Native Token Recycling
An ROI measurement model for Cryptocurrency Treasury Grants
Here’s a wild idea.
What if grants from a DAO or Treasury delivered measurable ROI?
What if the tokens delivered actually returned to the ecosystem.
What if they enabled further community engagement.
What if they were — in essence — recycled?
Much has been made of the coming tidal wave of opportunity for cryptocurrency treasuries and their associated DAOs.
Treasury assets represent — in essence — balance sheet capital to be deployed to continue to deliver protocol success.
We’re in very early days — grant processes are still being structured, operational foundations are still being defined. Voting mechanisms are effective for some, and completely nascent for others.
Aye, treasuries will be unlocked! They will be utilized to enable protocol success. And it will be massive.
But one critical piece is still missing: Effective measurement of value.
Many grant programs are still focused on outcomes that are hard to prove let alone measure. One organization clarifies value creation as “goodwill within the community”; “improvement to brand and positioning”; “improved sentiment”. There’s a lot to be desired there.
Measuring ROI is hard, even in the most sophisticated business models.
Luckily, cryptocurrency isn’t most business models.
Native Token Recycling is the concept of granted treasury tokens returning to the ecosystem itself.
Beyond the value of the recipient’s (grantee’s) service, the ecosystem must desire to remain healthy on its own terms. Like any “business”; cash distributed out must return in the form of revenue or liquidity or users.
For protocols, that recycling of grant capital looks as follows:
- How many tokens (count, value) were actually returned or maintained within the ecosystem.
- Increased participation; how many tokens were utilized for further ecosystem value creation: staking, loans, borrowing, liquidity pooling, etc.
And can be further expanded into traditional customer metrics:
- User Acquisition: how many new participants (wallets) were enabled
- User Retention and Growth: did participants increase their activity levels as a result of the program
Some applications will make this easier to measure than others — ultimately though, every grant recipient should have some consistent way to extend value beyond surface metrics.
Let’s run down an example:
Flipside recently engaged with AlchemixFinance running a Community-Enabled Analytics* program. Beyond program stats related to queries and APIs and dashboards…
31% of the ALCX delivered to members in the form of bounties was restaked back into the protocol.
29% of the recipients were newly acquired members to the ecosystem.
In summary, cryptocurrency treasury grant programs are designed to enable protocol stability, activity and growth — and will be greatly enabled by strong ROI programs that justify results. [You can’t grow what you don’t measure!]
One form of ROI is the measurement of native token recycling to active community members — maintaining liquidity and attracting new ecosystem participants.
* Flipside Crypto’s Community-Enabled Analytics provides a free analytics solution to protocol community members, along with a motivational bounty program which directs and accelerates outcomes.
CEA includes fully pre-modeled and labeled data and a SQL level interface for query writing, including read and event views, auto-generated API endpoints and a full suite of dashboard visualization solutions.
Community members are engaged through structured bounty programs, targeting on-demand insights based on feedback from the protocol and community itself.
Join Flipside’s Discord to learn more about Community-Enabled Analytics and Native Token Recycling.