Multi-utility token to enable Web 3.0 providing more than financial value

[ad_2][ad_1]

Cryptocurrencies are commonly known to be a store of value, but as the blockchain space continues to mature, utility tokens are being created that extend their benefits beyond mere financial gains.

Scott Gralnick, director of global partnerships for ShapeShift, a Swiss cryptocurrency exchange, told Cointelegraph that cryptocurrency can help launch Web 3.0 as more utility tokens are designed to provide functions beyond market value:

“At ShapeShift, we are looking beyond the idea of ​​whether a token has value and can be traded or held. Moving forward, we hope that the tokens have functionality beyond just being a digital asset. Rather, we believe that tokens will enable a fully decentralized ecosystem. “.

While there is no clear definition of “Web 3.0” yet, the term is used to describe the technologies that will power the future of the Internet. Therefore, many in the crypto community believe that this future version of the web will be decentralized.

Don Tapscott, famous author and co-founder of the Blockchain Research Institute, told Cointelegraph that Web 3.0 is in the eye of the beholder. “There are a lot of definitions, but in general I’m not thrilled with stage theories. I find that, over time, people begin to shape reality to fit their theory, “he said.

Multiutility tokens designed to drive Web 3.0

In order to enable true decentralization, Gralnick explained that ShapeShift’s FOX loyalty token, launched in November 2019, has become a multiutility token that can now be used in three ways in the ShapeShift ecosystem.

Although FOX tokens have value, Gralnick said they also provide users with free trading on the ShapeShift platform. Additionally, Gralnick shared that ShapeShift recently released a product feature called “Rainfall” which rewards ShapeShift users for holding FOX tokens. “If you are a verified ShapeShift user and have FOX in your wallet, you will automatically be placed in Rainfall,” said Gralnick.

Simply put, Rainfall is designed to reward ShapeShift users who hold FOX with the US dollar-backed stablecoin, USD Coin (USDC). For example, every time a ShapeShift user makes a trade on the platform, they are entered to win free amounts of USDC. Gralnick shared that users who hold larger amounts of FOX tokens have a better chance of winning the stablecoin. Although the project launched on October 28, Gralnick shared that over 5,000 Rainfall awards were given to users, noting that 3% of users received over $ 25 in USDC.

Importantly, Rainfall is different from staking. Eric Voorhees, founder of Shapeshift, told Cointelegraph that while some might view Rainfall as “aiming for the prizes,” it’s actually a lot easier. “Our users don’t need to bind their FOX tokens anywhere. As long as they keep them, they earn the Rainfall payments, “he said.

Binance, one of the largest cryptocurrency exchanges in the world, similarly uses its native Binance Coin (BNB) token to provide users with multiple features.

Changpeng Zhao, CEO of Binance, told Cointelegraph that Binance’s BNB token has multiple forms of utility. Although BNB is known for fueling the Binance ecosystem with its underlying gas, Zhao said it is also used for trading fees on both the company’s exchange and the decentralized exchange.

Additionally, BNB is used for token sales on Binance Launchpad, along with merchant payments. For example, in May, it was announced that CoinPayments, a leading cryptocurrency payment provider, will support Binance’s BNB token for merchants around the world. The BNB token was also used to reward users, as demonstrated when Binance offered BNB tokens to test Binance’s decentralized exchange when it launched. Zhao commented:

“There are so many applications and use cases for BNB, from games to cross-border remittances. There is now a large diverse community in the BNB ecosystem. I don’t know what they will find next, but I’m sure a lot of them will be very exciting. “

Zhao further noted that Binance believes in long-term value investing, which is what the platform is trying to build for the crypto community at large. Zhao explained that as the industry matures and participants interact with utility tokens, there will be more multi-utility tokens designed to power the global ecosystem.

DeFi will drive multi-utility tokens, but what about Web 3.0?

For Zhao’s point, new multi-utility tokens are emerging rapidly, especially with the rise of decentralized finance. There are 216 DeFi projects listed on Defiprime.com, along with a list of trusted DeFi tokens associated with certain projects.

And while many DeFi tokens are seen by the crypto community as a means to “get rich quick”, some go far beyond financial value. For example, Ichi.farm is a new DeFi project that uses a governance token known as “ICHI”.

A founding member of Ichi.farm told Cointelegraph that tokens representing sophisticated asset exposure are already becoming more common. For example, they noted that ICHI is used for voting to secure the economic policies of the protocol. Furthermore, 0.5% of Ichi.farm’s trading volume is automatically converted to ICHI and distributed to those who participate in ICHI. Finally, the token is used as an incentive to provide exchange liquidity. Other DeFi projects like Uniswap also enable multi-utility tokens. For example, Uniswap’s UNI tokens are used to facilitate community governance.

While this may be, ShapeShift’s Gralnick pointed out that many DeFi projects often allow for the most common utility: governance options. Yet Gralnick said ShapeShift’s FOX token goes far beyond governance:

“We are excited about the utility beyond governance and the right to vote. We can and must continue to innovate in this area. Rainfall is trying to show the crypto and developer community that tokens should be multiutility, which means there should be user benefits not dependent on the token’s value or governance. We are taking steps to demonstrate how tokens should be multi-utility in the future and will continue to provide new rollouts. “

Blockchain projects like Polkadot also use cryptocurrency to create Web 3.0. For example, Polkadot’s DOT token serves three purposes: network governance, network management, and parachain creation. In this case, the third function plays an important role, as it allows you to build new parachains – or new blockchain projects – on its network.