a16z urges crypto developers to take a closer look at a little-discussed digital asset class: “arcade tokens.”
Key points to remember:
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a16z claims that arcade tokens can boost user engagement by providing stable, usable rewards within digital ecosystems.
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These tokens mirror airline miles or in-game currencies, enabling loyalty and activity without speculative volatility.
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a16z notes that arcade tokens are not needed for speculative projects or layer 1 networks with established tokens.
In a report released Thursday, researchers at the venture capital firm argued that these tokens, designed to function more like airline miles or credit card points than speculative assets, could become a fundamental tool for scaling digital economies.
Arcade tokens have a relatively stable value within a specific software or product ecosystem and are intended to be spent, not hoarded.
They give users access to features or rewards within a network, helping projects increase user activity without exposing them to the volatility associated with most cryptoassets.
“Just as stablecoins unlock new forms of commerce and network tokens enable decentralized value sharing and governance, arcade tokens can power digital economies at scale,” wrote a16z researcher Scott Duke Kominers, CTO Eddy Lazzarin and others.
One example cited in the report is Blackbird, a hospitality technology startup that launched a Web3 payment platform for restaurants in 2024.
Its FLY token acts as a rewards asset: customers earn it by spending and can redeem it at participating restaurants.
The redemption process runs on a specially designed blockchain layer, while a separate network token ensures security and incentives between service providers.
a16z argued that this split model, using a network token for infrastructure and an arcade token for user-facing activity, mirrors the traditional reward systems that drive loyalty programs.
Airline miles and in-game currencies have been presented as analogues that encourage repeated engagement without giving away stake holders.
Importantly, arcade tokens have a “program-limited” value, preventing extreme price fluctuations.
The report also highlights broader opportunities. For “spend-centric economies” or applications that connect to real-world businesses, arcade tokens offer price stability, predictable accounting, and simpler token design.
Developers can also issue new arcade tokens on demand to support growth, whether through user incentives, grants, or developer grants, while allowing value to flow within the ecosystem instead of leaking out.
