The rampant proliferation of points has led to collective pessimism; the "routine" of the points system and airdrops need to return to sincerity

Author: Nancy, PANews

Previously, the founder of Compound claimed that "the era of points has ended," and then the "father of airdrops," the founder of Uniswap, suggested that projects "issue tokens instead of points." The rampant point systems have led to "aesthetic fatigue" and even pessimism.

As an important weapon for the rapid growth of TVL and user numbers, the introduction of point systems has driven the prosperity of various project ecosystems and achieved valuation leaps. With point culture beginning to flourish in the crypto space, projects across numerous sectors, including Layer2, LSD, SocialFi, DePIN, blockchain games, exchanges, wallets, and NFTs, have entered the fray.

However, the increasingly competitive point sector is struggling to hide its decline. Currently, there are several controversies surrounding point systems in the market:

Linear/Batched Release of Rewards Criticized for Harming User Interests

Point airdrops have become an emerging tool for projects to incentivize user participation, but past cases often face risks such as price crashes and difficulties in user retention. In response, many projects have begun to implement strategies for linear release or batch distribution of rewards, but compared to the previous method of mining, withdrawing, and selling, this approach has not been well received by users. For example, recently, EigenLayer, a leader in the re-staking sector, adopted a batch and linear release method for its airdrop, which led to user dissatisfaction and a large number of withdrawal requests. In response, EigenLayer clarified some community issues and announced the distribution of additional EIGEN tokens to all interacting users. The liquidity re-staking protocol Renzo also faced severe decoupling due to setting the top 5% addresses for linear release and other airdrop rules, later adjusting to a one-time release.

The Reasonableness of Witch Hunts is Questioned

Although witch hunts can often ensure a certain degree of fairness in reward distribution mechanisms, many projects' witch hunts for points are considered unreasonable. This is because the current point systems mainly rely on deposits or trading volumes, and the acquisition of these points is based on indicators such as asset quantity, participation duration, capital scale, and transaction frequency, with certain withdrawal restrictions. This means that users face higher time and capital costs compared to previous airdrop forms. Moreover, many projects encourage users to inflate their volumes through various tasks but then conduct witch hunts, significantly increasing the risk of users being penalized. Additionally, some projects implement anti-witch strategies by setting minimum point standards, which can filter out users who exploit the system but also exclude some genuine users who participate at a low cost.

The Value of Points is Constantly Diluted

Different projects have varying durations for point activities, including single point events, multiple phases, or even permanent point plans. While multiple point activities can bring sustained engagement to projects, the continuous postponement of point rewards and the constant dilution of point value are eroding user enthusiasm for participation. For instance, the L2 project Blast introduced new point rules after its mainnet launch, and subsequent activities like point bonuses and the Blast Jackpot have led to the inflation and dilution of early participants' point earnings.

Unfairness in Reward Distribution Mechanisms

Many projects assess point earnings based on capital volume, which is not friendly to retail investors who lack capital advantages, especially since some projects set minimum points that make retail investors "also-rans," despite them being the main participant group in the market. For example, recently, Sun Yuchen's team deposited 120,000 EETH into Swell L2, accounting for 46.6% of total deposits. Furthermore, distributing rewards in batches to users at different point stages is also seen as unfair. For instance, EigenLayer's initial airdrop plan included "users directly staking on EigenLayer and LRT holders" in the first phase, while excluding users interacting with other protocols.

Points as a "Traffic Generation" Tool

Unlike DeFi mining projects with clear APRs, the expectation of point airdrops is the main motivation for user participation, but it is also seen by many as an effective traffic generation strategy. For example, recently, the Solana ecosystem DEX derivative platform Drift Protocol launched an airdrop after several months of point trading activities, but the distribution was not based on points; instead, it was given to OG users, leading the community to question the existence of "insider trading."

Ultimately, the skepticism surrounding the point model stems from the lack of transparency in distribution models, imbalances in reward distribution mechanisms, arbitrary rule modifications, and the use of points as marketing gimmicks. These issues are significantly consuming and overdrawing user trust and project brand value.

As most projects' point systems are quite similar, users are experiencing "aesthetic fatigue," but many projects are beginning to "put effort" into point marketing. For example, recently, Blast launched a gold bar prize that allows users to gain points for a lottery chance by adding tokens or NFTs to form a set, enriching the channels for users to acquire points and increasing the fun of participation. AnimeCoin's Gacha Grab point activity allows users to obtain points through NFTs and then draw different levels of capsule toy rewards, creating interactivity and fun while increasing the channels for point consumption to avoid excessive accumulation. UniSat launched a limited-time point multiplier reward activity, effectively improving user participation and retention rates. Friend.tech distributed points from investment institutions like Paradigm to users, and this "subsidy" model is also more likely to enhance user loyalty and better attract traffic to the project.

At the same time, as point-related tools gradually improve, there will be greater growth and optimization space. For instance, Whales Market can provide an off-chain trading market for points, OKX Web3 wallet supports a point mining dashboard feature, and Stack can build an on-chain distribution and tracking framework for points, etc.

In summary, the high funding and user participation in point projects are driven by market sentiment premiums. Once market sentiment reverses, it will be difficult to sustain, so projects should focus more on information transparency and fairness while comprehensively capturing community user contributions in their point designs.

"If you think the community is not worth it, please do not issue tokens." As Hayden Adams said.