Arthur Hayes says a better ‘point’ than an ICO, will be agriculture for crypto adoption
Former CEO of BitMEX and Chief Investment Officer of Maelstrom, Arthur Hayes, published a blog post that makes the case for “points” as a better alternative to Initial Coin Offerings (ICOs) and provides a farm product for fundraising and participation in crypto.
“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 used and abused, read on. pic.twitter.com/2E2d6yiERh
— Arthur Hayes (@CryptoHayes) February 8, 2024
In the year On February 9, Hayes blogged about the benefits of ICOs and product farming in a blog titled “Point Guard,” which also brought many challenges to crypto projects. For example, while ICOs may allow millions of retail investors to purchase project tokens, they also attract regulatory hurdles while allowing them to invest early in potential innovations. When you sell something to retail, some regulators call that ‘security' and ask you to do a lot of junk, which you don't want to do.
On the other hand, while a production farm allows users to obtain tokens to use protocols, this can have “too powerful” consequences. Hayes explained that this could quickly exacerbate the limited token supply. As a result, the value of the token may decrease, giving users no further incentive to use the protocol.
Following these, the executive argued that point programs are a new way for projects to perform guerilla marketing. According to Hayes, instead of immediately issuing tokens to users for using the protocol, the protocol leads to a “stressful token issuance schedule.” They can issue points for participating in a protocol that can be converted into tokens with users' consent.
Hayes believes that this approach is not considered a contract between the project and the user for a future tangible reward and does not provide any fiat or crypto exchange between the project or users. This seems to suggest that regulators may find the use of points acceptable.
Related: $900M in Tokens Released in February
While points may be a promising means of deployment for crypto projects, the executive recognizes the potential for “abuse.” Hayes pointed out that a points program can only be effective when there is a high level of trust between the project and the users. However, Hayes writes that there are bad actors who abuse trust. The executive believes that this can “kill points” as a tool for user engagement and fundraising.
The executive predicted that successful Web3 projects could issue a points program before generating tokens. This creates the use of the protocol, as possible to simulate airdrops and pump up the jam! A public list,” Hayes wrote.
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