(Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) I recently read a fascinating book about the history of the East India Company (EIC) called “The Anarchy” by Wiliam Dalrymple. For those unfamiliar with this chapter of European colonialism, the EIC was a joint stock company that was given a royal charter/monopoly over the trade between Britain and the Indian subcontinent. Over a few centuries, what was initially a weak and poor commercial enterprise that survived at the whim of various Indian rulers conquered the entire subcontinent and paved the way for the British Raj, which lasted from the late 19th century until 1947.
I personally don’t trust this point system stuff, nor can I be arsed to connect to this, test that, move that there etc etc etc…..I’ll wait for release, wait for the ‘point holder’ dump and buy in ‘if’ the project is viable and has good engagement. I don’t need to jump through hoops to get access to a 500 buck ‘potential’ airdrop - ain’t nobody got time for that !
seems to me points may be okay (and have the virtuous properties you ascribe to them) if used strictly as a bridge to token distribution
the problem however is that people (whether as part of regulatory psyops or otherwise) are trying to make them their own thing with independent utility that would outlast a token distribution based on points
in practice, therefore, rather than, as you say, aligning users *better*, they will exacerbate the divisions b/w VCs/teams on the one hand and users on the other:
-->teams know the rules for accruing points and can change them, and use them to stealthily increase team/investor allo (classic info asymmetries)
-->teams/VCs will still get equity in the company as well
-->teams/VCs will be allocating value utility across tokens, points and equity, and thus incentive alignment will worsen, not improve--much the same as splitting value/utility between shares of stock held by VCs and tokens (held/bought by users, dumped by VCs) did
-->we will move from the notorious VC equity/token double dip to a notorious VC equity/token/points triple-dip, with users always having less information and only able to acquire the lower-quality asset
-->points are centralized, highly trustful and freely revocable (web2, not web3), and there is nothing they do that could not be done with non-transferable tokens that can later be made transferable, except non-transferable tokens are less appealing to teams because the teams lose some power/control
Let's go one step further: why not make these points liquid and create a marketplace where they can be traded? May as well enable airdrop farmers to cash in early instead of dumping all at the same time when the project airdrops...
The SEC isn’t fooled by adding one layer of abstraction. “Points” are an investment contract, even if there’s a little song and dance between them and the company accreting value to its shareholders. What am I missing here?
one of the ethos of crypto is transparency, and yet we're now aping into projects without transparency (about their token distribution). the irony continues...
Thank King. One point I just wanna add that web3 start up need a initial fund to pay for operation. This fund comes from ecosystem L1 grant or selling NFT without promises about token or future, we have seen a lots of projects in solana success in this way. And 100% points system is the main way to distribute the token in this cycle.
Now pertaining to the article: To fix the issues with the point system, we need clear rules. Anyone who abuses it should face consequences, like being banned.
This will make things fair and rebuild trust. Also, users should have a say in how the point system works since they often notice problems first.
By involving everyone and spreading the word, we can make the point system better for everyone.
Or, buy Bitcoin, HODL, and go live your life.
I personally don’t trust this point system stuff, nor can I be arsed to connect to this, test that, move that there etc etc etc…..I’ll wait for release, wait for the ‘point holder’ dump and buy in ‘if’ the project is viable and has good engagement. I don’t need to jump through hoops to get access to a 500 buck ‘potential’ airdrop - ain’t nobody got time for that !
seems to me points may be okay (and have the virtuous properties you ascribe to them) if used strictly as a bridge to token distribution
the problem however is that people (whether as part of regulatory psyops or otherwise) are trying to make them their own thing with independent utility that would outlast a token distribution based on points
in practice, therefore, rather than, as you say, aligning users *better*, they will exacerbate the divisions b/w VCs/teams on the one hand and users on the other:
-->teams know the rules for accruing points and can change them, and use them to stealthily increase team/investor allo (classic info asymmetries)
-->teams/VCs will still get equity in the company as well
-->teams/VCs will be allocating value utility across tokens, points and equity, and thus incentive alignment will worsen, not improve--much the same as splitting value/utility between shares of stock held by VCs and tokens (held/bought by users, dumped by VCs) did
-->we will move from the notorious VC equity/token double dip to a notorious VC equity/token/points triple-dip, with users always having less information and only able to acquire the lower-quality asset
-->points are centralized, highly trustful and freely revocable (web2, not web3), and there is nothing they do that could not be done with non-transferable tokens that can later be made transferable, except non-transferable tokens are less appealing to teams because the teams lose some power/control
Best one
Let's go one step further: why not make these points liquid and create a marketplace where they can be traded? May as well enable airdrop farmers to cash in early instead of dumping all at the same time when the project airdrops...
The SEC isn’t fooled by adding one layer of abstraction. “Points” are an investment contract, even if there’s a little song and dance between them and the company accreting value to its shareholders. What am I missing here?
Thx Arthur
Insightful. Thanks for the time you put into this.
Why is it not more likes airmiles and less like an IPO?
Participation = Ownership is debateable statement.
Does holding UNI give me part of ownership of the protocol? Smart contract, perhaps. But not part of Uniswap Labs, unfortunately.
It's more like Participation = Reward system, but ownership stage is not yet reached in DeFi.
one of the ethos of crypto is transparency, and yet we're now aping into projects without transparency (about their token distribution). the irony continues...
Thank King. One point I just wanna add that web3 start up need a initial fund to pay for operation. This fund comes from ecosystem L1 grant or selling NFT without promises about token or future, we have seen a lots of projects in solana success in this way. And 100% points system is the main way to distribute the token in this cycle.
Your article provides an interesting overview, history and perspective about IPO, ICO and points. Thanks.
Nice work... LFG crypto bro!
Good read!
Now pertaining to the article: To fix the issues with the point system, we need clear rules. Anyone who abuses it should face consequences, like being banned.
This will make things fair and rebuild trust. Also, users should have a say in how the point system works since they often notice problems first.
By involving everyone and spreading the word, we can make the point system better for everyone.