Connect with us

Dennis Jarvis

The Power Of Loyalty Points And The Importance Of Getting Them Right – Dennis Jarvis, CEO Of Bitcoin.com

Published

on

The Power Of Loyalty Points And The Importance Of Getting Them Right – Dennis Jarvis, CEO Of Bitcoin.com

Prominent DeFi projects such as Uniswap, Curve, Aave, and MakerDAO declined in ETH terms since at least Q1 2021. Some see this as a fundamental failing of DeFi protocols to capture value and an inability to create moats. There are questions whether the composable and open nature of crypto prevents sufficient moats from being made at all.

I don’t agree with this. I think DeFi projects have done a poor job at creating sticky rewards and utility with their tokens.

In traditional markets, rewards and utility schemes are called loyalty reward programs. In this article I will argue that loyalty rewards programs can not only create moats, but become a core business of DeFi projects. The reason we haven’t seen this yet is because of a failure to understand how to properly use loyalty rewards programs. To support both parts of this argument I will examine the airline industry.

Advertisement

The rise of air miles

Modern frequent flyer programs (FFPs) were first introduced in the late 1970s. Although airlines had programs to track customers before, the major innovation of modern frequent flyer programs was to use mileage tracking to give rewards to its passengers. It was a clever marketing tool designed to create loyalty in the most profitable customers – the frequent flyers.

Since then it has become much more than a tool to increase customer stickiness. FFPs developed into a major revenue source for airlines. For example, according to this paper on frequent flyer programs, in the financial year of 2017-2018, Qantas Airways’ frequent flyer program accounted for 23.2% of the profit for the entire Qantas Group.

FFPs now span beyond the air travel industry into tourism, banks, telecommunication, insurance, and retailers. Air miles have become an economy of its own, acting like a virtual currency. Sound familiar?

Why crypto loyalty tokens are superior to traditional ones

Advertisement

Air miles are the most money-like of any loyalty points in tradfi, yet they are only accepted at participating partners, carry minimum thresholds for redemption, expiration dates, and so on. The key innovation of loyalty tokens in the crypto world is that, because you can easily cash them out for fiat, they are equivalent to real money. This means that loyalty points in the crypto world have the same power as real money to acquire customers and incentivize customer behavior. For projects that don’t have access to hundreds of millions of dollars in VC runway, loyalty programs present a huge opportunity.

The failure of loyalty programs in crypto

My thinking on this has partly been informed by this Harvard Business Review article on loyalty rewards programs. This quote summarizes the mistakes some loyalty programs in legacy markets and almost all crypto markets make:

“[T]oo many companies treat rewards as short-term promotional giveaways or specials of the month. Approached that way, rewards can create some value by motivating new or existing customers to try a product or service. But until they are designed to build loyalty, they will return at best a small fraction of their potential value… A company must find ways to share value with customers in proportion to the value the customers’ loyalty creates for the company. The goal must be to develop a system through which customers are continually educated about the rewards of loyalty and motivated to earn them. Achieving sustainable loyalty, measured in years, requires a strategic sustainable approach.”

Important lessons

Advertisement

These are the most salient ideas I took away from the aforementioned HBR article. I’m confident that if more projects begin to internalize these lessons, they’ll be able to create and retain value in their project.

Value created must exceed the cost of rewards delivered.

This seems obvious, but many (perhaps most) DeFi projects with a loyalty component break this first tenet. The playbook is typically to offer very high APY for staking in the hopes that bootstrapped liquidity will stay and the project will achieve critical mass. The reality, however, is that mercenary participants will dump your token and move on to the next high-APY project the moment your rewards dry up.

The only way to avoid this is good old fashioned product-market fit. You can bootstrap growth using loyalty tokens as incentives, but customers need a reason to stay.

Rewards should reinforce helpful customer behavior.

Advertisement

High APY staking rewards are a pervasive example of a maladaptive incentive. In fact, billion dollar crypto firms deploy hundreds of millions of dollars into new crypto projects, suck out all the value, and move on to the next one. Your rewards are teaching participants to harm your project. Make sure your rewards encourage behavior that is beneficial to the project.

Do you want your best customers to actively participate in governance, thereby feeling more psychologically invested over time? You could look into the viability of rewarding them for their proposals, votes, and community outreach.

Customers are not equal.

It’s common for DeFi projects to integrate tiered rewards systems, but all too often rewards are distributed linearly. A more effective model is to make tiered rewards top heavy. This provides a compelling reason for your most valuable customers to stay with you, but it also provides strong incentive for less valuable customers to climb the ranks – which leads to the final point:

Rewards should be aspirational.

Advertisement

From the HBR article:

”A company that offers average-value products and services to everyone wastes resources in over-satisfying less profitable customers while under-satisfying the more valuable loyal customers. The outcome is predictable. Highly profitable customers with higher expectations and more attractive choices defect.”

I’ve been repeatedly struck by some of the pedestrian rewards in some projects, such as Netflix, Hulu, or Amazon prime 1-month subscriptions. Does that motivate people, let alone high-end crypto users? It certainly doesn’t for me.

How about rewards such as a bottle of Yamazaki 12 year whiskey, or a new M1 MacBook Pro? A few quality rewards sounds more appealing than a constant drip of mediocre ones.

It’s often joked that crypto is speed running the entire history of the legacy financial system. I think this isn’t limited to financial markets. The work done in legacy markets on loyalty programs provides a proven path to loyalty and profitability. I’m confident in short order crypto projects will speed run through them to victory.

Advertisement

Dennis Jarvis
Bitcoin.com Chief Executive Officer

Dennis is an accomplished executive who is passionate about building stellar teams of people and promoting economic freedom through cryptocurrency adoption. Dennis joined Bitcoin.com in 2018 as Chief Product Officer, and became CEO of Bitcoin.com in 2020.

Bitcoin.com

Since 2015, Bitcoin.com has been a global leader in introducing newcomers to crypto. Featuring accessible educational materials, timely and objective news, and intuitive self-custodial products, we make it easy for anyone to buy, spend, trade, invest, earn, and stay up-to-date on cryptocurrency and the future of finance.

Advertisement

Image Credits: Shutterstock, Pixabay, Wiki Commons

Advertisement

Dennis Jarvis

Self-Custody Is More Than A Feature – Dennis Jarvis, CEO Of Bitcoin.com

Published

on

Self-Custody Is More Than A Feature – Dennis Jarvis, CEO Of Bitcoin.com

While markets are going up, people get more comfortable putting their cryptoassets into trusted third parties such as centralized exchanges and centralized lending platforms that promise increasingly enticing returns. The good times never last, though. As markets peak and monetary policy tightens, companies that overleveraged on the way up expose themselves to liquidity risks. If you deposited your cryptoassets into these products, perhaps unaware of their risk taking, your assets are exposed to their risks.

Not Your Keys, Not Your Coins

Pretty much everyone in crypto has heard this phrase at this point. This phrase is most applicable in the current market environment. Crypto and traditional markets are currently undergoing a contraction. During every contraction, whether it is in crypto or traditional markets, highly leveraged businesses have a greater chance of failing. Even worse, there have been countless stories of unscrupulous companies reaching for their customers’ funds to paper over the cracks.

We highly recommend for people to move your funds off of centralized services into self-custodial wallets (sometimes called non-custodial). Make sure it’s truly self-custodial, or you still don’t have complete control over your assets. Read more about the difference between custodial and self-custodial wallets here.

Advertisement

Risk Exposure to Failing Crypto Products

Self-custody doesn’t completely protect from risks associated with failing projects. We saw this spectacularly with LUNA/UST a month ago. However, there is a difference between custodial and self-custodial projects. The risks of LUNA/UST were apparent for many to see because the finances were mostly on-chain, transparent and free for anyone to observe. Despite that, plenty of participants, both retail and “sophisticated” institutional users were wiped out.

A far worse problem is the centralized crypto products because their finances are shrouded in mystery. It prevents any foreknowledge of their impending problems until it suddenly blows up. This is already unfolding now.

Celsius Network, a centralized borrow/lend crypto platform suddenly announced on June 13 that they were freezing customer assets. This was especially shocking given their CEO’s tweet responding to rumors of freezing customer withdrawals the day before.

Mike do you know even one person who has a problem withdrawing from Celsius?,

why spread FUD and misinformation.

If you are paid for this then let everyone know you are picking sides otherwise our job is to fight Tradfi together…

Advertisement

— Alex Mashinsky (@Mashinsky) June 11, 2022

.@CelsiusNetwork is pausing all withdrawals, Swap, and transfers between accounts. Acting in the interest of our community is our top priority. Our operations continue and we will continue to share information with the community. More here: https://t.co/CvjORUICs2

— Celsius (@CelsiusNetwork) June 13, 2022

This caused a market wide sell-off, during which centralized exchange Binance, the world’s largest crypto exchange, announced the “temporary pause of bitcoin withdrawals.”

Temporary pause of $BTC withdrawals on #Binance due to a stuck transaction causing a backlog. Should be fixed in ~30 minutes. Will update.

Funds are SAFU.

— CZ 🔶 Binance (@cz_binance) June 13, 2022

Advertisement

Since then, there have been alleged stories of Celsius customers having their collateral liquidated despite having sufficient assets to re-collateralize loans. They were unable to do so due to the account freezing. On June 15, The Wall Street Journal reported that Celsius had hired restructuring lawyers to “advise on possible solutions for its mounting financial problems.” For Celsius’ customers, the terms of use indicate their funds could be forfeit:

In the event that Celsius becomes bankrupt, enters liquidation or is otherwise unable to repay its obligations, any Eligible Digital Assets used in the Earn Service or as collateral under the Borrow Service may not be recoverable, and you may not have any legal remedies or rights in connection with Celsius’ obligations to you other than your rights as a creditor of Celsius under any applicable laws.

Meanwhile, rumors began to circulate on June 14 that famed crypto hedge fund, Three Arrows Capital (3AC) was insolvent. Like Celsius, 3AC had sequestered a large amount of ETH into stETH. The problem with stETH is that, while a secondary market is available to trade the staking derivative, it is far less liquid than ETH. While Celsius was attempting to find liquidity by selling stETH, 3AC sold much more. On June 15, rumors of 3AC solvency problems were confirmed with co-founder Su Zhu’s tweet.

We are in the process of communicating with relevant parties and fully committed to working this out

— Zhu Su 🔺 (@zhusu) June 15, 2022

Self-Custody Is Insurance

While it’s impossible to know if there will be contagion or how far it could spread (hopefully we’ve already seen the worst of it!), one thing is certain: if you self-custody your crypto, you will have much greater control over your money during up and down times.

Advertisement

Self-custody is certainly more than insurance, however, its role as insurance is critical. It is insurance against third parties, whether they be financial institutions or governments. All insurance comes with a premium, and self-custody is no different. In this case, it is paid in the form of personal responsibility, but the benefit is peace of mind.

Bitcoin.com’s mission is to create economic freedom, which is why we dedicate the majority of our resources to development of the fully self-custodial Bitcoin.com Wallet and other self-custodial products like the Verse DEX. Use them to take control of your Bitcoin, Bitcoin Cash, Ethereum, and ERC-20 tokens (support for more chains is on the way!).

Dennis Jarvis is CEO of Bitcoin.com

Bitcoin.com

Bitcoin.com is your premier source for everything Bitcoin-related. We can help you buy bitcoins and choose a bitcoin wallet. You can also read the latest news, or engage with the community on our Bitcoin Forum. Please keep in mind that this is a commercial website that lists wallets, exchanges and other Bitcoin-related companies.

Advertisement

Advertisement

Image Credits: Shutterstock, Pixabay, Wiki Commons

Advertisement
Continue Reading

4SV

Crypto Industry Leader Bitcoin.com Secures $33.6 Million In VERSE Token Private Sale

Published

on

Crypto Industry Leader Bitcoin.com Secures $33.6 Million In VERSE Token Private Sale

On Wednesday, the leading crypto industry firm, Bitcoin.com, announced it has concluded a private sale of its VERSE token and secured $33,600,000 from strategic investors. VERSE is meant to bolster Bitcoin.com’s growing infrastructure by providing a utility token that rewards users for contributing to the Bitcoin.com ecosystem.

Bitcoin.com’s Private Token Sale Raises $33.6 Million

This week, Bitcoin.com revealed that it has completed a private sale of its VERSE token and raised $33.6 million from participating investors. For over seven years, Bitcoin.com has been an industry leader when it comes to blockchain technology and cryptocurrency solutions. Bitcoin.com provides crypto exchange services, educational resources, a non-custodial wallet, and news. VERSE is meant to enhance the company’s growth by rewarding VERSE users for participating in the myriad services Bitcoin.com has to offer. Perks include rewarding the crypto community with VERSE for things like buying, selling, and swapping digital assets.

Learn more about VERSE at getverse.com.

VERSE will be released this summer as an Ethereum-based (ERC20) token with cross-chain compatibility. Just recently, Bitcoin.com revealed the introductory web portal getverse.com and VERSE white paper, in order to give the crypto community details about the VERSE launch. On May 5, 2022, Bitcoin.com announced that it completed a private token sale and raised $33.6 million from firms like Digital Strategies, Blockchain.com, Kucoin Ventures, Redwood City Ventures, 4SV, and Boostx Ventures.

Advertisement

Furthermore, well-known crypto pioneers and influencers such as Jihan Wu, Roger Ver, and David Wachsman participated in the private VERSE sale. Dennis Jarvis, Bitcoin.com’s CEO, explained in a statement that the token will add a significant amount of utility and value to the firm’s multiple finely-tuned crypto services. Jarvis further explained that the VERSE token public sale will take place this summer.

“Since 2015, Bitcoin.com has been a leader in introducing newcomers to crypto and guiding them along their crypto journey. So far we’ve built an incredible portfolio of products and services that count more than 4 million monthly active users and 30 million self-custody wallets created,” Jarvis said after the private sale concluded. “Today, we’re proud to announce VERSE, a utility, and rewards token for everyone who participates in the ready-built Bitcoin.com Verse ecosystem.”

Bitcoin.com’s CEO added:

VERSE is user-centric and adds tremendous value across our range of crypto products and services including the Bitcoin.com self-custody wallet app, the Bitcoin.com Exchange, the Verse DEX, Bitcoin.com News, and our upcoming crypto-enabled debit card. We’re also extremely excited to announce the Verse public token sale, which is scheduled to begin in June.

Kucoin Ventures Exec Says ‘Next Wave of Growth in Crypto Will Be Led by Strong Global Brands’

VERSE tokens are similar to the likes of crypto utility tokens such as BNB, CRO, or FTT. In the Bitcoin.com ecosystem, VERSE users will gain utility from things like yield farming on the Verse DEX, trading via the Bitcoin.com Exchange, staking tokens in contracts, and earning VERSE from a variety of Bitcoin.com’s current services.

Justin Chou, the chief investment officer at Kucoin Ventures, believes the crypto industry will be bolstered by well-known and reliable brands. “The next wave of growth in crypto will be led by strong global brands that create real-world products for millions of people,” Chou said in a statement. “Bitcoin.com will accelerate the development of products and partnerships that expand their reach globally.”

Advertisement

In addition to the recent private sale, the public sale is scheduled for June 2022 and 12,600,000,000 VERSE tokens will be available. Bitcoin.com will release the Bitcoin.com Verse Launchpad, which will give visitors information about the public sale, and allow people to purchase VERSE. The getverse.com website offers a signup form for updates about the public sale and other information related to the VERSE token and ecosystem.

Tags in this story

4SV, Bitcoin.com, Bitcoin.com VERSE, Blockchain.com, Boostx Ventures, crypto assets, Cryptocurrencies, David Wachsman, Dennis Jarvis, Digital Strategies, ERC20, ERC20 token, Jihan Wu, June sale, Justin Chou, Kucoin Ventures, Kucoin Ventures exec, perks, private sale, public sale, Redwood City Ventures, Rewards, Roger Ver, summer, utility token, VERSE rewards, VERSE Token

What do you think about Bitcoin.com completing a private VERSE token sale for $33.6 million? Let us know what you think about this subject in the comments section below.

Bitcoin.com

Bitcoin.com is your premier source for everything Bitcoin-related. We can help you buy bitcoins and choose a bitcoin wallet. You can also read the latest news, or engage with the community on our Bitcoin Forum. Please keep in mind that this is a commercial website that lists wallets, exchanges and other Bitcoin-related companies.

Advertisement

Advertisement

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Advertisement

Continue Reading

Top posts

Monero Faces Pressure In Keeping Upward Pace – Will XMR Overcome Resistance? Monero Faces Pressure In Keeping Upward Pace – Will XMR Overcome Resistance?
btcusd3 hours ago

Monero Faces Pressure In Keeping Upward Pace – Will XMR Overcome Resistance?

Monero has its hands full trying to keep its momentum and rally forward. But, it must first overcome obstacles. As...

TA- Binance Coin Continues To Look Strong Despite Altcoins Shakeout TA- Binance Coin Continues To Look Strong Despite Altcoins Shakeout
Binance Coin3 hours ago

TA- Binance Coin Continues To Look Strong Despite Altcoins Shakeout

The price of Binance coin (BNB) continues to look strong as it holds its support against Tether (USDT) after the...

July’s CPI Report Shows US Inflation Cooling — Critics Say ‘US Government’s Formula Understates The Actual Rise In Prices’ July’s CPI Report Shows US Inflation Cooling — Critics Say ‘US Government’s Formula Understates The Actual Rise In Prices’
analyst4 hours ago

July’s CPI Report Shows US Inflation Cooling — Critics Say ‘US Government’s Formula Understates The Actual Rise In Prices’

After last June’s inflation report published by the U.S. Bureau of Labor Statistics indicated that the Consumer Price Index (CPI)...

TA- Bitcoin Bounced off Key Support After CPI Announcement TA- Bitcoin Bounced off Key Support After CPI Announcement
Bitcoin bulls4 hours ago

TA- Bitcoin Bounced off Key Support After CPI Announcement

The price of Bitcoin (BTC) bounced off its key support against Dollars (USD) after the Consumer Price Index (CPI) announcement...

Defi Attacker Siphons $570,000 From Curve Finance, Crypto Exchange Fixedfloat Freezes 112 Ethereum Defi Attacker Siphons $570,000 From Curve Finance, Crypto Exchange Fixedfloat Freezes 112 Ethereum
$6.13 billion TVL5 hours ago

Defi Attacker Siphons $570,000 From Curve Finance, Crypto Exchange Fixedfloat Freezes 112 Ethereum

Reports indicate that the decentralized finance (defi) protocol Curve was hacked for $570,000 in ethereum after people noticed that Curve’s...

Biggest Movers: AVAX Nears Highest Level Since May, ETC Moves Towards $40 Biggest Movers: AVAX Nears Highest Level Since May, ETC Moves Towards $40
Analysis6 hours ago

Biggest Movers: AVAX Nears Highest Level Since May, ETC Moves Towards $40

Avalanche rallied on Wednesday, as the token broke out of a key resistance level on its way towards a multi-month...

German Crypto Exchange Nuri Files For Insolvency German Crypto Exchange Nuri Files For Insolvency
Bankruptcy7 hours ago

German Crypto Exchange Nuri Files For Insolvency

Cryptocurrency exchange Nuri has filed for insolvency, reportedly becoming Germany’s first fintech to take the step in a challenging year...

Report: Nearly 13,000 Chinese Social Media Accounts Promoting Virtual Currency Closed Report: Nearly 13,000 Chinese Social Media Accounts Promoting Virtual Currency Closed
Baidu10 hours ago

Report: Nearly 13,000 Chinese Social Media Accounts Promoting Virtual Currency Closed

Nearly 13,000 Chinese social media accounts that allegedly promoted virtual currency investments were closed, the Cyberspace Administration of China recently...

Decentralizing The Internet: How Wayru Is Bringing People Together With Blockchain Decentralizing The Internet: How Wayru Is Bringing People Together With Blockchain
Sponsored10 hours ago

Decentralizing The Internet: How Wayru Is Bringing People Together With Blockchain

sponsored In 2011 the UN released a report declaring the internet a Human Right, but over a decade later millions...

Current Mortgage Refinance Rates, August 10, 2022 | Rates Move Higher Current Mortgage Refinance Rates, August 10, 2022 | Rates Move Higher
rates10 hours ago

Current Mortgage Refinance Rates, August 10, 2022 | Rates Move Higher

Advertiser Disclosure Jason Stauffer Jason Stauffer Staff WriterAdvertisement Jason Stauffer is a personal finance reporter who previously covered the housing...

USDT volume on exchanges up 20% in 3 months USDT volume on exchanges up 20% in 3 months
Binance10 hours ago

USDT volume on exchanges up 20% in 3 months

USDT volume on exchanges up 20% in 3 months Oluwapelumi Adejumo · 6 mins ago · 2 min read According...

Axie Infinity holders have reasons to celebrate market drawdown Axie Infinity holders have reasons to celebrate market drawdown
Altcoins12 hours ago

Axie Infinity holders have reasons to celebrate market drawdown

The market crash has affected every cryptocurrency in some or the other way. And, the recovery from the same has...

What’s changed in GameFi in the last month? – July Report What’s changed in GameFi in the last month? – July Report
Analysis12 hours ago

What’s changed in GameFi in the last month? – July Report

What’s changed in GameFi in the last month? – July Report Footprint Analytics · 2 hours ago · 7 min...

How To Make Money From Ethereum Name Service? How To Make Money From Ethereum Name Service?
Cryptocurrency13 hours ago

How To Make Money From Ethereum Name Service?

Learn how you can use ENS to become rich We all love to reap the benefits of advanced technologies, but...

Degrain (DGRN) Continues To Thrive In Bear Market, Outshines Litecoin(LTC) And Polkadot(DOT) Degrain (DGRN) Continues To Thrive In Bear Market, Outshines Litecoin(LTC) And Polkadot(DOT)
Cryptocurrency13 hours ago

Degrain (DGRN) Continues To Thrive In Bear Market, Outshines Litecoin(LTC) And Polkadot(DOT)

In this article, we examine why the coin on the block, Degrain, has been thriving while Litecoin and Polkadot have...

HUMAN Protocol’s Big Announcement On V2 Upgrade With Routing Protocol HUMAN Protocol’s Big Announcement On V2 Upgrade With Routing Protocol
Blockchain13 hours ago

HUMAN Protocol’s Big Announcement On V2 Upgrade With Routing Protocol

The voting model will utilize HUMAN Protocol Reputation Oracles to adjust voting power. Last week, HUMAN Protocol announced the introduction...

Report: Samsung Signs MOU To Build Galaxy NFT Ecosystem Report: Samsung Signs MOU To Build Galaxy NFT Ecosystem
Digital Plaza14 hours ago

Report: Samsung Signs MOU To Build Galaxy NFT Ecosystem

Korean electronic goods producer Samsung Electronics recently signed a memorandum of understanding (MOU) with six companies that will collaborate to...

Shiba Inu Breakout Is On The Way! And Only Whales Can Help In That Shiba Inu Breakout Is On The Way! And Only Whales Can Help In That
Cryptocurrency14 hours ago

Shiba Inu Breakout Is On The Way! And Only Whales Can Help In That

Shiba Inu is outperforming in the crypto market and gaining the attention of ETH whales Shiba Inu is the most...

Trending

Daily Bitcoin MiningEarn At least $50 daily with just your phone