Over the past year, the crypto industry has seen the rise of a new trend: the adoption of points systems.
Li Jin, cofounder of Variant Fund, says that while points systems have long been a staple in the Web2 domain, their integration into the crypto ecosystem could have pitfalls.
She covers how these points are currently being leveraged within crypto applications in the hopes of driving user engagement and retention, why they’re taking off now, and why they’re off-chain. She also points out that, if implemented poorly, they could engender disloyalty instead of leading to sustainable communities, and urges founders to be thoughtful about the design of these systems, especially about how points translate to economic value.
Show highlights:
- What points are in crypto and their role in rewarding user behavior
- Examples of popular projects that have successfully implemented points systems
- Why points mechanisms are gaining traction in crypto, offering benefits of tokens without the downsides
- Whether points, which are currently off-chain, will eventually move on-chain, and the implications for users and founders
- How points can incentivize inorganic behavior, drawing from Li Jin's experience in the Web2 sector
- The potential pitfalls of points systems and how they can sometimes create more disloyalty than loyalty
- Identifying which crypto projects are best suited for using points, and the importance of product-market fit
- Why keeping the economic value of points ambiguous can enhance user engagement and loyalty
- Whether points are being used by projects to navigate around regulatory challenges
- Future developments in points systems, including the potential of bringing points on-chain for a universal loyalty system
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