The Hyperliquid point system has become one of the most successful airdrops in history. This article explores its point mechanism and reasons for success, revealing how user participation and loyalty drive project development. This article is based on a piece written by Three Sigma, compiled and translated by PANews.
(Background: A Letter to the Hyperliquid Core Team: You've Made a Great Product, but It Can Be Even Better)
(Additional Background: Review of 22 Mainstream Public Chains' Performance in 2024: Half Saw Declining Activity, Hyperliquid Ranked First in Multiple Metrics)
Hyperliquid has broken the airdrop model, a topic that the crypto community has been discussing. This article aims to decipher Hyperliquid's point system and why it has become one of the most successful airdrops in history.
1. A Brief Introduction to Points and Psychology
Points are a structured way to measure and reward user participation and loyalty within an ecosystem. They provide a framework for tracking activities and incentivizing behaviors that align with the project's growth goals, such as interacting with the project platform or contributing to the community.
In the context of airdrops, points typically determine airdrop eligibility and distribution quantities, turning what was once a random reward into an interactive process to foster competition and a sense of achievement. Beyond that, point systems are also used to onboard users and launch the final product.
Most importantly, the real goal of launching a point system is to strengthen the project's user base, increase its liquidity, and ultimately improve all growth-related metrics. Some projects even use these metrics to raise funding at higher valuations, demonstrating the project's engagement and appeal.
Psychologically, points are a powerful behavioral driver that can enhance user engagement. Concepts like reward expectancy use the promise of future benefits to motivate users, while the principle of reciprocity encourages users to remain loyal to the system that rewards their efforts. The visibility of points also promotes social comparison, incentivizing users to participate more deeply in the competition.
2. Hyperliquid's Point Program
Hyperliquid is a decentralized derivatives trading platform with its own L1, aiming to combine the speed and efficiency of CEXs with the security and transparency of blockchains. Hyperliquid stood out in 2024 as the only prominent project without external funding.
Furthermore, Hyperliquid has leveraged its point system to create the best token airdrop event in the crypto space. This airdrop campaign has become one of the most successful in history in terms of scale and execution.
To understand how Hyperliquid achieved this feat, it is necessary to examine the various factors that have propelled the platform to the top and made it the talk of the town.
Hyperliquid's Point Seasons
The point program is the cornerstone of Hyperliquid's success, aiming to reward users and foster genuine engagement with the platform. During this period, three main seasons were launched: a closed-door alpha, an open first season, and an open second season. Hyperliquid also implemented undisclosed 1.5 and 2.5 seasons to provide additional points for real usage, not just point mining.
In the closed-door alpha phase that ended on October 31, 2023, Hyperliquid distributed 446 million points among 11,500 active users. This stage rewarded early adopters who participated in testing the platform, laying the foundation for Hyperliquid's community-driven spirit.
The point program and the first season officially launched on November 1, 2023, distributing 1 million points per week for six months to reward users who contributed to the protocol's growth. This initial phase ended on May 1, 2024.
In addition, users can earn fees and points through recommendations. To further incentivize participation and distribution, a temporary 1.5 season (May 1 to May 28, 2024) was implemented with a 2x point reward, and a total of 8 million points were distributed within four weeks.
The second season began on May 29, 2024, with 700,000 points distributed weekly until September 29, 2024. After these 4 months, an undisclosed 2.5 season was launched, running from September 30 to November, with a total of 8.4 million points distributed.
Earning Rewards: The Known and the Unclear
Hyperliquid's reward system encourages users to participate in compliant activities, such as generating trading volume and depositing funds. However, manipulative behaviors like fake trades, withdrawals, and mining using affiliated wallets are penalized and marked as Sybil activities.
While the distribution rates and season durations are transparent, key details remain uncertain or are only disclosed after some time, including the total season points, the existence of tokens, how points convert to tokens, the exact criteria for earning points, and behaviors that may lead to penalties.
This mix of clarity and ambiguity focuses participants on meaningful contributions while speculating on the broader potential of the campaign system.
Perpetual Trades and Season 1
Although the total points distribution for each season is known, the exact token allocation remains unclear. In Season 1, as the perpetual contract market was only considered in the final weeks, the points distribution is speculated to be based on typical perpetual contract metrics, such as trading volume, number of trades, fees paid, liquidation volume, and user profit or loss.
Compared to Season 2, the Season 1 points distribution was more linear, with users who transferred more capital through perpetual contracts earning significantly more points. There may be a cap on points distribution or increasing costs for earning additional points after reaching certain thresholds. However, a clear distinction existed between users with more capital and those who could only trade with a few thousand dollars.
Spot Trading, Retail, and Participation
The spot market was launched alongside the PURR airdrop before the end of Season 1. Initially, there were no indications that spot market trading or general trading would come with incentives. However, after May, the Season 2 points activity was initiated, marking a shift in the reward mechanism.
During Season 1, the only way to earn points was through perpetual contract trading, a system that naturally favored whales, high-frequency traders, and market makers due to their ability to access larger capital and advanced trading strategies. Season 2 introduced a more inclusive system, allowing users to earn points not only by trading in the spot market but also by holding assets. This change created a more level playing field, as the spot market's lack of deep liquidity put retail traders and whales on equal footing, making it easier for less capitalized participants to compete for points.
In most airdrop mechanisms, whales dominate through staking or high trading volumes due to their capital. Hyperliquid, however, implemented mechanisms to ensure a fairer distribution of rewards. This design significantly improved the community's positive sentiment towards the platform.
By the start of Season 2, the points distribution had been diversified across users in both the perpetual and spot markets. While the specific details of the weekly points distribution remain undisclosed, unique spot market metrics (such as token holdings or liquidity contributions) may influence the reward calculations.
The decision to maintain these reward mechanisms opaque requires users to experiment and discover the best strategies themselves, preventing whales from cheating and monopolizing the points distribution. This approach has resulted in a more equitable reward structure, fostering inclusion and participation across different capital levels.
3. Indicators
In the analyzed time period, the Open Interest (OI) exhibited a sustained upward trend, closely correlated with the trading volume patterns, without any signs of wash trading throughout the year. Most of the activity appears to be organic, attracting market attention during active periods and gradually subsiding during the quieter summer months when the overall market was in a sideways and slightly downward trend.
A key milestone was the PURR airdrop, which drove a significant increase in platform activity. After the end of Season 1, the activity levels naturally declined, retaining only the users who were genuinely participating in the dApp. Subsequently, during the launch of Season 1.5, these users were further incentivized with additional point rewards.
The initial launch of Season 1 activity garnered relatively less attention, but over the following months, the activity gradually increased, even in the midst of a depressed crypto market. By the end of Season 2, when the overall market was still in recovery, Hyperliquid had become a hot topic. Despite the lack of public rewards and the general perception that the platform's hype had subsided, its indicators showed a significant uptick. As the market rebounded after the US elections, Hyperliquid emerged as the platform of choice for on-chain traders, outperforming its competitors.
The establishment of the Hyperliquid Foundation, coupled with the upcoming network token confirmation, has solidified the platform's position in the market. This surge in exposure has triggered exponential growth in the relevant indicators, attracting new users who have maintained a certain level of endorsement for the platform, drawn by its powerful performance and innovative features.
4. What Did Other Projects Do?
To summarize and understand why the Hyperliquid points system succeeded while others' points systems did not, the following table compares the key features of the major airdrops and points systems in this cycle:
5. Secrets to Success
The success of the Hyperliquid points system lies in its ability to balance user retention mechanisms and the quality of its underlying product. By analyzing its unique aspects and the common features with other airdrop activities, key lessons can be drawn regarding enhancing user loyalty, token retention, and project growth.
Unique Aspects of the Hyperliquid Points System
Hyperliquid introduced innovative elements that set its activity apart. The limited points created a fair and competitive environment, avoiding the frequent user dissatisfaction caused by unlimited points mining. Additionally, users could earn extra airdrops, increasing the perceived value of participation. Most importantly, the points mining required skill and effort, ensuring that the most engaged and capable users were rewarded, while filtering out those seeking easy gains.
Common Features of Airdrops
Although Hyperliquid's activities have unique characteristics, they share certain common features with other airdrops. The total score was not disclosed in advance, thereby maintaining market interest and speculation. As with many other activities, it lasted for about 10 months and launched one or more scoring seasons before the token generation event. However, the lack of clear rules is a common shortcoming, leaving users to explore the reward mechanism on their own. Score mining also requires financial investment, which is a standard practice in similar activities, but sometimes an exclusive one.
Lessons Learned for Future Airdrops
If the goal is to distribute tokens to knowledgeable, loyal holders who understand the ecosystem, then users who receive the airdrop need to put in effort and expertise. This approach aligns participants with the project's vision and reduces the likelihood of token dumping after the TGE. Limiting the total score can further increase user satisfaction, fostering trust and mitigating excessive score mining. Additionally, miners should feel that their rewards are earned through a combination of time, resources, and skills, rather than being free, which increases the perceived value of the tokens.
The ideal score mining duration seems to be around 10 months. As Hyperliquid and other leading activities have shown, this period balances sustained participation and user fatigue. Simple programs like Grass that require minimal effort can withstand shorter durations, but those demanding higher commitments need more time to succeed.
The Bigger Picture: Product Trumps Scores
Hyperliquid's success goes far beyond its scoring system. It avoided high marketing costs, refused to charge fees during the activity, and provided a user-centric platform. It is not constrained by an externally funded and investor-driven roadmap, allowing for a consistent, community-driven narrative. By focusing on sustainable contract trading, Hyperliquid has built a product that is essential even in market downturns, ensuring ongoing trading activity.
The project's gradual approach has cultivated a loyal community that truly believes in its mission. The emphasis on effort and skills in the scoring activity not only filtered out speculative miners but also established strong connections between top contributors and the project.
