Former BitMEX CEO and Maelstrom chief investment officer, Arthur Hayes, has proposed “points” as a more effective method for crypto fundraising and engagement compared to initial coin offerings (ICOs) and yield farming. In his blog post titled “Points Guard,” published on Feb. 9, Hayes outlines the limitations of ICOs and yield farming and highlights the potential benefits of points programs.
Hayes acknowledges the benefits of ICOs in allowing retail investors to participate in new projects early on but emphasizes the regulatory hurdles associated with selling tokens to retail investors. Similarly, while yield farming offers incentives for users to engage with protocols, it can lead to rapid inflation of token supply and subsequent price depreciation.
Hayes proposes points programs as a novel approach for crypto projects to engage users without facing regulatory scrutiny or token inflation issues. Instead of immediately rewarding users with tokens for protocol usage, projects can offer points that users can later convert to tokens at their discretion.
According to Hayes, points programs enable projects to conduct guerilla marketing by incentivizing user participation without committing to future tangible rewards or engaging in fiat or crypto exchanges with users. This approach may be perceived as more acceptable by regulators, as it does not establish a contractual obligation between the project and the user.
By avoiding direct token rewards and exchanges with users, points programs may navigate regulatory constraints more effectively than ICOs or yield farming. Hayes suggests that regulators may view the use of points as a less contentious means of engaging users within the crypto ecosystem.
In summary, Hayes advocates for points programs as a strategic alternative to ICOs and yield farming, offering crypto projects a way to incentivize user participation while mitigating regulatory risks and token supply concerns.
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