The Token Economy Shaping Emerging Consumer Behavior

Consumer behavior can shift overnight or over decades. Almost overnight, the pandemic shifted the global perception of remote work from “a good option” to a need for normal business operations. However, it took nearly two decades for the relatively obscure vegan movement from the beginning of the century to go from insignificant in the United States to tens of millions of vegetarians. Large-scale changes in consumer behavior are often catalyzed by new technologies, macro trends or global events.

Throughout the 21st century, the primary catalyst for new consumer behavior has been new social technologies: the internet, mobile phones, social networks, and blockchain are just a few of them. Given that blockchain is both a technological innovation and a social revolution, web3 has sown fertile soil that will continue to breed new consumer behaviors.

Tokens provide a mechanism to shape how users behave in the network, offering exciting ways to potentially predict and engineer new consumer behaviors. Entrepreneurs, developers and creators will leverage tokens to extend existing behaviors and create new consumer norms, intentionally or not.

Skeuomorphic and Emergent Consumer Behavior

In product design, skeuomorphism is the process of making an existing item resemble its real-world counterpart – to take a photo on your phone, select the camera icon. Likewise, “skeuomorphic behavior” is a user activity that resembles existing consumer behavior—it only changes consumption patterns or perceptions, but not both. Conversely, the “emerging/emergent behavior” design is the closest to net new consumer behavior, combining new forms of consumption and changes in consumer perceptions. While there are various catalysts for any change in consumer behavior, emerging behaviors—changes in consumer form and perception—are often catalyzed by new technologies.

The advent of social media, be it Facebook or Reddit, has simply transformed existing consumer behaviors (like texting on flip phones) into DMs, comments, and public forums. Other changes in consumer behavior maintain basic forms of consumption, but new technologies, macro trends or events change how consumers perceive or interact with one another. Uber and Airbnb created marketplaces that use economic and social incentives to commodify trust (if you lie or you’re a bad person, we’ll kick you off our platform and you won’t be able to make money or get this great service).

However, the most transformative technologies often change both underlying consumption patterns and consumer perceptions.

Air travel has fundamentally upended the previous form from cars, trains to planes, so it is necessary to shift the “overton window” to the belief that flying is at least as safe as driving. The Internet has transformed the form of consumption from physical to Crypto, and required a greater shift in consumer perceptions—there is value in online communities and relationships. The most dramatic shifts lead to new behaviors.

Changes in consumption patterns

The most quasi-materialized consumer behavior is a change in the form of consumption. Written communication has always been an existing consumer behavior, and as technology continues to evolve, so does its format. The Internet gave birth to blogs, which eventually became “microblogging” through social networks such as Twitter.

Changes in consumer attitudes

Often, consumer perceptions first shift among smaller audiences and then shift into the mainstream over time. Every social network starts with an element of authenticity as a catalyst for growth, and BeReal is the latest example. Facebook is authentic and exclusive to your college classmates, and Snapchat filters less than Instagram until authenticity finally fades with mass adoption (and mass advertising).

Emerging Consumer Behavior (Form Change + Perception)

The latest form of consumption behavior, the most “emerging consumption behavior” requires a change in consumption forms and concepts.

Blockchain catalyzed the birth of NFTs, which facilitated a shift in the form of consumption (from Crypto photos to blockchain objects) and a shift in consumer perceptions that Crypto objects are owned and valuable. Similar to Airbnb, Ethereum is changing consumer perceptions by commoditizing trust in financial transactions and transforming the transaction format from a web2 application to a web3 protocol for financial transactions. This combined change in format and perception has led to wider adoption of DeFi — trustless financial applications and protocols.

Leveraging Tokens and New Crypto Consumer Behavior

While not all new consumer behaviors are predictable, tokens are often a new form of consumption that enables companies or protocols to engineer human behavior.

Examining consumer behavior through these lenses (both skeuomorphism and emergence), we can envision how consumers will behave in the future.

Let’s examine three potential skeuomorphisms and

Emergency encryption behavior:

communication and social

  • Mimic Design: W2W (Wallet to Wallet) Messaging – Individuals connect via their wallets on platforms like OpenSea or Magic Eden.

  • Urgent Design: Web3 Social – an open social graph means followers can be ported (how will this change where we interact with creators), content published as NFTs (will consumers find it valuable?),

physical infrastructure

  • Mimic Design: Nova Labs: Physical infrastructure can be built and designed by private companies (eg, building helium blockchains and miners).

  • Emergent Design: Helium – Unlocking the blockchain means the ability to coordinate socio-economic behavior, Helium pioneers a business model where consumers are rewarded for allocating money (buying hotspots) and performing work (setting up and running hotspots). This has spawned various projects that iterate new use cases on the Helium model: DIMO (vehicle data), Hivemapper (location data), Pollen (5G), Helium (5G), and more.

Token distribution

  • Mimic Design: Token Incentives – Get rewarded with tokens instead of referrals, discounts or cash back.

  • Urgent Design: Retroactive Airdrops – Uniswap’s airdrops started a chain reaction of retroactive airdrops for protocol usage that protocols felt obligated to reward their communities and consumers for early access to new products now.

Airdrops are an interesting example of how experiments in token distribution can inspire new consumer behaviors over time. The model has been iterated through the Hop protocol (anti-witch airdrops) and Optimism airdrops (rewards based on more refined criteria).

Clearly, tokens offer design space beyond distribution and growth marketing. When we shift perception to seeing tokens as products, we open the door to possible consumer behavior. That is, “how do new types of tokens — distribution, functionality, and incentives — shape consumer behavior”?

While it is impossible to fully predict new social behaviors, they are often driven by innovative business models, technologies, or macro events and trends. Crypto networks and tokens offer predictions and outlooks on the future of skeuomorphism and emerging human behavior.

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