The Three Token Models of Web3 Applications – Exploring the Future of Tokenization

On April 15th, at the main event of the 2023 Hong Kong Web3 Carnival, titled “The Future of Tokenization”, Xiao Feng, Chairman of Wanxiang Blockchain and Chairman of HashKey Group, delivered a closing keynote speech titled “The Three Token Models of Web3 Applications”. He stated that Web3 applications must meet various needs, and the token models at the Web3 application level and the basic protocol are different. The basic protocol is a single token model, The world should be unified, and the application protocol is a three token model with unique application scenarios. Among the three token models, the first is NFT (data, product, and service value), the second is functional token (usage value), and the third is securities token (ownership value, also known as equity value).

Xiao Feng: The Web3 application layer three token models include NFT, functional token, and securities token

Introduction

The world of blockchain and cryptocurrency has been rapidly evolving, with new advancements and developments coming forth every day. One such development is the emergence of Web3 applications. These applications are powered by blockchain and new token models that are different from traditional cryptocurrencies. On April 15, 2023, at the main event of the Hong Kong Web3 Carnival, Xiao Feng, Chairman of Wanxiang Blockchain and Chairman of HashKey Group, delivered a keynote speech titled “The Three Token Models of Web3 Applications”. In this article, we will explore the concepts highlighted by Xiao Feng in his speech and understand the future of tokenization.

The Basic Protocol Token Model

According to Xiao Feng, the basic protocol token model should be a single token model that is universal in nature. This means that the token should be able to perform all functions required by the blockchain, such as transactions, smart contracts, mining, and staking. It should have a high degree of utility and liquidity to enable easy transfers and provide a reliable store of value. This model aims to create a unified system that can be used globally by everyone.

The Three Token Models of Web3 Applications

Unlike the basic protocol token model, the Web3 application token model is a three token model. These tokens serve different purposes and cater to various needs of the application. The three tokens models are:

Token Model 1: NFT

NFTs or non-fungible tokens are used to represent unique data, products, or services. They are used in situations where authenticity, scarcity, and ownership are essential, such as in digital art, gaming, and collectibles. NFTs have opened up new possibilities for creators and artists to monetize their work and provide their audience with a unique experience.

Token Model 2: Functional Token

Functional tokens are used to provide access to a specific functionality or service within the application. They allow users to interact with the application by performing certain tasks or functions. They have usage value and can be exchanged for other tokens or services within the application. They are commonly used in decentralized applications (dApps) that require specific access and functionality to work.

Token Model 3: Securities Token

Securities tokens, also known as equity tokens, represent ownership of an underlying asset or security. They provide ownership value and are used in situations where investors want to have a stake in a particular project or venture. These tokens are regulated by securities laws and require compliance with regulations to prevent fraudulent activity.

Conclusion

The emergence of Web3 applications has led to the development of new token models that cater to specific needs of the application. The three token models – NFT, functional token, and securities token – represent distinct values and serve different purposes. While the basic protocol token model aims to create a unified system, the Web3 application token model recognizes the need for diversification and customization. Tokenization has the potential to revolutionize the way we interact with digital assets and provide new opportunities for creators and investors.

FAQs

Q1. What is a Web3 application?

A: Web3 applications are decentralized applications that rely on blockchain technology to enable a trustless and decentralized system. They implement new token models that are different from traditional cryptocurrencies to serve specialized purposes.

Q2. What are NFTs?

A: NFTs or non-fungible tokens are unique tokens that are used to represent data, products, or services. They are used in situations where authenticity, scarcity, and ownership are essential.

Q3. Are securities tokens regulated?

A: Yes, securities tokens are regulated by securities laws to prevent fraudulent activity and ensure compliance with regulations.