Best UX Practices for Tokenization


26 Jun 2023
Best UX Practices for Tokenization

In today's rapidly evolving digital landscape, tokenization has emerged as a powerful solution that merges blockchain technology, artificial intelligence, and cryptocurrencies. By representing real-world assets or digital rights as tokens on a blockchain, tokenization offers a plethora of exciting possibilities, ranging from enhanced liquidity to democratized investment opportunities. However, amidst this technological revolution, one aspect remains paramount for the success of tokenization projects: user experience (UX).

Imagine a world where users seamlessly interact with tokenization platforms, effortlessly navigating through the intricate web of transactions and ownership transfers. Picture an interface that captivates the senses, with visually stunning graphics and interactive elements that invite users to explore the vast world of tokenized assets. Envision a secure environment that shields users from the threats that loom in the digital realm, instilling trust and confidence in every transaction. Such a world is within our grasp, and the path to its realization lies in the application of best UX practices.

By following these best UX practices, tokenization projects can deliver a user-centric experience that fosters trust, enhances usability, and encourages broader adoption. Let's dive into each practice in detail and explore how they can be implemented effectively to create the best user experience in tokenization.

Grasping User Requirements in Tokenization

For a prosperous tokenization solution featuring an excellent user experience (UX), it's vital to comprehend the target audience's needs and preferences. Acquiring valuable insights into user expectations and pain points can be achieved by examining user personas and use cases, as well as carrying out user surveys and interviews. The following is a detailed outline of the crucial steps in grasping user requirements in tokenization:

Examining User Personas and Use Cases

  • Pinpointing the Target Audience and Their Objectives: Start by outlining your tokenization solution's target audience. Take into account elements like demographics, professional histories, and particular goals they seek to accomplish via tokenization. For instance, your audience could comprise small businesses aiming to tokenize assets or investors searching for novel investment prospects.
  • Investigating User Inclinations and Conduct: Perform market research to scrutinize user inclinations and conduct associated with tokenization. This might entail examining existing tokenization platforms and pinpointing features and functions that have a positive impact on users. Furthermore, identify frequent pain points and areas where current solutions might be lacking.

By thoroughly grasping user requirements in tokenization, you can develop a user-focused solution that tackles pain points while providing a smooth experience. This research phase lays the groundwork for devising intuitive workflows and crafting engaging user interfaces that conform to user preferences and expectations.

Developing User-Friendly Tokenization Workflows

It's essential to develop user-friendly tokenization workflows that ensure a seamless and pleasant experience for those interacting with your tokenization solution. By streamlining token creation and management, as well as improving token transfer and ownership processes, you can increase user satisfaction and adoption. Keep these key considerations in mind when developing user-friendly tokenization workflows:

Streamlining Token Creation and Management

  • Efficient User Onboarding and Registration: Make the onboarding process straightforward and effortless. Reduce the number of steps users need to create an account and access the tokenization platform. Think about incorporating social media or email registration options for added convenience.
  • Providing Clear Guidance with Instructions and Tooltips: Offer clear, concise instructions during each stage of the token creation and management process. Utilize tooltips and informative pop-ups to assist users in completing required information and actions.

Improving Token Transfer and Ownership Procedures

  • Creating Intuitive and Secure Transaction Flows: Make sure the process of transferring tokens between users is both intuitive and secure. Design a user interface that enables users to initiate and monitor token transfers effortlessly. Consider adding multi-factor authentication and encryption for increased security.
  • Delivering Real-Time Notifications and Updates: Keep users informed about their token transfers' status and ownership changes in real-time. Notify users through email, push notifications, or directly within the platform, updating them on their transactions' progress. This promotes transparency and fosters trust.

By simplifying token creation and management procedures, as well as enhancing token transfer and ownership processes, you can significantly elevate your tokenization solution's user experience. These user-friendly workflows minimize confusion, boost user engagement, ultimately leading to higher satisfaction rates and greater adoption.

Developing an Engaging User Interface

To capture and maintain user interest while delivering a seamless and enjoyable experience in tokenization, it is vital to develop an engaging user interface. By integrating aesthetically pleasing design elements, user-friendly navigation, and interactive features, you can boost user engagement and differentiate your tokenization solution. Consider the following key aspects when designing an engaging user interface:

Crafting Visually Appealing Tokenization Interfaces

  • Consistency in Branding and Visual Elements: Establish a unified visual identity for your tokenization platform by using consistent branding components like colors, typography, and logo positioning. This will strengthen your brand identity while presenting a recognizable and professional interface.
  • Implementing Intuitive Navigation and Layout: Create an easily navigable structure that helps users quickly locate desired features and information. Employ logical grouping, visual hierarchy, and attention-grabbing calls-to-action to assist users in navigating the interface and streamlining their interactions.

Integrating Interactive Features

  • Enabling User Exploration of Token Data and Statistics: Equip users with interactive tools that allow them to examine token-related data such as transaction history, token distribution, and market performance. Utilizing interactive charts, graphs, and visualizations makes the information more appealing and easier to understand.
  • Providing Customizable Dashboards and Preferences: Let users tailor their experience by offering personalized dashboards and preferences. Give them the ability to prioritize the information and features they want, including favorite tokens, notification settings, or tailored analytics.

Nextrope example no. 1

By incorporating visually attractive design elements, intuitive navigation, and engaging features, an appealing user interface not only enhances the aesthetic appeal but also promotes a smooth and enjoyable user experience with your tokenization solution.

Ensuring Security and Trust

In tokenization projects, maintaining security and confidence is crucial. To ensure the protection of their assets and personal information, users must feel secure. By adopting rigorous authentication methods, performing in-depth security assessments, and delivering clear communication regarding security protocols, you can create a safe environment for your users. Here are essential factors to consider in promoting security and trust in tokenization:

Adopting Rigorous Authentication Procedures

  • User Account Two-Factor Authentication (2FA): Encourage users to activate 2FA for added security on their accounts. This may involve employing authentication apps, text message verification codes, or physical tokens to confirm user identities during sign-in.
  • Preserving Private Keys and Sensitive Data Securely: Employ secure storage techniques, such as hardware wallets or encrypted databases, for safekeeping users' private keys and sensitive data. Apply robust encryption algorithms and access management systems to deter unauthorized entry.

Carrying Out In-Depth Security Assessments and Penetration Tests

  • Detecting Weaknesses and Addressing Them Swiftly: Regularly perform security reviews and penetration tests to detect any potential vulnerabilities in your tokenization solution. Examine the structure, code, and infrastructure comprehensively for possible flaws and correct them without delay.
  • Communicating Security Protocols Clearly to Establish Trust: Inform your users about the implemented security measures with clarity. Offer transparent details regarding the security methods, encryption norms, and data safeguard practices you adhere to. This fosters trust and assures users that their assets and data remain secure.

By placing a high priority on security measures and implementing strong safeguards, you can foster user confidence and trust. Stay ahead of shifting threats and industry best practices by continuously updating and improving your security strategies. Effective security practices not only safeguard user assets but also contribute significantly to your tokenization solution's reputation and success.

Comprehensive Assistance and Support Provision

It is essential to offer comprehensive assistance and support for a positive user experience in tokenization projects. As they interact with your platform, users may face questions, issues, or need guidance. You can effectively help users by creating an extensive knowledge base, delivering prompt customer service, and promoting engagement within the user community. Here are crucial aspects of offering comprehensive assistance and support:

Developing an Extensive Knowledge Base

  • FAQs and User Manuals: Construct a well-arranged, readily accessible knowledge base consisting of an exhaustive list of frequently asked questions and user guides. Address typical user inquiries, and offer detailed guidance for different tokenization processes.
  • Video Guides and Step-by-Step Tutorials for Complex Procedures: Develop video guides and step-by-step tutorials to help users comprehend and navigate intricate tokenization procedures. Visual illustrations can effectively provide clarity while ensuring users can easily perform necessary actions.

Delivering Prompt Customer Service

  • Quickly Resolving User Inquiries and Problems: Implement a swift customer service system to tackle user inquiries and problems promptly. Provide various support channels, such as live chat, email, or phone support, while ensuring that support agents are well-informed and deliver useful, rapid assistance.
  • Maintaining Transparent Communication and Updates: Inform users about their support request's progress. Communicate clearly regarding reply times, ticket updates, and resolutions while consistently updating users on their inquiries' status to ensure transparency and trust.
Nextrope example no. 2

Read our article about Evaluating Tokenization Launchpads

Nextrope Tokenization Launchpad Platform

Nextrope Launchpad Platform is a White Label solution in a Software-as-a-Service model that helps you launch your project within a month and fundraise with Initial Coin Offering (ICO) or Security Token Offering (STO).

Our platform allows you to participate in the broad financial market of digital assets. Expand your reach and find investors globally. Tokenize your project and start raising capital within a month!

Read more about Nextrope Tokenization Launchpad Platform and Contact Us!

Conclusion - UX in Tokenization

Prioritizing user experience (UX) is essential for the success of tokenization solutions. By understanding user needs, designing intuitive workflows, creating engaging interfaces, ensuring security, providing comprehensive support, and embracing user feedback, we can create a seamless and user-friendly tokenization experience. Let's strive for a future where tokenization is accessible, intuitive, and centered around user satisfaction.

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Applying Game Theory in Token Design

Kajetan Olas

16 Apr 2024
Applying Game Theory in Token Design

Blockchain technology allows for aligning incentives among network participants by rewarding desired behaviors with tokens.
But there is more to it than simply fostering cooperation. Game theory allows for designing incentive-machines that can't be turned-off and resemble artificial life.

Emergent Optimization

Game theory provides a robust framework for analyzing strategic interactions with mathematical models, which is particularly useful in blockchain environments where multiple stakeholders interact within a set of predefined rules. By applying this framework to token systems, developers can design systems that influence the emergent behaviors of network participants. This ensures the stability and effectiveness of the ecosystem.

Bonding Curves

Bonding curves are tool used in token design to manage the relationship between price and token supply predictably. Essentially, a bonding curve is a mathematical curve that defines the price of a token based on its supply. The more tokens that are bought, the higher the price climbs, and vice versa. This model incentivizes early adoption and can help stabilize a token’s economy over time.

For example, a bonding curve could be designed to slow down price increases after certain milestones are reached, thus preventing speculative bubbles and encouraging steadier, more organic growth.

The Case of Bitcoin

Bitcoin’s design incorporates game theory, most notably through its consensus mechanism of proof-of-work (PoW). Its reward function optimizes for security (hashrate) by optimizing for maximum electricity usage. Therefore, optimizing for its legitimate goal of being secure also inadvertently optimizes for corrupting natural environment. Another emergent outcome of PoW is the creation of mining pools, that increase centralization.

The Paperclip Maximizer and the dangers of blockchain economy

What’s the connection between AI from the story and decentralized economies? Blockchain-based incentive systems also can’t be turned off. This means that if we design an incentive system that optimizes towards a wrong objective, we might be unable to change it. Bitcoin critics argue that the PoW consensus mechanism optimizes toward destroying planet Earth.

Layer 2 Solutions

Layer 2 solutions are built on the understanding that the security provided by this core kernel of certainty can be used as an anchor. This anchor then supports additional economic mechanisms that operate off the blockchain, extending the utility of public blockchains like Ethereum. These mechanisms include state channels, sidechains, or plasma, each offering a way to conduct transactions off-chain while still being able to refer back to the anchored security of the main chain if necessary.

Conceptual Example of State Channels

State channels allow participants to perform numerous transactions off-chain, with the blockchain serving as a backstop in case of disputes or malfeasance.

Consider two players, Alice and Bob, who want to play a game of tic-tac-toe with stakes in Ethereum. The naive approach would be to interact directly with a smart contract for every move, which would be slow and costly. Instead, they can use a state channel for their game.

  1. Opening the Channel: They start by deploying a "Judge" smart contract on Ethereum, which holds the 1 ETH wager. The contract knows the rules of the game and the identities of the players.
  2. Playing the Game: Alice and Bob play the game off-chain by signing each move as transactions, which are exchanged directly between them but not broadcast to the blockchain. Each transaction includes a nonce to ensure moves are kept in order.
  3. Closing the Channel: When the game ends, the final state (i.e., the sequence of moves) is sent to the Judge contract, which pays out the wager to the winner after confirming both parties agree on the outcome.

A threat stronger than the execution

If Bob tries to cheat by submitting an old state where he was winning, Alice can challenge this during a dispute period by submitting a newer signed state. The Judge contract can verify the authenticity and order of these states due to the nonces, ensuring the integrity of the game. Thus, the mere threat of execution (submitting the state to the blockchain and having the fraud exposed) secures the off-chain interactions.

Game Theory in Practice

Understanding the application of game theory within blockchain and token ecosystems requires a structured approach to analyzing how stakeholders interact, defining possible actions they can take, and understanding the causal relationships within the system. This structured analysis helps in creating effective strategies that ensure the system operates as intended.

Stakeholder Analysis

Identifying Stakeholders

The first step in applying game theory effectively is identifying all relevant stakeholders within the ecosystem. This includes direct participants such as users, miners, and developers but also external entities like regulators, potential attackers, and partner organizations. Understanding who the stakeholders are and what their interests and capabilities are is crucial for predicting how they might interact within the system.

Stakeholders in blockchain development for systems engineering

Assessing Incentives and Capabilities

Each stakeholder has different motivations and resources at their disposal. For instance, miners are motivated by block rewards and transaction fees, while users seek fast, secure, and cheap transactions. Clearly defining these incentives helps in predicting how changes to the system’s rules and parameters might influence their behaviors.

Defining Action Space

Possible Actions

The action space encompasses all possible decisions or strategies stakeholders can employ in response to the ecosystem's dynamics. For example, a miner might choose to increase computational power, a user might decide to hold or sell tokens, and a developer might propose changes to the protocol.

Artonomus, Github

Constraints and Opportunities

Understanding the constraints (such as economic costs, technological limitations, and regulatory frameworks) and opportunities (such as new technological advancements or changes in market demand) within which these actions take place is vital. This helps in modeling potential strategies stakeholders might adopt.

Artonomus, Github

Causal Relationships Diagram

Mapping Interactions

Creating a diagram that represents the causal relationships between different actions and outcomes within the ecosystem can illuminate how complex interactions unfold. This diagram helps in identifying which variables influence others and how they do so, making it easier to predict the outcomes of certain actions.

Artonomus, Github

Analyzing Impact

By examining the causal relationships, developers and system designers can identify critical leverage points where small changes could have significant impacts. This analysis is crucial for enhancing system stability and ensuring its efficiency.

Feedback Loops

Understanding feedback loops within a blockchain ecosystem is critical as they can significantly amplify or mitigate the effects of changes within the system. These loops can reinforce or counteract trends, leading to rapid growth or decline.

Reinforcing Loops

Reinforcing loops are feedback mechanisms that amplify the effects of a trend or action. For example, increased adoption of a blockchain platform can lead to more developers creating applications on it, which in turn leads to further adoption. This positive feedback loop can drive rapid growth and success.

Death Spiral

Conversely, a death spiral is a type of reinforcing loop that leads to negative outcomes. An example might be the increasing cost of transaction fees leading to decreased usage of the blockchain, which reduces the incentive for miners to secure the network, further decreasing system performance and user adoption. Identifying potential death spirals early is crucial for maintaining the ecosystem's health.

The Death Spiral: How Terra's Algorithmic Stablecoin Came Crashing Down
the-death-spiral-how-terras-algorithmic-stablecoin-came-crashing-down/, Forbes


The fundamental advantage of token-based systems is being able to reward desired behavior. To capitalize on that possibility, token engineers put careful attention into optimization and designing incentives for long-term growth.


  1. What does game theory contribute to blockchain token design?
    • Game theory optimizes blockchain ecosystems by structuring incentives that reward desired behavior.
  2. How do bonding curves apply game theory to improve token economics?
    • Bonding curves set token pricing that adjusts with supply changes, strategically incentivizing early purchases and penalizing speculation.
  3. What benefits do Layer 2 solutions provide in the context of game theory?
    • Layer 2 solutions leverage game theory, by creating systems where the threat of reporting fraudulent behavior ensures honest participation.

Token Engineering Process

Kajetan Olas

13 Apr 2024
Token Engineering Process

Token Engineering is an emerging field that addresses the systematic design and engineering of blockchain-based tokens. It applies rigorous mathematical methods from the Complex Systems Engineering discipline to tokenomics design.

In this article, we will walk through the Token Engineering Process and break it down into three key stages. Discovery Phase, Design Phase, and Deployment Phase.

Discovery Phase of Token Engineering Process

The first stage of the token engineering process is the Discovery Phase. It focuses on constructing high-level business plans, defining objectives, and identifying problems to be solved. That phase is also the time when token engineers first define key stakeholders in the project.

Defining the Problem

This may seem counterintuitive. Why would we start with the problem when designing tokenomics? Shouldn’t we start with more down-to-earth matters like token supply? The answer is No. Tokens are a medium for creating and exchanging value within a project’s ecosystem. Since crypto projects draw their value from solving problems that can’t be solved through TradFi mechanisms, their tokenomics should reflect that. 

The industry standard, developed by McKinsey & Co. and adapted to token engineering purposes by Outlier Ventures, is structuring the problem through a logic tree, following MECE.
MECE stands for Mutually Exclusive, Collectively Exhaustive. Mutually Exclusive means that problems in the tree should not overlap. Collectively Exhaustive means that the tree should cover all issues.

In practice, the “Problem” should be replaced by a whole problem statement worksheet. The same will hold for some of the boxes.
A commonly used tool for designing these kinds of diagrams is the Miro whiteboard.

Identifying Stakeholders and Value Flows in Token Engineering

This part is about identifying all relevant actors in the ecosystem and how value flows between them. To illustrate what we mean let’s consider an example of NFT marketplace. In its case, relevant actors might be sellers, buyers, NFT creators, and a marketplace owner. Possible value flow when conducting a transaction might be: buyer gets rid of his tokens, seller gets some of them, marketplace owner gets some of them as fees, and NFT creators get some of them as royalties.

Incentive Mechanisms Canvas

The last part of what we consider to be in the Discovery Phase is filling the Incentive Mechanisms Canvas. After successfully identifying value flows in the previous stage, token engineers search for frictions to desired behaviors and point out the undesired behaviors. For example, friction to activity on an NFT marketplace might be respecting royalty fees by marketplace owners since it reduces value flowing to the seller.


Design Phase of Token Engineering Process

The second stage of the Token Engineering Process is the Design Phase in which you make use of high-level descriptions from the previous step to come up with a specific design of the project. This will include everything that can be usually found in crypto whitepapers (e.g. governance mechanisms, incentive mechanisms, token supply, etc). After finishing the design, token engineers should represent the whole value flow and transactional logic on detailed visual diagrams. These diagrams will be a basis for creating mathematical models in the Deployment Phase. 

Token Engineering Artonomous Design Diagram
Artonomous design diagram, source: Artonomous GitHub

Objective Function

Every crypto project has some objective. The objective can consist of many goals, such as decentralization or token price. The objective function is a mathematical function assigning weights to different factors that influence the main objective in the order of their importance. This function will be a reference for machine learning algorithms in the next steps. They will try to find quantitative parameters (e.g. network fees) that maximize the output of this function.
Modified Metcalfe’s Law can serve as an inspiration during that step. It’s a framework for valuing crypto projects, but we believe that after adjustments it can also be used in this context.

Deployment Phase of Token Engineering Process

The Deployment Phase is final, but also the most demanding step in the process. It involves the implementation of machine learning algorithms that test our assumptions and optimize quantitative parameters. Token Engineering draws from Nassim Taleb’s concept of Antifragility and extensively uses feedback loops to make a system that gains from arising shocks.

Agent-based Modelling 

In agent-based modeling, we describe a set of behaviors and goals displayed by each agent participating in the system (this is why previous steps focused so much on describing stakeholders). Each agent is controlled by an autonomous AI and continuously optimizes his strategy. He learns from his experience and can mimic the behavior of other agents if he finds it effective (Reinforced Learning). This approach allows for mimicking real users, who adapt their strategies with time. An example adaptive agent would be a cryptocurrency trader, who changes his trading strategy in response to experiencing a loss of money.

Monte Carlo Simulations

Token Engineers use the Monte Carlo method to simulate the consequences of various possible interactions while taking into account the probability of their occurrence. By running a large number of simulations it’s possible to stress-test the project in multiple scenarios and identify emergent risks.

Testnet Deployment

If possible, it's highly beneficial for projects to extend the testing phase even further by letting real users use the network. Idea is the same as in agent-based testing - continuous optimization based on provided metrics. Furthermore, in case the project considers airdropping its tokens, giving them to early users is a great strategy. Even though part of the activity will be disingenuine and airdrop-oriented, such strategy still works better than most.

Time Duration

Token engineering process may take from as little as 2 weeks to as much as 5 months. It depends on the project category (Layer 1 protocol will require more time, than a simple DApp), and security requirements. For example, a bank issuing its digital token will have a very low risk tolerance.

Required Skills for Token Engineering

Token engineering is a multidisciplinary field and requires a great amount of specialized knowledge. Key knowledge areas are:

  • Systems Engineering
  • Machine Learning
  • Market Research
  • Capital Markets
  • Current trends in Web3
  • Blockchain Engineering
  • Statistics


The token engineering process consists of 3 steps: Discovery Phase, Design Phase, and Deployment Phase. It’s utilized mostly by established blockchain projects, and financial institutions like the International Monetary Fund. Even though it’s a very resource-consuming process, we believe it’s worth it. Projects that went through scrupulous design and testing before launch are much more likely to receive VC funding and be in the 10% of crypto projects that survive the bear market. Going through that process also has a symbolic meaning - it shows that the project is long-term oriented.

If you're looking to create a robust tokenomics model and go through institutional-grade testing please reach out to Our team is ready to help you with the token engineering process and ensure your project’s resilience in the long term.


What does token engineering process look like?

  • Token engineering process is conducted in a 3-step methodical fashion. This includes Discovery Phase, Design Phase, and Deployment Phase. Each of these stages should be tailored to the specific needs of a project.

Is token engineering meant only for big projects?

  • We recommend that even small projects go through a simplified design and optimization process. This increases community's trust and makes sure that the tokenomics doesn't have any obvious flaws.

How long does the token engineering process take?

  • It depends on the project and may range from 2 weeks to 5 months.