Designing for user focused incentives using a Token utility canvas

March 2019


In our last post, we discussed stakeholder and value mapping for designing your token model. As we wrap our series on the Discovery Phase, it needs to be stressed that token design is not only about systems design thinking. Incentives and mechanism design are only part of the equation. It is equally important to take a user centered approach in the design and take a long look at how the user will actually interact with the system and their journey to it.  

In this post we’ll discuss our Token Utility Canvas which we use in the Discovery Phase to help map token utility across network layers and bridge the gap between incentives and actual network users.


When examining token economies, we essentially look for the merged optimization of two sets of economics, which we call layered economics, where the token acts as the interface between these two layers:

  • ledger layer economics: provides the trust framework than enables all market layer activities.
  • market layer economics: is where all the transactions occur


As the market exchanges digital services, the ledger layer is where key attributes of each transaction need to be verified and simple contracts need to be executed. The main goal of the ledger layer is to drive costs of verification to as low a level as possible, ideally as near to costless as possible without being free to abuse. Cost reduction and disintermediation are the primary advantages of blockchain-based services over traditional intermediary or audit-based economies where substantial value is lost in the process as economic rent. Common examples of where a token is used to facilitate low cost transactions for digital resources in payments, computation, and data storage are Bitcoin, Ethereum and Filecoin.


At the market layer, the economics of the ecosystem are designed to align the distribution of value in order to achieve a more efficient market that also leverages powerful network effects. The token is used as an incentive or disincentive to participants to behave both in their best interests and those of the greater good of the ecosystem at large. Tokens represent an atomic element of a network’s business model.


Each of these layers will have different users with different personas, channels, and customer journeys. The token utility canvas is a useful tool to not just get your initial design down on paper, but hopefully to help you and your token team integrate a user centered approach to design. These systems can be quite complex so thinking about how people will actually interact with them is very important. It is ultimately users that drive adoption, so be sure to keep your design centered around them.

Designing for user focused incentives using a Token utility canvas Outlier Ventures

In much the same way a business model canvas is used to capture key elements of a venture’s business plan, a Token Utility Canvas seeks to outline the utility of a token in its entirety and can broadly be broken out into two sides: Business Centric Factors and Network Centric Factors as seen below.


Network Centric Factors (Left Hand Side)

The left hand side of the canvas focuses on the network centric token model and the internal factors that will influence the long term success and sustainability of the ecosystem. This section of the canvas breaks down subsections into ledger and market layers, a useful heuristic for tokenized ecosystems.

  • Participants: What roles do stakeholders need to occupy in each layer?
  • Undesired Behaviors: What are the incentives for each role, absent of any mechanism?
  • Desired Behaviors: What are the desired behaviors of each role within the ecosystem?
  • Mechanisms: What are the planned mechanisms to bridge the gap between each role’s incentives and desired behaviors?


Business Centric Factors (Right Hand Side)

The right hand side of the canvas focuses on the business-centric token model and the external factors that will influence the long term sustainability and success of a tokenized ecosystem. It requires us to classify the token in terms of its type, role & purpose, and underlying value which should help clarify and develop a positioning strategy. As well as focus on designing for the user’s experience with the network.  


Token Taxonomy

It is important to remember that a token is exactly that, a token. It does not have any value or utility by itself, but instead its value and utility is derived from the underlying asset or service that it represents. New types of tokens are emerging all the time so any taxonomy is going undoubtedly evolve with the space. That being said we found the taxonomy from Untitled Inc particularly useful. For more details on the Token Taxonomy that we use please see our Token Ecosystem Report. In our Token Utility Canvas we describe a token using the following categories.

  • Token Type: What use does the token provide?
  • Role and Purpose: What is the role of the token?
  • Underlying Value: What is the value of the token tied to?


Value Proposition: How value is created and captured?

This is one of the ecosystem’s distinguishing factors. Focusing on the ecosystem’s value proposition helps the token design meet key value drivers, while also aiding in the clear external communication of its value to potential network participants.


Experience/Service Design:

This section takes the otherwise business centric focus of the right hand side of the canvas and gives your token team an opportunity to think about your design in a user centerd way. Focusing on the human element of your token design wll be a key element of success. We recommend using an Experience Design lense. Experience design takes a holistic approach to a system’s value proposition by putting the user front and centre, while providing an actionable opportunity assessment. This type of design methodology is the rationale behind the iterative process of token ecosystem creation, and capturing the quantitative and qualitative aspects of users’ needs, habits and motivations is a crucial part of this process.

In this section you should describe the various personas of your users, the channels they will be first engaged, and the journey onto the network. This should be done not just for end users of the service provided by the network, but also for each key role within the network. Thinking through the user experience this way can help focus certain design choices and prioritise your roadmap to meet the needs of users, and help you focus on features that, for example, are crucial to attract users types who are critical for early adoption.


Ocean Protocol Case Study

Below is a Utility Canvas we briefly filled out for Ocean Protocol, a decentralised data exchange protocol to unlock data for AI. For the Experience section we focused on a single persona for Data Providers, but in practice this should be expanded to include other personas and other roles.

Designing for user focused incentives using a Token utility canvas Outlier Ventures

One of the tests of a token design is whether it is actually used by the users the network is intended to serve. Before jumping into the design phase it is critical to have a deep understanding of who your users will be and how collectively they will contribute to the overall objective of the network. The Token Utility Canvas presented here is just a tool that we hope will help token teams structure and solve this problem so that they can design networks that will be actually adopted. It is ultimately users that drive adoption, so be sure to keep your design centered around them.

To learn more about our phased strategic process for token ecosystem creation, please download the full report.