We recently put together a new, comprehensive taxonomy of token types, including network tokens, collectible tokens, and memecoins. Of the seven types we identified, the least explored and most underappreciated is the arcade token: a token with a relatively stable value within a specific software or product ecosystem, often managed by an issuer (like a company).
Fundamentally, arcade tokens are the blockchain-based equivalent of a type of asset that people are already familiar with: airline miles, credit card points, in-game digital gold, and so on. What all these have in common is that they are currencies that are internal to, and support the functioning of, a marketplace economy: Frequent flyer miles and rewards points, for example, can encourage brand loyalty and be used to make flight and upgrade purchases; digital gold can let you buy or sell items in a video game.
While companies have used assets like these for decades, almost all previous instances have existed on centralized databases, limiting ownership, transferability, and user choice. Arcade tokens on public blockchains differ in that they are open, interoperable, and composable, which gives them a range of new market design benefits.
