The Good, the Bad and the Ugly of Airdrop ‘Points’

Who
doesn’t
want
free
money?

Points,
the
quasi-loyalty
programs
meant
to
incentive
use
of
blockchain
applications
by
offering

scrip
that
might
in
time
be
redeemed
for
something
valuable,
tap
into
something
primal
in
our
reptilian
brains:
our
hardcoded
desire
for
gambling.

0xRooter


is
the
founder
of
Solend
and
Suilend
protocols.

The

dopaminergic
system
helped
our
ancestors
take
risks
that
brought
us
to
today.
Without
high-risk-high-reward
actions,
we
wouldn’t
be
in
this
golden
era
of
technology
(which
we
use
to

flip
meme
coins
at
1,000
TPS).

Stories
of
Regular
Joes
earning
life-changing
money
prompt
an
internal
monologue
of
“what
if?”
When

“everyone
is
getting
hilariously
rich
and
you’re
not,”
we
FOMO.

Airdrops
have
been
rewarding
for
many.
But
projects
have
caught
onto
the

growth-hacking
potential
and
recent
trend
of
“points,”
and
the
process
is
already
being
abused.
Developers
know
what
they’re
doing,
we
know
what
they’re
doing,
they
know
we
know
what
they’re
doing.
Points
today
are
predatory,
lazy
and
are
really
just
gambling.

See
also:



As
Crypto
‘Points’
Farming
Grows,
So
Does
Risk
of
Vague
Promises

To
understand
points,
it’s
important
to
understand
how
they
came
to
be.

Liquidity
mining
was
pioneered
by
Compound,
a
move
which

kicked
off
the
“DeFi
Summer”
of
2020.
Lending
and
borrowing
on
Compound
was
incentivized
via
COMP
tokens.
Soon,
a
dozen
projects
offered
similar
incentives
with
their
own
twist.
One
of
them,
Sushiswap,
incentivized
liquidity
provisioning
(LP)
positions
with
its
own
token,
SUSHI,
to

“vampire
attack”
Uniswap,
which
hadn’t
yet
launched
its
own
governance
token.
This
pressured
Uniswap
to
launch
UNI,
which
it
did
with
a
retroactive
airdrop
for
early
users.
(Some

joked
it
was
the
“stimulus
for
Ethereum”
since
it
was
bigger
than
a

COVID
stimulus
check.)

The
widespread
reach
of
the
UNI
airdrop
was
a
huge
catalyst
for
decentralized
finance,
attracting
hordes
of
new
users.
This
same
process
of
airdropping
tokens
has
been
copied
by
numerous
different
protocols
on
numerous
different
chains
since
—
with
varying
degrees
of
differentiation.

Then
came
Blur
in
2022,
the

pioneer
of
points.
Users
could
earn
points
by
trading
non-fungible
tokens
(NFTs)
on
its
marketplace.
By
keeping
earning
criteria
opaque,
farming
could
be
resisted
in
favor
of
real
usage.
With
the
incredible
success
of
Blur,
it
wasn’t
long
before
every
project
had
a
points
program.

A
common
misconception
is
that
points
in
DeFi
are
an
evolution
of
loyalty
points
that
airlines,
hotels
and
cafés
offer.
Just
because
DeFi
projects
and
cafés
both
call
them
“points”
doesn’t
mean
they’re
the
same
thing.
They
have
major
differences
in
history
and
usage,
making
them
separate
taxonomies.
One
is
a
low-stakes
loyalty
program,
the
other
intentionally
preys
on
hype
to
pump
metrics
and
farm
fees.

The
current
points

meta
is
predatory.
There’s
no
known
reward,
no
timeframe
and
changes
can
be
made
arbitrarily.
Rewards
could
be
valueless
or
never
be
distributed
(what
some
call
“forever
points”
because
they’re
never
redeemed
for
valuable
tokens).
Goalposts
can
continuously
be
moved
back.
All
at
the
expense
of
users
who
pay
real
fees
and
opportunity
cost.

Projects
are
running
wild
with
false
advertising,
promoting
black
boxes
in
a
world
where
transparency
should
be
paramount.
And
they’re
pushing
things
beyond
what
the
pioneers
did.
Blur
launched
their
token
within
five
months,
but
there
are
projects
now
that
have
been
milking
their
users
for
over
a
year
now.

The
issue
with
points
is
not
points
themselves,
but
how
they’re
being
used
to
prey
on
users.
However,
it’s
possible
to
design
a
points
program
that
is
beneficial
to
both
the
project
and
users.

The
main
changes
that
need
to
be
made
are
disclosing
rewards
upfront,
communicating
a
timeframe
and
committing.

See
also:



Solana’s
Biggest
DeFi
Lender
Almost
Got
Rekt

Solend,
the
project
I
founded,
did
this
with
“Points
Season
1,”
where
a

minimum
rewards
pool
(which
could
only
be
increased)
was
disclosed
and
a
timeframe
was
communicated.
The
rewards
pool
started
with
100,000
SLND
tokens
and
was
later
increased
to
include
100,000
PYTH
(the
governance
token
for
Pyth
Network)
and
10
Tensorians
(the
NFT
collection
launched
by
Tensor,
the
leading
NFT
marketplace
on
Solana).

The
path
forward
for
points
requires
a
commitment
to
transparency
and
fairness.
By
being
upfront,
projects
can
deliver
the
dream
of
transparent,
decentralized
finance
rather
than
building
the
systems
we
took
issue
with
in
the
first
place.
By
prioritizing
ethics,
we
can
transform
points
from
a
speculative
gamble
into
a
useful
tool
for
engagement,
retention
and
rewards.
As
it
should
be.