Arthur Hayes: The points system combines the advantages of ICOs and liquidity mining to create a more flexible and sustainable incentive mechanism

ChainCatcher news, BitMEX co-founder Arthur Hayes, in his latest blog post, delves into the evolution of ownership structures and fundraising methods in crypto projects. Hayes explores how the business model of the historical East India Company compares to the operation of modern crypto projects, discussing how the progression from Bitcoin to Initial Coin Offerings (ICOs), yield farming, and the latest points systems has become a natural evolution for user participation and fundraising.

Hayes emphasizes the fundamental differences in fundraising and attracting users between Web 2.0 and Web 3.0 projects, particularly in crypto projects where holding tokens or points allows users to directly participate in the ownership of the project, marking a significant paradigm shift. He believes that the emergence of Bitcoin signifies a new beginning where participation equates to ownership. Subsequently, ICOs as an early fundraising method allowed retail investors to participate early, while yield farming further incentivized participation by rewarding users for directly using the protocol.

According to Hayes' analysis, the latest points systems combine the strengths of both ICOs and yield farming. This system creates a more flexible and sustainable incentive mechanism by issuing points to users who interact with the protocol, which may potentially convert to tokens in the future. Hayes argues that this approach not only effectively attracts and retains users but may also provide a fairer way for retail investors to participate in projects at a lower cost in the early stages.

Additionally, Hayes mentions the potential impact of points systems on the fundraising strategies of crypto projects, noting that this could reduce reliance on venture capital and high-net-worth investors for pre-sale tokens. He emphasizes that the success of such systems relies on a high level of trust between project founders and users, while also cautioning about the potential risks and misconduct that may arise.