolution of a business model, but also an entrepreneurial path that combines market verification and compliance innovation. In the context of the increasingly complex global regulatory environment, start-up teams should abandon the illusion of "one step" for token issuance, adopt a step-by-step strategy, start with points, accumulate data through market verification, optimize mechanisms, and then transform successful experience into district Assetization applications on the blockchain.

This "progressive tokenization" model not only reduces the legal risks in the early stages of the project, but also makes the verification process of commercial value more natural and efficient. Only by continuously experimenting and optimizing within a compliance framework can blockchain entrepreneurs find their own breakthroughs in the complex and ever-changing market environment. Internet entrepreneurship is all about running fast in small steps, but in the field of blockchain exploration, steady and steady steps may be the real "fast".