Key Takeaways:
- Learn how tokenization works in the Software-as-a-Service (SaaS) market as more businesses opt for decentralized workflows.
- Explore the different facets of SaaS tokenization that dictate how software products cater to decentralized business ventures.
- Check the use cases where tokenizing SaaS products will make a difference for projects aiming to maximize the Web3 revolution.
Ever since Web3 technology began existing, it has been called the alternative to the existing Web2 technology that relied overly on centralized workflows and mechanisms. Fast forward to today, advancements in Web3 have hit new highs, with many use cases popping up every day, with some labeled to have a higher potential for evolution than others. Now, it looks like it is time for SaaS tokenization to capture the top slot since it aims to cover an industry that is worth trillions of dollars and replace it with decentralized solutions that can add a layer of transparency. This blog discusses how tokenization for SaaS works and the benefits various stakeholders will get from it.
SaaS Tokenization: What It Means
Basically, SaaS tokenization involves tokenizing software products offered for service and instilling them with rights to access and ownership. While the process is new to the Web3 space, the potential has existed since the first real-world assets were tokenized on the blockchain. Tokenizing SaaS products can revolutionize the way a trillion-dollar industry works since it introduces elements that were never seen before in the space.
- Tokenizing Software-as-a-Service solutions opens up ample liquidity for startups, which often struggle to maintain sturdy operations. Tokens, in this regard, can help SaaS businesses gain the trust of Web3 supporters who vouch for decentralized products that cater to everyday applications.
- It also creates opportunities for fractional ownership of SaaS products, which could potentially replace employee equity shares, giving a heightened sense of appreciation for the work employees do. Distributing tokens to a wider investor pool also drives the product’s monetary value in the long run as it attains results from clients and gains success.
- Tokenizing products related to Software-as-a-Service also creates ample scope for newer forms of payments in the SaaS industry. By allowing people to redeem crypto tokens to acquire the services of a software solution for a predetermined time, processes and payments in the industry become even more transparent, easing the transition to Web3 technology.
Do You Want to Tokenize Your SaaS Product to Promote Decentralized Business Operations?
Models that Tokenization for SaaS Products Can Adopt
Tokenization for SaaS products has become an impressive move for both Web3 and Web2 spaces, and multiple possibilities to do so make it more exciting. There are various models through which one can tokenize SaaS products and distribute them to clients and investors. The following points depict the popular types of SaaS token offerings:
- Token Issuance: The token issuance model lets product owners create RWA (real-world asset) tokens using an exclusive company. This was the first model in the SaaS sphere for tokenization. While it provided some efficiency, the legalities surrounding security tokens mean investors (especially institutional ones) look for licensed and proprietary services that could make them unique.
- Security Token Exchange: The security token exchange model is an improvement to the earlier model since it brings the necessary technology and licenses to operate RWA-based tokens for SaaS. This platform works on a blockchain in a manner akin to traditional stock exchanges, letting them connect to the entire decentralized finance (DeFi) ecosystem, adding extra value to these tokens.
- Licensed Tokenization SaaS: The licensed tokenization SaaS model taps into the benefits of both token issuance and security token exchange models. This model also opens avenues for customization and control over assets and investors. Various token trading pathways, such as OTC (Over-The-Counter), broker-dealer, and exchange, are possible without needing special licenses.
How Do Tokenized SaaS Products Work?
Tokenizing SaaS solutions has opened the chance for various stakeholders in the global software industry to participate in the system in a better way. These products work in a slightly different way compared to the workflow in traditional SaaS environments. The following steps shed light on the working of tokenized SaaS products:
- Token Development: Tokenizing a SaaS solution begins with creating the tokens necessary for representing the software on the blockchain. While these tokens are typically fungible, the possibility of using non-fungible tokens (NFTs) exists, although underexplored.
- Token Sale to Users: After developing SaaS tokens, they should be distributed to target users through an offering model. Projects can either opt for initial token offering pathways that open exclusivity by fostering a sense of community or direct exchange listings, depending on their mission and capabilities.
- Controlled Access: After acquiring tokens, users can access various functionalities of the software based on the number of tokens they hold. Smart contracts play an important role here by gating access in varying levels based on how many tokens one holds.
- Secondary Trading: These SaaS tokens can be traded secondarily across crypto exchanges once they are listed on these platforms. The price of these tokens will increase or decrease based on their supply and demand in the market. Availability in the open market also enhances the liquidity of these tokens.
- Incentives Over Time: Projects can reward token holders with various incentives when they use the SaaS product for a long time or have unused tokens that contribute to the project’s liquidity. Doing so boosts the industry presence of the SaaS project while enhancing user satisfaction and retention levels.
Conclusion
Thus, we saw the fundamentals of SaaS tokenization and how it works in the current market conditions. With Software-as-a-Service emerging as the single most important industry in the digital-first world, bringing tokenization into the ecosystem can enhance trust among stakeholders in the long run. With regulatory clarity surrounding real-world asset (RWA) tokenization rising around the globe, we can understand that tokenizing SaaS products could become easier without legal hassles. This also brings Web3 to mainstream processes, slowly replacing conventional Web2-based solutions, and doing so introduces various benefits that were impossible to imagine before. If you want to tokenize your service-oriented software, Blockchain App Factory is the place to go, and our team can assist you in forming a full-fledged tokenization campaign.
