Solend Founder: The Good, Bad and Ugly of Airdrop “Points”

Author: Rooter, founder of Solend and Suilend protocols, CoinDesk; Compiled by: Whitewater, Golden Finance

Who doesn’t want free money?

Points, a quasi-loyalty program designed to incentivize the use of blockchain applications by offering tokens that may be redeemed in time for something valuable, taps into something primal in our brains: our hard-core attachment to gambling. Coding desire.

The dopaminergic system helped our ancestors take risks, bringing us to where we are today. We wouldn’t be in this golden age of technology without high-risk, high-reward action (we use it to flip meme coins at 1,000 TPS).

Stories of ordinary people making life-changing money spark inner monologues of "What if?" We fear missing out when “everyone gets really rich and you don’t.”

Airdrops can be beneficial to many people. But projects have seized on the potential of growth hacking and the recent “points” trend, and it’s been misused. The developers know what they're doing, we know what they're doing, and they know we know what they're doing. Today’s points airdrop is predatory, lazy, and really just gambling.

Looking back to incentivize cryptocurrency adoption

To understand this issue, It is important to understand how they are formed.

Liquidity mining was pioneered by Compound, which kicked off the "DeFi Summer" in 2020 the prologue. Lending and borrowing on Compound is incentivized through COMP tokens. Soon, more than a dozen programs offered similar incentives, each with its own twist. One of them, Sushiswap, used its own token SUSHI to incentivize liquidity supply (LP) positions in a “vampire attack” on Uniswap, which has yet to launch its own governance token. This forced Uniswap to launch UNI and conduct a retroactive airdrop for early users. (Some people joke that this is the "stimulus of Ethereum")

The widespread impact of the UNI airdrop is decentralization It has become a huge catalyst for globalized finance, attracting a large number of new users. Since then, the same process of airdropping tokens has been replicated by many different protocols on many different chains – with varying degrees of differentiation.

Then in 2022 came Blur, a precursor to points. Users can earn points by trading non-fungible tokens (NFTs) on its marketplace. 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 loyalty offered by airlines, hotels and cafes The evolution of points. Just because DeFi projects and cafes call them “points” doesn’t mean they are the same thing. They have significant differences in history and usage that make them distinct taxonomies. One is a low-risk loyalty program, the other is a deliberate attempt to use hype to boost metrics and fees.

Current points

Current The points are predatory. There are no known rewards, no timetable, and changes can be made at will. Rewards may be worthless or never distributed (some call them "permanent points" because they are never redeemed for valuable tokens).   All of these are with );">Pay actual fees and opportunity costs at the expense of the user.

False advertising programs are rampant, promoting black boxes in a world where transparency is crucial. They are pushing things beyond what the pioneers did. Blur launched their token within five months, but some projects have been fleecing users for over a year now.

How should the integral be designed?

The problem with the integral is not the integral itself, but how Use points to rob users. However, it is possible to design a points program that benefits both the project and the users.

The main changes that need to be made are upfront disclosure of rewards, communication of timelines and commitments.

The way forward

The way forward for points requires a commitment to transparency and fairness . By acting early, projects can realize the dream of transparent, decentralized finance instead of building on our original System for raising objections. By prioritizing ethics, we can transform points from a speculative gamble into a useful tool for engagement, retention, and rewards. As it should be.