Points as a Path to Blockchain Adoption
Former BitMEX CEO and current Maelstrom Chief Investment Officer Arthur Hayes has proposed a revolution in the engagement and funding strategies of Web3 projects. In a blog post titled ‘Points Guard’, Hayes suggests that ‘points programs could be the key to broader and more effective adoption of blockchain technologies’, surpassing traditional approaches such as Initial Coin Offerings (ICOs) and yield farming.
Challenges with Traditional Methods
ICOs and yield farming, while playing a crucial role in financing many blockchain projects, are not without drawbacks. ICOs, in particular, attract the attention of financial regulators as the sale of tokens to individual investors could be interpreted as a securities offering, leading to considerable regulatory burden.
Yield farming, on the other hand, can quickly dilute the token supply if carried out excessively, reducing user incentive to participate in the protocol due to potential token devaluation.
Advantages of Points Programs
Hayes argues that points programs offer an attractive alternative, allowing projects to reward user participation without the regulatory inconveniences associated with direct token distribution.
This approach, according to Hayes, promotes guerrilla marketing where users are encouraged to engage with the protocol, accumulating points that can be converted into tokens at their discretion. Such an approach minimizes the risk of rapid token devaluation and keeps regulatory scrutiny at bay while maintaining a high level of engagement and interest in the project.
Towards a More Engaged Crypto Future
Hayes envisions that successful Web3 projects will likely adopt points programs before conducting token generation events, creating usage for the protocol, generating excitement around the probable token airdrops, and ultimately powering token introductions.
With the proliferation of points programs, there will be malicious actors who abuse this trust. Ultimately, blatant trust abuse encompassing a large sum of money could be what kills points as a fundraising and user engagement tool. But we are not there yet, so I’m not worried.
Arthur Hayes
However, he warns about the potential for abuse in these programs, emphasizing the importance of trust between projects and their users to prevent this strategy from being compromised by malicious actors.
