Despite branded stablecoins being a step in the right direction, tokenized reward systems are still a form of centralization. A third party — in the form of a brand, bank or both — may be present to achieve one-to-one stability, bridging the gap between traditional finance and crypto. The upside to this centralization is that it potentially presents a more intuitive experience for the user, where they don’t have to download different apps or become acclimated to a new process. However, brands could find themselves having to make a hard decision between a frictionless, centralized user experience or a bumpier, decentralized on-ramp.
There is also the brands’ bottom line to take into consideration: Minting and redemption costs can be high due to expensive gas fees. Compounded with the brands’ operational, auditing and compliance costs — and combined with interoperability with legacy banking systems — this could present expensive barriers to entry. The uncertainty of regulations makes the waters even murkier. Brands might need to decide on taking a loss upfront for delayed future benefits. These are nuanced, mission-critical decisions that brands will have to make.
Consumers feel empowered and perceive greater value when receiving currency in their app instead of recieving points. For many, brands are an identity symbol. Let’s say Gucci identifies you as an ambassador and airdrops Gucci tokens to you as a thank you for posting positively about the brand across social media using your “GucciCoin” public tag. If you own a certain amount of “GucciCoin,” you may get access to an elite community, be it a physical space (an exclusive event, concert, in-store showroom, etc.) or an online one.
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Perhaps you even get access to advanced or limited-edition merchandise drops others wouldn’t get and receive an NFT that allows you to showcase your status. Branded stablecoins are a win-win for brands and customers, enabling consumers to signal their support while brands increase engagement and loyalty.
Branded stablecoins provide a gateway for an interoperable, liquid and frictionless future. One day, maybe not so far off, a customer will have a digital wallet filled with all of their favorite brands, a global ecosystem opening up the floodgates for mass adoption.