Arthur Hayes, co-founder of BitMEX, has made the prediction that successful Web3 companies would include a “points” scheme prior to holding token creation events.
Arthur Hayes, former CEO of BitMEX and current chief investment officer of Maelstrom, argues in a blog post that “points” are a superior alternative to initial coin offerings (ICOs) and yield farming in terms of cryptocurrency fundraising and engagement.
In his “Points Guard” blog post from February 9, Hayes acknowledged that initial coin offerings (ICOs) and yield farming had their advantages, but he also noted that these trends had introduced new difficulties for crypto ventures. Case in point: initial coin offerings (ICOs) have the potential to draw legal difficulties, but they also provide millions of ordinary investors with the possibility to buy project tokens and participate in innovative ideas early on.
While yield farming does provide users with tokens for using protocols, there may be consequences if this is “pursued too aggressively.” According to Hayes, this has the potential to rapidly increase the already limited quantity of tokens. Consequently, the value of the token may decline, making the system unattractive to potential users.
According to Hayes, projects may now engage in guerrilla marketing via point programs. Projects may provide points for protocol participation that users can convert to tokens whenever they choose, rather than issuing tokens instantly for utilizing the protocol (which leads to “an aggressive token emissions schedule”), according to Hayes.
In Hayes’s view, there is no cash or cryptocurrency transaction between the project and the users, and the method does not constitute a contract between the two parties for a future material benefit. This seems to imply that point systems may be acceptable to regulators.
The CEO saw the possibility of misuse, even if points are a viable deployment technique for crypto projects. Hayes made the valid point that a points system may work best if the project and its consumers have a strong level of confidence. But evil actors will exist, and they will exploit the confidence, as Hayes warned in his writings. The executive is concerned that this may be a tool that “kills” user engagement and fundraising efforts.
The CEO speculated that token generation would follow the implementation of a points program in future successful Web3 initiatives. The protocol will be used more often, excitement about the likely token airdrop will grow, and Pump Up The Jam! will be listed publicly, according to Hayes.
Also Read: Coinbase is being sued over the Songbird cryptocurrency controversy February 9, 2024
Wallets