Cryptocurrencies are commonly known as stores of value, but as the blockchain technology space continues to mature, Utility tokens are created that extend their benefits beyond mere financial gain.
Scott Gralnick, director of global partnerships at ShapeShift – a Swiss cryptocurrency exchange – told Cointelegraph Cryptocurrencies can be helpful when launching Web 3.0 as more utility tokens offer features that go beyond market value:
“ShapeShift is not just about whether a token has a value and can be traded or held. In the future, we expect tokens to have functions that go beyond pure digitality. Rather, we believe that the tokens are a completely decentralized ecosystem enable. “
While there is still no clear definition of “Web 3.0”, the term is used to describe the technologies that will determine the future of the Internet. As, Many in the crypto community believe that this future version of the web will be decentralized.
Don Tapscott, a famous writer and co-founder of the Blockchain Research Institute, told Cointelegraph that Web 3.0 is in the eye of the beholder. “”There are many definitions, but in general I am not keen on stage theories. I find that as time goes on, people begin to shape reality to match their own theory“said.
Multipurpose token for Web 3.0
To enable real decentralization, Gralnick stated that the ShapeShift FOX loyalty token introduced in November 2019 has become a multi-purpose token that can now be used in three ways across the ShapeShift ecosystem.
Although FOX tokens have value, Gralnick mentioned that they also don’t offer users commissions on the ShapeShift platform. Additionally, Gralnick announced that ShapeShift recently released a product feature called “Rainfall” that rewards ShapeShift users for holding FOX tokens. “”If you are a verified ShapeShift user and you have FOX in your wallet, you will be automatically logged into Rainfall“said Gralnick.
Simply put, Rainfall is designed to reward ShapeShift users who hold FOX alongside the US dollar-backed stablecoin, USD Coin (USDC). For example, every time a ShapeShift user makes a trade on the platform, they sign up to earn free USDC funds. Gralnick said that users with higher amounts of FOX tokens have a better chance of winning the stablecoin. Though the project kicked off on October 28, Gralnick said it had given more than 5,000 Rainfall Awards to users, noting that 3% of users received more than $ 25 from USDC.
It is important to note that rainfall is different from staking. Eric Voorhees, founder of Shapeshift, told Cointelegraph that while Rainfall may be viewed by some as a “work for rewards”, it is actually much simpler. “”Our users don’t need to compromise their FOX tokens anywhere. As long as they have them, rain payouts are earned“said.
Binance, one of the largest exchanges in the world, also uses the native BNB (Binance Coin) token to provide multiple functions to users.
Changpeng Zhao, CEO of Binance, told Cointelegraph that Binance’s BNB token has several types of uses. While BNB is known for fueling the Binance ecosystem for the underlying gas payment, Zhao mentioned that it is also used for trading fees on both the company’s exchange and the decentralized exchange.
In addition, BNB is used for token sales on the Binance Launchpad as well as for payments for merchants. For example, it was announced in May that CoinPayments, a leading provider of cryptocurrency payments, would be supporting Binance BNB for merchants around the world. The BNB token was also used to reward users, as was shown when Binance offered BNB tokens to test the Binance decentralized exchange at launch. Zhao commented:
“There are so many uses and use cases for BNB, from gaming to cross-border transfers. There is a huge, diverse community in the BNB ecosystem right now. I don’t know what they’ll come up with next, but I’m sure many of them are will be very exciting “.
Zhao further noted that Binance believes in long-term value investments, which the platform aims to build for the broader crypto community. Zhao stated that as the industry matures and participants interact with utility tokens, there will be more utility tokens designed to fuel the global ecosystem.
DeFi will control multi-purpose tokens, but what about Web 3.0?
New multi-purpose tokens are emerging quickly for Zhao, especially with the advent of decentralized funding. There are 216 DeFi projects listed on Defiprime.com, along with a list of reputable DeFi tokens associated with specific projects.
And while many DeFi tokens are viewed by the crypto community as a means to “get rich quick,” some go way beyond financial value. For example, Ichi.farm is a new DeFi project that uses a governance token called “ICHI”.
A founding member of Ichi.farm told Cointelegraph that tokens, which represent an elaborate exposure to assets, are already becoming more common. For example, They noted that the ICHI will be used to vote to ensure the economic policy of the protocol. In addition, 0.5% of the trading volume on the Ichi.farm exchange is automatically converted into ICHI and distributed to ICHI stakers. Finally, the token is used as an incentive to provide liquidity on the exchange. Other DeFi projects like Uniswap also enable multi-purpose tokens. For example, Uniswap’s UNI tokens are used to facilitate community governance.
While this may be the case, ShapeShift’s Gralnick pointed out that many DeFi projects often allow for the most common benefit: governance options. However, Gralnick mentioned that ShapeShift’s FOX token goes way beyond governance:
“We are excited about a benefit that goes beyond governance and voting rights. We can and must continue to innovate in this area. Rainfall tries to show the crypto community and developers that tokens have to be versatile, which means that there must be such a thing. ” User benefits that do not depend on the value or governance model of the token. We are taking steps to demonstrate how tokens should span multiple utilities in the future and will continue to provide new deployments. “
Blockchain projects like Polkadot also use cryptocurrencies to create Web 3.0. For example, Polkadot’s DOT token serves three purposes: network governance, network operations, and parachute creation. In this case, the third function plays an important role as it can be used to create new parachutes – or new blockchain projects – on your network.