Arthur Hayes Advocates 'Points' Over ICOs and Yield Farming for Crypto Fundraising
Summary:
Former BitMEX CEO, Arthur Hayes, advocates for the use of "points" as a more effective alternative to initial coin offerings (ICOs) and yield farming for crypto fundraising and engagement, in his recent blog post. He proposes points could potentially be converted into future tokens, bypassing immediate token emissions and possible regulatory infringement. However, Hayes also highlights concerns about the misuse of points systems. He predicts successful Web3 projects might adopt a points system before generating tokens to create protocol usage and anticipation for a potential token drop.
Arthur Hayes, former BitMEX CEO and Maelstrom's chief investment officer, recently made a case for "points" as a more practical alternative to initial coin offerings (ICOs) and yield farming in the area of crypto financing and engagement. Hayes shared his detailed perspective on this fresh fundraising approach in crypto through his blog post titled “Points Guard”.
On February 9, he highlighted in his blog that while both ICOs and yield farming brought some advantages, they also posed considerable difficulties for crypto-based initiatives. For instance, ICOs allow vast numbers of regular investors to buy tokens of a project, which lets them invest early in potential breakthroughs but also brings in regulatory issues. Hayes bluntly stated, "Once you open sales to retail, regulations may classify that as a 'security' and force you to undergo procedures that you would want to avoid.”
He further noted that while yield farming enables users to earn tokens in exchange for using platforms, if excessively implemented, this could lead to inflation of the limited token supply. This could eventually cause the token's value to plummet, eliminating incentives for users to continue using the protocol.
Against this backdrop, Hayes advocates for point systems as a new guerrilla marketing strategy for projects. His proposal includes giving users points instead of immediate tokens for using the protocol, which often fast-tracks an overzealous token emission schedule. These points could later be converted into tokens. Hayes suggested this approach may not be construed as a legally binding agreement for a specific future reward and would not necessitate any financial or crypto transactions between the project and its users, possibly implying that regulators might find this tactic acceptable.
However, while finding potential in points as a mechanism for crypto endeavors, Hayes acknowledged that it has a capacity to be misused. He underlined that a points system may only be effective with a strong trust relationship between the project and its users. Still, Hayes warned about the inevitable presence of malicious players who could exploit this faith, possibly rendering points ineffective for user engagement and fundraising.
He further forecasted that successful Web3 initiatives might deploy a points system prior to generating tokens. According to Hayes, this would foster protocol use, stimulate excitement for a potential token drop, and hype up the public introduction. However, he cautioned about the risks and possible misuse of this strategy.
Published At
2/9/2024 12:53:37 PM
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