The Three Token Models of Web3 Applications: An Overview of Xiao Feng’s Keynote Speech

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

In his closing keynote speech at the 2023 Hong Kong Web3 Carnival, titled “The Future of Tokenization,” Xiao Feng, Chairman of Wanxiang Blockchain and Chairman of HashKey Group, spoke about the importance of Web3 applications meeting various needs, and the different token models that exist at both the Web3 application level and the basic protocol level.

Outline

1. Introduction to Xiao Feng’s Keynote Speech
2. What are Web3 Applications?
3. Importance of Token Models in Web3 Applications
4. The Basic Protocol’s Single Token Model
5. The Three Token Models for Web3 Applications
– NFTs
– Functional Tokens
– Securities Tokens
6. Real-life scenarios where each token model has been successfully applied
7. Challenges with Implementing Three Token Models in Web3 Applications
8. Conclusion
9. FAQs

Introduction

At the 2023 Hong Kong Web3 Carnival, Xiao Feng delivered a closing keynote speech titled “The Three Token Models of Web3 Applications.” In his speech, he emphasized that as the use cases of blockchain technologies evolve, Web3 applications need to meet various needs, and the token models at the Web3 application level and the basic protocol level are different.

What are Web3 Applications?

Web3 applications are decentralized blockchain applications that provide transparency, security, and self-executing smart contracts. They are built on the blockchain and enable peer-to-peer interactions without the need for intermediaries.

Importance of Token Models in Web3 Applications

Token economics is an integral part of Web3 applications, and it refers to the creation and management of the native tokens used in the blockchain network. Token models define the characteristics, use cases, and value of tokens in a decentralized ecosystem. Token models also play a critical role in the compliance of the underlying blockchain platform.

The Basic Protocol’s Single Token Model

The basic protocol level is a single token model, where a single native token represents the underlying blockchain’s digital currency. The native token is used to pay the transaction fees and incentivize the network participants to secure the blockchain. The world should be unified at the protocol level since it allows interoperability among various blockchain platforms.

The Three Token Models for Web3 Applications

The Web3 application level consists of three unique token models:
– NFTs or Non-Fungible Tokens represent data, product, and service value. NFTs are unique and indivisible tokens that cannot be exchanged one-to-one, creating value in scarcity. NFTs have been applied to art, music, gaming, and real estate industries.
– Functional Tokens are used to access or consume a product or service. They represent usage value and provide the holder some benefit or access to a platform such as reduced fees or exclusive access. One of the most widely used functional token models is the ERC-20 token used to build Decentralized Finance (DeFi) applications.
– Securities Tokens represent ownership value, also known as equity value. Securities Tokens are backed by real-world assets or businesses, and they offer ownership rights to the investor. Securities tokens are subject to securities regulations in various countries making their issuance and trade extremely strict.

Real-life scenarios where each token model has been successfully applied

NFTs have been successfully applied in the art industry by artists such as Beeple, whose digital art piece sold for $69 million in March 2021, gaming industry where players collect in-game items that can be traded, and the real estate industry where NFTs can represent property rights. Functional Tokens have enabled DeFi to flourish by providing access to decentralized lending, borrowing, and trading platforms. Securities tokens have been applied in real estate investment trusts, where ownership in the trust is tokenized and traded on a blockchain platform.

Challenges with Implementing Three Token Models in Web3 Applications

The complexity of interoperating with each token model poses a significant challenge in implementing a three token model in Web3 applications. Furthermore, the legal framework of each token model’s compliance requirements creates a lack of standardization in the industry.

Conclusion

Web3 applications need to meet various needs, and token models play a crucial role in achieving that goal. At the Web3 application level, three token models-NFTs, Functional Tokens, and Securities Tokens- are used to represent different types of value. Xiao Feng’s keynote speech at the 2023 Hong Kong Web3 Carnival highlighted the importance of three token models for Web3 applications.

FAQs

1. What does NFT stand for?
NFT stands for Non-Fungible Tokens.
2. What is the ERC-20 token?
The ERC-20 token is a popular functional token used to build Decentralized Finance (DeFi) applications.
3. What are Securities Tokens?
Securities Tokens represent ownership value, also known as equity value. Securities Tokens are backed by real-world assets or businesses, offering ownership rights to the investor.