Author: Nancy, PANews
First, the founder of Compound claimed that "the era of points has ended", and then the founder of Uniswap, the "pioneer of airdrops", suggested that projects "issue tokens instead of points". The rampant points gameplay has caused "aesthetic fatigue" and has even been criticized.
As an important weapon for the rapid growth of TVL and the number of users, the introduction of the points system has promoted the prosperity of the ecosystem of various projects and achieved a leap in valuation. As the points culture begins to become popular in the crypto field, so far, projects in many fields including Layer2, LSD, SocialFi, DePIN, blockchain games, exchanges, wallets and NFT have entered the market.
However, the increasingly involutionary points system is on the decline. Currently, there are several controversies surrounding the points system in the market:
Linear/batch release of rewards is criticized for harming user interests
Points airdrops have become a new tool for projects to motivate user participation, but from past cases, they often face risks such as market crash pressure and difficulty in retaining users. In response, many project parties have begun to implement a strategy of linear release or batch distribution of rewards, but compared with the previous mining, withdrawal and sale method, users are not willing to pay for it. For example, recently, EigenLayer, the leader in the re-staking track, adopted a batch and linear release airdrop method, which caused user dissatisfaction and large-scale withdrawal requests. For this reason, EigenLayer clarified some community issues and announced that it would allocate additional tokens EIGEN to all interactive users. Renzo, a liquidity re-staking protocol, also suffered from serious decoupling due to community dissatisfaction due to the airdrop rules such as setting the top 5% addresses as linear release, and later adjusted to a one-time release.
The rationality of witch-hunts is questionable
Although witch hunting can often guarantee the fairness of the reward distribution mechanism to a certain extent, the witch review of points in many projects is considered to be unreasonable. The reason is that the current point system is mainly based on deposits or trading volume. The acquisition of these points is based on indicators such as the number of assets, participation time, fund size and number of transactions, and there is a certain withdrawal restriction cycle, that is, users need higher time and financial costs than in the past airdrop form. Not only that, many projects launch various tasks to encourage users to brush the volume, but then conduct witch reviews, which greatly increases the risk of users being reversed. In addition, some projects implement anti-witch strategies by setting a minimum score standard. Although it can screen out the "minimum living security" group to a certain extent, some real users who participate at low cost are also excluded.
The value of points is constantly expanding and diluted
Each company has different time settings for points activities. In addition to single points activities, there are also multi-period/multi-stage or even permanent points plans. Although multiple points activities can bring continuous participation to the project, the continued postponement of points rewards and the continuous dilution of points value are wearing down the enthusiasm of users to participate. For example, the new points rules of the L2 project Blast after the mainnet launch, and the subsequent launch of points bonus, Blast Jackpot and other activities have caused the points income of early participating users to be repeatedly diluted by inflation.
The reward distribution mechanism is unfair
Since many projects use the amount of funds as the key basis for earning points, this is not friendly to retail investors who do not have financial advantages, especially some projects that set a minimum score will make retail investors "runners-up", but retail investors are the main participants in the market. For example, Justin Sun's team recently deposited 120,000 EETH into Swell L2, accounting for 46.6% of the total deposits. In addition, it is also considered unfair to reward participating users at different points stages in batches. For example, EigenLayer's initial airdrop plan included "users and LRT holders who directly pledged in EigenLayer" in the first stage, while other protocol interaction users were excluded.
Points become a means of "drawing traffic"
Unlike DeFi mining projects with clear APR, the expected airdrop based on the points system is the main motivation for users to participate, but it is also regarded by many as an effective traffic diversion strategy. For example, recently, Drift Protocol, a DEX derivatives platform of Solana ecosystem, launched airdrops a few months after launching the points trading activity, but the reference basis was not based on points, but distributed to OG users, which was also questioned by the community for "rat warehouse" behavior.
Ultimately, the reasons behind the controversial points model include the opacity of the distribution model, the imbalance of the reward distribution mechanism, the arbitrary modification of the rules, and the use of points as a marketing gimmick. These problems are significantly consuming and overdrawing user trust and project brand value.
Since the points system of most projects is similar, users have already experienced "aesthetic fatigue", but many projects have begun to "work hard" on points marketing. For example, the gold nugget award recently launched by Blast allows users to get points lottery opportunities by adding tokens or NFTs to form a set, enriching the channels for users to obtain points and increasing the fun of participation; AnimeCoin's Gacha Grab points activity allows users to obtain points through NFTs and then draw different levels of capsule rewards. While creating interactivity and fun, it increases the channels for consuming points to avoid excessive accumulation of users; UniSat launched a limited-time points multiple reward activity, which can effectively improve user participation and retention rate; Friend.tech distributes points from investment institutions such as Paradigm to users. This "subsidy" model is also easier to improve user loyalty and better guide projects.
At the same time, as the points-related tools are gradually improved, they will usher in greater growth and optimization space. For example, Whales Market can provide an over-the-counter points trading market, OKX Web3 wallet supports the points mining dashboard function, and Stack can build an on-chain distribution and tracking points framework, etc.
In general, the high funding and user participation of the points project is due to the premium of market sentiment. Once the market sentiment reverses, it will be difficult to sustain. Therefore, when designing the points system of the project, more attention should be paid to information transparency and fairness, while more comprehensively capturing the contribution of community users.
“If you don’t think the community is worth it, don’t launch a token.” As Hayden Adams said.
