A new method of raising funds through so-called points better suited for popularizing cryptocurrencies compared to ICOs and income farming. This was stated by ex-CEO of BitMEX Arthur Hayes.
“Points Guard” is an essay on the new pseudo-ICO crypto fundraising and engagement method. If you don't understand what points are and why they are going to be used and abused, read on. https://t.co/fR5ruXX4cT pic.twitter.com/2E2d6yiERh
— Arthur Hayes (@CryptoHayes) February 8, 2024
In the Points Guard essay, Hayes pointed out the problems with ICOs, whose participants may face regulatory scrutiny.
“Some regulators see the sale of assets to retail investors as selling “securities” and require you to do a lot of “crap”,” – he pointed out.
In the case of yield farming, aggressive distribution of tokens can significantly increase their supply, undermining the stability of quotes. As a result, users will lose incentive to use the protocol, the expert emphasized.
In contrast to these methods, “points” can act as a new element of the so-called guerrilla marketing.
According to Hayes, instead of instantly issuing assets for use dapps projects can provide points for participation, which can be converted into tokens at the user's discretion.
The ex-CEO of BitMEX is convinced that such an approach will not be considered an investment contract between the team and the user. It does not provide for future rewards and the exchange of cryptocurrency for fiat. Such an interpretation may make the “points” acceptable to regulators.
Thanks to points, the project does not bind itself to a contract that specifies the token emission schedule. The conversion ratio can be changed at any time, the specialist clarified.
“The ability to 'surgically' dynamically calibrate emission points for specific actions across the entire ecosystem means the team can get the desired effect in creating exactly the type of user experience they want,” – he explained.
The ex-CEO of BitMEX also added that with the help of “points” the project gains some independence from venture funds and other large players.
Regarding retail investors, he sees points as a fairer way to reward participation, despite the uncertainty of the airdrop and the ratio of “points” to tokens.
Hayes acknowledged that the concept is not without its flaws. A points program can only be effective if there is high trust between the project and users. The specialist did not rule out the possibility that there would be attackers who would abuse it.
The expert predicted that successful Web3 startups will adopt the concept he proposed, introducing a “points” program before issuing tokens.
“This will lead to the use of the protocol, hype around a possible airdrop,” – he summed up.
Let us recall that in January, Hayes revealed the possibilities of arbitrage after launching a Bitcoin ETF.
In February, Ripple’s technical director called the idea of issuing “Robinhood” tokens a failure.
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