Points Incentive Program
Before introducing the Outrun ecosystem's points incentive program, let's first discuss the growth strategy of points incentive programs (airdrop expectations) itself.
In Web3, we’ve seen countless projects use “airdrop expectations” as an early growth strategy. However, data analysis shows that no project can rely on “airdrop expectations” for long-term growth. It’s more like a rocket launch: before the fuel runs out, the project must escape gravity, or it will inevitably crash.
Many projects leverage airdrop expectations to significantly boost TVL and user engagement in the short term. Project teams often revel in these vanity metrics, failing to pivot in time. Once the airdrop concludes, user activity and TVL plummet back to their starting point, as if nothing had happened. For example, after the airdrop snapshot for the Layer-2 network Scroll on October 19, 2024, its TVL dropped from $1 billion to less than $50 million as of now, a staggering 95% decline. Similarly, the Layer-2 network Blast, which conducted its airdrop a few months earlier than Scroll, saw its TVL fall from $2 billion to $100 million as of now, also a 95% drop. Why does this happen? After our analysis, we discovered that these types of projects often share a commonality: they've hardly generated any network effects.
Network Effects refer to an economic phenomenon where the value of a product or service increases as the number of users grows. This increase in value attracts more new users, further enhancing the product's value and creating a virtuous cycle. In simple terms, it means "the more people use it, the better it becomes." This concept is especially significant in fields such as technology, platform economies, and social networks, serving as a key factor in explaining the success of many modern enterprises. Network effects are primarily divided into two categories:
Direct Network Effects: The value of the product or service rises directly with an increase in the number of users. For example, on social media platforms like X or Facebook, the more users there are, the more opportunities for interaction and connection arise, making the platform increasingly attractive to each user.
Indirect Network Effects: The value grows as the number of users attracts complementary products or services. For instance, with smartphone operating systems like iOS or Android, a larger user base motivates developers to create more applications for the system, which in turn draws more users to adopt it.
Research indicates that over 90% of airdrop farmers cease using a product after the airdrop concludes, suggesting that airdrop-driven growth is primarily a short-term attention grab rather than a strategy for genuine user retention. Similarly, many staking projects experience a decline in TVL exceeding 90% following airdrops. This occurs because their value does not scale with user growth. In fact, as TVL rises, the average yield (APY) decreases, meaning that the addition of new users can negatively impact the interests of existing users.
Project Types with Strong Network Effects
Certain Web3 projects are inherently built with a strong foundation for network effects. This makes them particularly well-suited to leverage airdrops as an early growth strategy, allowing them to achieve a virtuous cycle of user growth and value appreciation through effective operations. Here are a few typical categories:
Public Chain Infrastructure A public chain itself is a massive operating system, similar to iOS or Android. Its value depends on the diversity of its developer and user communities, as well as the number of non-homogenous applications. In this regard, Ethereum has undoubtedly excelled, being the primary source of Web3 innovation and thriving due to its rich ecosystem. However, some unsuccessful public chains focus too much on vanity metrics (such as TVL not genuinely attracted by the product itself), with applications often being homogenous forks and lacking user diversity. Consequently, users frequently return to Ethereum after airdrops.
Buyer/Seller Market Applications Applications in this category are very broad, including DEXs, NFT marketplaces, prediction markets, lending markets, token launchpads, and more. These projects are essentially akin to Amazon: the more sellers there are, the easier it is for buyers to find what they need; the more buyers there are, the more willing sellers are to join the platform. However, they need to avoid homogenous competition through innovation, as failures often stem from pure forks or inefficient buyer/seller matching, coupled with insufficient brand trust.
Social/Community Applications This covers instant messaging, short video platforms, microblogging, forums, content sharing platforms, DAOs, and so forth. Their value is entirely derived from network effects; without users, they would have no value whatsoever, and every new user joining enhances the value of the entire ecosystem. However, social/community applications are also among the most challenging to build, because, with the exception of DAOs, social applications must directly compete with Web2 giants, and currently, there isn't a successful Web3 example. Nevertheless, DAOs are native Web3 social applications that do not directly compete with Web2 giants, making them the most likely to succeed and generate real-world impact.
Online Gaming Applications The value of online games also entirely stems from network effects. Games, in essence, build virtual societies outside the real world, with player interaction being central. Therefore, game playability is crucial, only enjoyable games can keep players consistently engaged. However, currently, Web3 still lacks a successful example. Compared to the difficulty of social applications, this is somewhat unexpected but nevertheless rational. This is because Web3 games have overly focused on financial attributes while neglecting playability, leading to low player interaction, and even fostering scenarios of mutual exploitation and zero-sum games, thereby failing to generate true network effects. Simultaneously, the exaggerated promotion of fake 3A games has also led to a lack of trust between developers and players.
Best Practices & Conclusion
"Airdrop Expectation" is best suited for the early growth of products that possess an inherent foundation for network effects. Even after an airdrop concludes, these projects can maintain high user retention by leveraging network effects to foster a virtuous cycle of user engagement and value creation. However, this isn't a one-and-done solution, continuous growth experiments are still necessary to ensure long-term sustainability.
Project teams shouldn't get too caught up in vanity metrics. Instead, they should see airdrops as a way to grab attention before a product launch, provided the product itself is genuinely appealing. Building brand image, customer trust, and user habits are just as important. Ultimately, product strength is always the core. If the product isn't competitive, any brand image, customer trust, and user habits built could quickly fall apart once the airdrop concludes.
Outrun's Multi-Module Ecosystem: An Innovative Points Incentive Program Centered on Network Effects
Outrun is building a unique, multi-module, closed-loop ecosystem. Through a precise modular design, it aims to pinpoint and solve pain points across various Web3 scenarios. Each module not only performs its specific function but also achieves interoperability through shared data and resources. This significantly enhances the entire ecosystem's network effects, making it more efficient and resilient for future growth and expansion.
Robust Network Effect Foundation
Our product encompasses multiple scenarios with exceptionally high network effects, including:
Yield Tokenization
Decentralized Exchanges (DEX)
Asset Launchpads
Memecoins
Decentralized Autonomous Organizations (DAO)
Outrun not only covers these scenarios but, more importantly, boasts a diverse target user base. The interaction between different scenarios and user groups will create fascinating "chemical reactions", making the "Points Incentive Program" an ideal tool for our early-stage growth.
Breaking with Tradition: Outrun's Innovative Points Incentive Program
Unlike traditional "airdrop expectations" or simple point incentives, Outrun's Points Incentive Program is designed to guide users in properly utilizing our product, cultivate positive usage habits, and foster communication and collaboration among users. We achieve this goal through the following innovations:
Decentralized and Transparent Points Tokens
In traditional projects, points often exist off-chain, making the entire points system a "black box" for users. This creates severe information asymmetry between project teams and users, potentially enabling behind-the-scenes manipulation. Furthermore, off-chain points cannot be freely traded, while products like Pendle's YT contribute to the "pollution" of DeFi.
Outrun's Solution:
Outrun will periodically distribute points in the form of on-chain points tokens.
This on-chain, decentralized, and transparent mechanism will effectively build user trust and eliminate information asymmetry.
The tradability of points tokens will also grant users greater flexibility and risk control.
Deploying points tokens across OmniChain—with corresponding allocations for each chain—will foster the omnichain development of the Outrun ecosystem while supporting the growth of underdeveloped public chain ecosystems.
Dual-Track Points Distribution: A More Equitable Allocation System
The Outrun ecosystem comprises multiple modules, making traditional single-point systems inadequate for its complex multi-module structure. Significant functional and behavioral differences exist across modules. Therefore, we will implement two independent points tokens through a dual-track distribution system:
Swap Points Token: The OutSwap module will utilize a distinct Swap points token, primarily distributed based on trading volume and market-making liquidity. This directly incentivizes trading and liquidity provision.
Core Points Token: UPT is the foundational core token that runs throughout the Outrun ecosystem. It's minted by staking interest-bearing tokens into the OutStake module and serves as the pairing token for Memecoin trading pairs launched via Memeverse. Consequently, the points distribution mechanisms for both the OutStake and Memeverse modules are closely tied to the adoption of UPT.
The core objectives are:
Adapting to Module Differences: Each module within the Outrun ecosystem has distinctly different value contributions and user participation methods. A dual-track system allows us to customize independent incentive rules for different modules, ensuring that points distribution is tightly linked to actual user contributions.
Enhancing Incentive Fairness: By differentiating between various types of points, we can more meticulously measure and reward positive user behavior within specific modules. This avoids the "one-size-fits-all" approach that can lead to incentive biases, thereby achieving a fairer distribution of value.
Guiding User Behavior: A separate points system can more clearly guide users toward desired actions within specific modules. For instance, providing liquidity or executing trades in OutSwap, or staking yield-bearing tokens and participating in Memecoin DAO governance in other modules. This helps cultivate positive interaction habits for users within the Outrun ecosystem.
Enhancing Ecosystem Flexibility: The design of two distinct points tokens also provides greater flexibility for Outrun's future development. We can independently adjust the issuance and distribution strategies for different points tokens based on market feedback and ecosystem evolution, adapting to ever-changing demands.
Precision Incentive Strategy: Maximizing User Points Earnings
Our points incentive design aims to guide users to explore the Outrun ecosystem more deeply and maximize their points earnings:
Base Multiplier:
Wallet addresses directly holding PT (Principal Token) will receive a 1x points multiplier based on the held value.
Holding UPT grants a 2x points multiplier.
Deploying UPT or PT to OutSwap to provide liquidity will also earn additional Swap Points Token.
DAO Treasury High Multiplier Incentive:
The Memecoin DAO treasury will hold a substantial amount of UPT, sourced from 20% of the genesis funds and subsequent market-making revenue from genesis liquidity.
We've set the points multiplier for the DAO treasury at an astonishing 20x. This means that with an initial 20% share, this 20x multiplier will generate points equivalent to twice that of an individual directly holding UPT (4x). Furthermore, DAOs that conduct at least one governance proposal per week will receive an additional 50% in points, potentially leading to three times the points of an individual directly holding UPT (up to 6x).
Crucially, we allow DAOs to pair the UPT in their treasury with Memecoins to add liquidity (LP), thereby minting Proof of Liquidity (POL) tokens.
These POL tokens will also earn points, and their value includes the paired Memecoin's value. This is equivalent to using Memecoins to apply risk-free leverage to points farming, thereby yielding significantly higher point multipliers, far exceeding 6x.
This points incentive mechanism can deeply guide user participation in the Memeverse module and Memecoin DAO Governance. At the same time, because the underlying functionalities of the Memeverse module are jointly supported by the OutStake and OutSwap modules, this incentive design will ensure that the entire Outrun ecosystem synergistically benefits, maximizing overall value.
DAO Governance Empowerment: Cultivating Long-Term Community Engagement
Outrun's points incentive program empowers individual community DAOs with the decision-making authority for points distribution, fostering user habits and long-term community participation:
DAO Periodically Claims Points Tokens: Memecoin DAOs can regularly claim their eligible points tokens through the governance.
Community Determines Distribution Plan: The distribution of these points tokens will be entirely decided by the DAO via governance voting. The community can choose to:
Distribute all points tokens to genesis participants and Memecoin stakers.
Distribute them progressively to community members through the DAO's native governance cycle incentive mechanism.
Implement various other points token distribution methods decided by the DAO.
Fairness and Participation: The majority of core points tokens will be allocated to the respective Memecoin communities, which then fairly distribute them through internal DAO governance. This guides and cultivates user habits. Even after the "airdrop" event concludes, community members will continue to actively participate in DAO governance because they hold genuine decision-making power and rights to benefit from the distribution.
Outrun is dedicated to building a community-driven ecosystem bolstered by strong network effects. Our innovative points incentive program is designed not only to attract early users but, more crucially, to guide deep user participation and collaborative development. This is achieved through transparent, decentralized, and ingeniously crafted mechanisms, ultimately ensuring the long-term prosperity and sustainable growth of the Outrun ecosystem.
Last updated