Local dynamic tokenization as a new financial tool for attracting and retaining customers

Description

Description Invention Title: Local Dynamic Tokenization as a New Financial Instrument for Attracting and Retaining Customers

[0001] The invention relates to the marketing section, subsection of financial incentives for the use of the organization's products.

[0002] In a highly competitive world, companies use various incentive systems to attract new users and retain existing ones.

[0003] There are a wide variety of loyalty programs available to users. These include discounts, cashback, and much more.

[0004] One typical loyalty program is Starbucks Rewards. Its introduction in 2008 allowed Starbucks to overcome its recession and return to the ranks of the world's most successful businesses. In the program, customers accumulate stars, which they can later redeem for affordable gifts. Once they have accumulated enough stars, they can redeem them for discounts or free menu items. However, in this loyalty program, as in any other, rewards are awarded only for generating revenue for the company. The customer is not at all interested in the company's prosperity, its technical and financial achievements, or its operational success. Users typically lose interest in such programs fairly quickly. Moreover, these days, virtually everyone offers similar programs. As a result, customer acquisition and retention are ineffective, and customers easily switch to other companies' products.

[0005] A person is interested in the life of a company when he owns shares or bonds of that company.

[0006] You have to spend your own money to buy a company's shares. Their value can rise as well as fall. Not to mention that companies go bankrupt, which can cause their shares to lose value altogether. So there's a risk of losing money when buying shares.

[0007] Some companies pay dividends on shares. This allows people to receive a share of the company's profits. However, dividend payments are often too small and don't exceed inflation. Alternatively, the company may reduce the payout or stop paying dividends altogether.

[0008] Bonds also pay a fixed interest rate. However, the need to invest in bonds and the risk of losing that money remain.

[0009] As a result, most clients of a particular company are unwilling to risk buying its shares or bonds. Therefore, they have no interest in its prosperity.

[0010] There are many ways to make money with cryptocurrency.

[0011] Cryptocurrency can be deposited into a cryptocurrency deposit account and profit from it. To obtain profit, the funds from such deposits are lent out at interest. This creates the risk of the exchange losing these funds.

[0012] Many people engage in staking. This is a process that occurs on a blockchain network secured by the Proof of Stake method. A person locks up cryptocurrency for a certain period of time to become a validator. A cryptocurrency validator is responsible for verifying transactions on the blockchain. They ensure that transactions comply with the network's rules and protocols and prevent fraudulent transactions from being added to the blockchain. In return, they receive a reward in the form of new cryptocurrency. However, the cryptocurrency cannot be used while locked. It can be partially confiscated even if fraudulent transactions are validated, which is often an accident. When many users receive staking rewards, there is a risk of cryptocurrency inflation. Because of this, successful staking requires advanced technical knowledge, making it a rather complex and risky endeavor.

[0013] Moreover, there's never a guarantee that a cryptocurrency won't collapse and a person won't lose their money. Even stablecoins don't provide complete security. For example, the TerraUSD stablecoin collapsed in May 2022.

[0014] And most importantly, you first need to buy cryptocurrency.

[0015] The Brave browser attempted to address this problem. Brave Rewards allows users to earn BAT (Basic Attention Tokens) for viewing ads in Brave. However, BAT is not credited with subsequent profits. Therefore, its value has not reached any significant levels over its lifetime. BAT tokens also fluctuate in value. Their price falls depending on supply, demand, and the price of Ethereum, the underlying cryptocurrency. An important result is that BAT holders are not interested in Brave's growth and prosperity; many use the browser solely for its technical security features, ignoring BAT as a means of monetization or any other benefit. Finally, BAT has no expiration date. This forces owners to perform complex mathematical calculations of its circulating supply relative to the parent Ethereum. This increases the opacity of BAT circulation for users, and therefore volatility.

[0016] The prototype for this invention is patent AU2012100850A4, "An automated rewards platform for different audiences utilizing self-regulating algorithms and game mechanics." This invention proposes a rewards platform in which users can create rewards programs by purchasing points or using free ones. Other users can earn these points for specific actions. Points can be exchanged for services, goods, and monetary value. The authors propose using such a platform for branding when offering the opportunity to choose any rewards program.

[0017] This approach entails creating a common platform on which many companies can host their various loyalty programs. However, this will inevitably create difficulties for companies. Most companies strive to integrate their loyalty programs as closely as possible with specific products and their sales. And, as experience has shown, such a company aggregator has not generated much enthusiasm. Furthermore, hosting a significant number of programs will diminish the value of each individual program and create difficulties in choosing among them. Furthermore, loyalty programs hosted on the platform will suffer from the standard drawbacks of all traditional programs.

[0018] The desired technical result is a new approach to distributing the company's profits to expand marketing opportunities to attract new users and retain existing ones.

[0019] The required technical result is achieved by using local dynamic tokenization of the organization's profit share, including a first portion of the profit share, which is issued free of charge to users for any use of the organization's products in the form of new tokens with an expiration date, with the possibility of their free cashing at any point during the expiration date, and a second portion of the profit share, which is equally divided among all current tokens, with the expiration date of the tokens sequentially from earlier to later, when the payment per token from the second portion of the profit share, divided by the token value, becomes lower than the value selected by the organization, and after the expiration date, the token value is necessarily paid to the user in the form of a monetary equivalent.

[0020] In the proposed dynamic tokenization, a share of the company's profits is allocated to reward users. The process is optimally organized through the issuance of tokens, with a token being, for example, a digital certificate that guarantees the company's obligations to its owner. Their use will be convenient for both the company and the user.

[0021] The first portion of this profit share is issued free of charge to specific users in the form of tokens. In addition to the usual options for selling and purchasing tokens on the secondary market, users will be able to cash out their tokens at any point during their lifespan.

[0022] The second part of the profit share is divided equally between all tokens to increase their value.

[0023] Since the token is backed by a share of the profits, its cashing out price is independent of secondary market sales and purchases. And cashing out tokens by users will not change the value of the remaining tokens. Therefore, the tokens in circulation will not only have stable value equivalents but will also grow in value.

[0024] The proposed token is a time-limited token. Since the tokens have different creation times, each token expires sequentially, from earliest to latest. The expiration condition is that the payout per token from the second part of the profit share, divided by the token price, falls below the value selected by the organization. As a result, the total number of tokens will be limited and controllable.

[0025] The presented dynamic tokenization is local, since any organization can implement this scheme with its own token.

[0026] The proposed solution differs from patent AU2012100850A4 in that the organization rewards users with its own free tokens, which continually increase in value due to a share of profits from other users. Importantly, the monetary backing of the tokens facilitates cashing them out, selling them on the secondary market, and other positive user benefits. Furthermore, the organization's effective and transparent limitation of the token supply creates additional management benefits.

[0027] This new approach has several interrelated aspects.

[0028] First, the share of profits the organization intends to pay out is divided into two parts. Therefore, using the first portion of the profit share, tokens can be issued to users for free.

[0029] Secondly, the second part of the profit share is sent to all tokens. This means that profits go not only to those users who, for example, purchased something at that moment. Therefore, all tokens will steadily increase in price.

[0030] Third, the token lifespan is limited by a simple and clear scheme. Therefore, the token supply will not grow indefinitely and does not need to be manually limited.

[0031] The use of the proposed local dynamic tokenization as a new financial instrument will have several positive technical effects.

[0032] Token holders will profit from other people using the company's products and generating revenue. This will make these users far more interested in the company's success than simply receiving discounts, cashback, or participating in other loyalty programs.

[0033] A material element of fairness towards users is introduced. The organization can effectively directly purchase people's time and attention.

[0034] The offered tokens have adjustable components—the token payout percentage and the number of people receiving new tokens. Adjusting these components also changes the time frame over which payouts are made. These components can be manipulated to achieve the best possible outcome for a specific organization. For example, if a company experiences a decline in profits, it can reduce the number of people holding tokens rather than the token payout. This significantly reduces the company's risks compared to stocks and bonds and preserves the token's value.

[0035] Even if the company goes bankrupt, the proposed solution still allows tokens to be cashed out at a guaranteed price. This important feature will provide better user protection, even compared to stablecoins.

[0036] The token backing is constantly growing. At the same time, the organization does not invest the funds backing users' tokens to generate profit. Therefore, there is no risk of losing them if investments fail. Unlike passive income methods such as cryptocurrency deposits.

[0037] The proposed solution awards tokens for any use of the organization's products. This is in contrast to staking, for example, which is a risky and difficult undertaking rather than a reward for routine user actions.

[0038] Since tokens can be cashed out or listed on a specialized exchange at any time, they act as a temporary currency while remaining local. As the proposed program develops, tokens can also be used as a metric for company success.

[0039] The terms of token issuance can be easily changed without removing those already in circulation. Changing the terms of token issuance opens up new opportunities for targeted marketing and user loyalty management. Brief description of the drawings

[0040] Figure 1 shows the organization's profit share distribution scheme. The first portion is allocated to new tokens. The second portion is used to increase the value of all tokens. Tokens expire when the payout per token, divided by the value per token, falls below the value selected by the organization. When a token expires, its value is paid to the client as a cash equivalent.

[0041] Example

[0042] Let's say Bank B decides to implement the proposed dynamic tokenization. It issues a token T, which is given to certain clients, for example, for a deposit. The bank plans to pay a fixed 5% interest on the token, for the sake of simplicity and clarity. In this case, the new tokens from the first portion are also distributed equally among clients.

[0043] Let's say the first time the share of profits that goes towards tokenization is $105,000.

[0044] The first portion is $100,000. The number of clients receiving tokens is, for example, 10,000. 100,000 / 10,000 = $10 per client. Each client then receives one token worth $10. The total is now 10,000 tokens, each worth $10.

[0045] Let's assume the bank can send $5,000 for the second part. The bank wants to pay 5% interest on each token, i.e., 10 * 0.05 = $0.50. Therefore, the bank needs $0.50 * 10,000 = $5,000 to accrue interest on the tokens. The second part covers this amount. After accrual, one token is worth $10.50.

[0046] The second time, the share of profits the bank wants to send to tokenization is $70,000.

[0047] The bank allocates $60,000 for the first part. The number of clients to whom tokens are issued is, for example, 8,000. 60,000 / 8,000 = $7.5 per client. Then, each client is issued 7.5 / 10.5 = 0.71 tokens worth $7,455. So, there were 10,000 tokens, and now 8,000 * 0.71 = 5,680 tokens. The total is now 15,680 tokens. The value of each token currently remains $10.5.

[0048] The bank has another $10,000 for the second portion. The bank wants to pay 5% interest on each token, or $10.5 * $0.05 = $0.525. Therefore, the bank needs $0.525 * $15,680 = $8,232 to accrue interest on the tokens. The second portion covers this amount. After accrual and recalculation, each token is worth $11,025.

[0049] For the third time, the share of profits that the bank plans to send to tokenization is $145,000.

[0050] The bank allocates $135,000 for the first portion. The number of clients to whom tokens are issued is, for example, 9,000. 135,000 / 9,000 = $15 per client. Then, each client is issued 15 / 11,025 = 1.36 tokens worth $14,994. So, there were 15,680 tokens, and now 9,000 * 1.36 are issued = 12,240 tokens. The total is now 27,920 tokens. The value of each token currently remains $11,025.

[0051] The bank can allocate another $10,000 for the second portion. The bank wants to pay 5% per token, or $11.025 * 0.05 = $0.55125. Therefore, the bank needs $0.55125 * 27920 = $15390.90 to accrue interest on the tokens. The second portion doesn't cover this amount. As a result, the tokens begin to expire sequentially.

[0052] The earliest tokens expire first, namely the first 10,000 tokens issued simultaneously. They are converted into cash equivalents in clients' accounts. This leaves 17,920 tokens remaining. The bank now needs 0.55125 * 17,920 = $9,878.4 to accrue interest on the tokens. The allocated second portion covers this amount. Therefore, the remaining tokens do not expire. After accrual and recalculation, any single token is worth $11.57625.

[0053] Thus, the proposed dynamic tokenization is a new, simple and understandable tool for increasing user engagement and retaining them within the organization's field of activity.

Claims

Formula [Clause 1] Local dynamic tokenization of the organization's profit share, including a first portion of the profit share, which is issued free of charge to users for any use of the organization's products in the form of new tokens with an expiration date and the ability to freely cash them at any point during the expiration date, and a second portion of the profit share, which is equally divided among all current tokens, with the expiration date of the tokens sequentially from earlier to later, when the payment per token from the second portion of the profit share, divided by the token value, becomes lower than the value selected by the organization, and after the expiration date, the token value is necessarily paid to the user in the form of a monetary equivalent.

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