When the catering industry meets Web3, a quick read on Blackbird's operating model and token model

Author: Karen, Foresight News

The restaurant industry has always played a key role in the consumer economy. What would happen if the restaurant industry combined with Web3? Imagine consumers earning token rewards while dining, which can be redeemed for signature dishes, drinks, discounts, access to exclusive events, and upgraded memberships, and even traded publicly. Restaurants would also gain clearer insights into consumers' dining frequency and preferences, including dining times, favorite dishes, tastes, and even dining locations.

This way, the connection between restaurants and customers will become closer. Restaurants can precisely target customer groups for personalized promotions or services, and can increase foot traffic through check-ins, while users can earn rewards from this. Blackbird is a product that combines the restaurant industry with Web3.

Earlier this month, the Web3 restaurant loyalty app Blackbird completed a $24 million Series A funding round led by Andreessen Horowitz (a16z), with participation from QED Investors, Union Square Ventures (USV), Shine, Variant, and others.

Just a year ago, in October 2022, Blackbird had already completed a $11 million seed funding round, co-led by Union Square Ventures, Shine Capital, and Multicoin Capital, with participation from Variant, Circle Ventures, and IAC.

So what exactly is Blackbird? How does it operate? What is the economic model of the tokens used to drive its loyalty and rewards system?

What is Blackbird?

The founder and CEO of Blackbird is Ben Leventhal, who is 44 years old and has been deeply involved in the restaurant industry for the past 20 years. He is also the co-founder of the online restaurant reservation service Resy and the food website Eater.

Eater was created in 2005 by Ben Leventhal and his friend, former Gawker executive Lockhart Steele. It was acquired by digital media company Vox Media in 2009. In 2014, Ben Leventhal partnered with wine entrepreneur Gary Vaynerchuk to launch the online restaurant reservation service Resy. Three years later, Resy raised $13 million from companies like Airbnb and First Data Corporation, and was later acquired by American Express in 2019, integrating it into its mobile app as a service for certain rewards card members. According to Wikipedia, as of 2023, approximately 16,000 restaurants worldwide can be booked through Resy.

Blackbird is building a decentralized platform specifically for the restaurant industry to enhance the connection between restaurants and their customers, covering engagement, loyalty enhancement, and payment networks. There are three main roles on the Blackbird platform:

• The network of restaurants using Blackbird;
• Restaurant consumers and customers;
• Protocol stakeholders.

The Blackbird platform token, FLY, is used to incentivize mutually beneficial actions between restaurants, customers, and the protocol, ultimately transforming the economic model of the restaurant industry.

How does Blackbird operate?

Blackbird is based on the Coinbase L2 network Base, providing a technical toolkit for restaurant merchants and an interface for consumers to participate, allowing users to earn tokens on a public blockchain.

Each Blackbird partner restaurant will distribute a corresponding NFT membership card to customers, containing their complete access history and membership level. Customers can apply for an account using the Blackbird app or by tapping their phone on Blackbird partner restaurants' NFC-supported stickers. Currently, Blackbird has only released an iOS version, with an Android app coming soon. Application requires a phone number, but the author did not receive a verification code during the application process. Blackbird collaborates with Privy to allow users to log in and access self-custodied wallets using their phone numbers.

To help users reduce costs and provide a seamless experience, Blackbird covers all gas fees for minting NFTs and FLY in the Blackbird wallet.

After the token generation event, a certain number of FLY tokens will be created daily and allocated to the triggered actions of the day (which may include restaurant check-ins and payments). 50% of the newly issued tokens will be allocated to users who triggered the activities, and 50% will be allocated to the restaurants.

Consumers can also earn additional points by providing feedback to restaurants or referring friends, which may be incentivized by the restaurants to encourage consumers to share data. Additionally, consumers may be incentivized to provide ongoing data to restaurants to gain a revenue multiplier.

Blackbird states that the utility of the FLY token can evolve into benefits such as internal redemption for discounts, dishes, membership level upgrades, access to Blackbird events, data-sharing incentives, payment of Blackbird platform fees, and usage of FLY with other industry merchants that have similar customer bases. Of course, restaurants can also offer check-in rewards in the form of FLY tokens to attract foot traffic.

Regarding data sharing, if users choose to join the data provision program, they will earn 3 times the FLY for each tap-in. Only restaurants where users have membership can see the data they provide.

FLY Token Economics

The total issuance cap for FLY tokens in the first three years is 500 million tokens, during which a certain number of FLY will be issued daily at a predetermined rate. The specific allocation model is as follows:

• 50% of all tokens (250 million) are allocated to the community, with Blackbird restaurants and consumers each receiving 50% of that allocation, or 125 million tokens each;
• 15 million tokens (3%) are allocated to early-stage restaurant launch partners;
• 87.5 million tokens (17.5%, with a 1-year full lock-up and 24-month release period) are allocated to the Blackbird Labs team;
• 60 million tokens (12%, with a 1-year full lock-up and 24-month release period) are allocated to Blackbird warrant holders (investors);
• 87.5 million FLY tokens (17.5%) are allocated to the Blackbird treasury.

The following chart shows the release schedule for FLY tokens:

In terms of community allocation, the token issuance for rewarding restaurant check-ins and purchases follows a logarithmic function, gradually decreasing daily. According to the formula below, 40% of the total community issuance will be issued in the first year, with 35% and 25% issued in the second and third years, respectively.

It is worth noting that the token rewards for check-ins and purchases at restaurants will be dynamically adjusted daily. Specifically, at the beginning of each week, the increase in new restaurants joining the network and total historical data will be evaluated to predict the daily check-in numbers for the entire network for the following week. Initially, the focus of reward distribution will be on restaurant check-ins, and will later shift to purchasing behavior.

The future development of FLY will first be determined by stakeholders (restaurants, consumers, and the ecosystem collaborator community), and will then transition to a formal decentralized governance strategy.

Blackbird aims to onboard 1,000 restaurants next year

According to Fortune magazine, Blackbird has added about 100 restaurant clients in just a few months and has fully integrated its technology into 22 of those restaurants. Ben Leventhal hopes to onboard another 1,000 restaurants next year.

Notably, Jake Schlessinger, product manager at Blackbird Labs, has previously discussed the possibility of applying methods used on friend.tech to real-life restaurant and hotel industries, and solicited opinions on whether to incorporate bonding curves into the product roadmap.

That is, if using a bonding curve model, Blackbird restaurants could sell memberships at a lower initial price, thereby incentivizing and benefiting early members (loyal customers of the restaurant).

Regardless of success, Blackbird's approach of combining dining and Web3 will bring new perspectives, insights, and reflections to the consumer industry.