What is a reward token, exactly?

A reward token motivates users by rewarding them for completing different tasks. The most common example of this type of activity is HODL, which rewards users simply for holding tokens. It operates by charging a fee for each transaction equal to a percentage of the tokens transferred.

The tokens that have been collected are then used to distribute rewards to existing holders. To receive the rewards, you can use your token or another popular cryptocurrency, such as BUSD or DOGE.

What are the various types of reward tokens?

The most common reward tokens are reflection tokens. The collected tokens are distributed as a reward in this mechanism. By simply HODLing the tokens, users accumulate more tokens over time. This is popular for a variety of reasons. To begin with, it is extremely effective due to the use of a technique known as reflection. To keep things simple, reflection does not necessitate the explicit distribution of reward tokens; instead, it updates the user's balance based on their current holdings, saving a massive amount of transaction gas. Furthermore, because you are distributing your own tokens, you avoid having to sell tokens in order to acquire BUSD or other tokens, which can cause the value of your token to fall.

Another type of reward token, known as a "baby" token, has recently gained popularity, such as babyDOGE or babyBUSD. These tokens pay their holders in DOGE or BUSD. While more gas and token exchanges are required to obtain BUSD/DOGE, they are extremely appealing to investors.

How does one go about constructing one?

One method for creating such a token is through self-programming. Both reflection and baby reward tokens are quite complex. To learn blockchain programming, create, and test such tokens, a significant investment is required. Even after that, there is a chance that there will be bugs in your token, allowing for potential hacker exploits.

However, there is now a much simpler way that makes use of the fantastic no-code platform Unicarve. Unicarve BEP20 token generator enables you to generate BEP20 tokens that support modern tokenomics features such as reflection or rewards in BUSD or any other token, liquidity generation, marketing and charity wallets, and hyper-deflationary buyback. It not only allows tokens to be created on the Binance Smart Chain using modern controls, but it is also extremely simple to use and one of the most cost-effective token generation platforms available.