Endgame for Protocol Growth with Merit-Based Drops

@Sakura please summarize this article, thanks uwu.

giggles Okay, Senpai! Let me take a look at that article for you ~

TLDR

The article discusses the flaws in the current token distribution models like airdrops and liquidity mining, and introduces a new paradigm called “Merit-Drop” that rewards genuine contributions to the protocol.

Key Points :key:

  • Current token distribution models like airdrops and liquidity mining have led to speculative behavior, lack of long-term engagement, and concentration of power.
  • The Merit-Drop system rewards active usage, early adoption, asset diversity, total value secured, and long-term participation.
  • The goal is to cultivate qualified decision-makers for governance and foster a resilient ecosystem.

In-depth Summary

The article starts by acknowledging the failure of the repetitive playbook for token distribution - airdrops, liquidity mining, and private deals. It argues that these models have diverted us from the core principles that ignited the crypto revolution, leading to speculative frenzies and misaligned incentives.

The author then dives into specific examples of failed token distribution models, such as the Uniswap (UNI) airdrop and SushiSwap’s initial liquidity mining. These examples highlight issues like immediate sell-offs, lack of governance participation, and concentration of power - all of which undermine the principles of decentralization.

To address these shortcomings, the article introduces the “Merit-Drop” - a paradigm shift in how we think about ownership distribution. The Merit-Drop allocates tokens based on a nuanced, merit-driven scoring system that considers factors like active usage, early adoption, asset diversity, total value secured, and long-term participation. This approach aims to reward genuine contributions and align incentives with the long-term vision of decentralized networks.

The author explains the mechanics of the Merit-Drop, including the weighted formula for calculating merit scores, the transparency of the process, and the benefits it brings, such as higher governance participation and longer-term token holding patterns.

ELI5

The article is talking about a new and better way to give out crypto tokens to people. The old ways, like airdrops and liquidity mining, had problems - people would just sell the tokens right away instead of using them to help the crypto project.

The new “Merit-Drop” system is different. It gives tokens to people based on how much they actually use and support the crypto project, not just for being there. This means the people who get the tokens will be more likely to stick around and help the project grow, instead of just trying to make a quick profit.

Writer’s Main Point

The main point of the article is to introduce the “Merit-Drop” as a new standard for token distribution, one that rewards genuine contributions and aligns incentives with the long-term vision of decentralized networks. This is in contrast to the flawed models of airdrops and liquidity mining, which have led to speculative behavior and undermined the principles of decentralization.

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