What is a reward token?

A reward token incentivizes users by rewarding them for various activities. The most prevalent example of such an activity is HODL, in which users are rewarded for simply holding tokens. The way it works is that for each transaction, a fee equal to a percentage of the tokens transferred is collected.

The tokens collected are then used to distribute rewards to current holders. The rewards can be in your token or another popular cryptocurrency, such as BUSD or DOGE.

What are the various types of reward tokens?

The most frequently created reward tokens are reflection tokens. The collected tokens are distributed as a reward in this mechanism. Simply by HODLing the tokens, users receive more tokens over time. This is popular for a number of reasons. For starters, it is extremely efficient, as it employs a technique called reflection. To keep things simple, reflection does not require explicit distribution of reward tokens; instead, it updates the user's balance based on their current holdings, which saves an enormous amount of transaction gas. Additionally, because you are distributing your own tokens, you avoid the need to sell tokens in order to acquire BUSD or other tokens, which can result in a decrease in the value of your token.

Recently, another category of reward tokens dubbed "baby" tokens have gained popularity, such as babyDOGE or babyBUSD. These tokens compensate their holders in DOGE or BUSD. While they consume more gas and require token exchanges to acquire BUSD/DOGE, they are extremely appealing to investors. 

How do you go about creating one?

The one way to create 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, the likelihood is that bugs will exist in your token, allowing for potential hacker exploits.

However, there is now a much simpler way, utilizing the incredible no-code platform Unicarve. Unicarve BEP20 token generator enables you to create 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. Not only does it enable the creation of tokens on Binance Smart Chain using modern controls, but it is also extremely intuitive to use and one of the most affordable token generation platforms available.