a16z is urging crypto developers to take a closer look at a little-discussed class of digital assets: “arcade tokens.”
Key Takeaways:
- a16z says arcade tokens can drive user engagement by offering stable, spendable rewards within digital ecosystems.
- These tokens mirror airline miles or in-game currencies, enabling loyalty and activity without speculative volatility.
- a16z notes that arcade tokens aren’t necessary for speculative projects or layer-1 networks with established tokens.
In a report published 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 foundational tool for scaling digital economies.
Arcade Tokens Offer Stable, Spendable Fuel for Digital Economies
Arcade tokens hold relatively stable value within a specific software or product ecosystem and are meant to be spent, not hoarded.
They give users access to functions or rewards inside a network, helping projects grow 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-tech startup that launched a Web3 payments platform for restaurants in 2024.
Its FLY token acts as a reward asset: customers earn it through spending and can redeem it at participating restaurants.
The redemption process runs on a purpose-built blockchain layer, while a separate network token ensures security and incentives among service providers.
a16z argued that this split model, using a network token for infrastructure and an arcade token for user-facing activity, mirrors traditional reward systems that drive loyalty programs.
Airline miles and in-game currencies were highlighted as analogues that encourage repeat engagement without giving holders ownership stakes.
Crucially, arcade tokens have “programmatically bounded” value, preventing extreme price swings.
The report also pointed to 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 subsidies, while keeping value circulating inside the ecosystem instead of leaking out.
However, the firm cautioned that not every project requires them. Highly speculative environments or layer-1 blockchains with established network tokens often gain little from adding an arcade layer.
a16z and DeFi Fund Urge SEC to Create Safe Harbor for Blockchain Apps
As reported, the DeFi Education Fund and a16z are calling on the SEC to establish a regulatory “safe harbor” for blockchain-based applications.
In an Aug. 13 blog post, a16z said both groups submitted formal proposals urging the SEC to clarify that developers of decentralized apps should not automatically be treated as brokers.
Their request follows years of SEC enforcement actions and Wells notices suggesting that software interfaces enabling peer-to-peer transactions could fall under broker-dealer rules.
The groups argue that the SEC should grant a “rebuttable presumption” that neutral blockchain apps are not engaged in brokerage activity unless proven otherwise.
According to the proposal, forcing developers to register as brokers would impose responsibilities they never agreed to, such as taking custody of user assets or acting as intermediaries, which would undermine blockchain’s core design and introduce new risks to users.
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