Cryptocurrency projects have given away 115 billion points so far (but some still don’t reveal how many).

adminFebruary 17, 2024

The point is that cryptocurrencies are either trendy or meta, depending on who you ask. Either way, there are growing forces that wallet users, speculators, airdrop hunters, etc. have to deal with.

To put it simply, Points are an off-chain number given to users as a “reward” for certain actions, such as exchanging tokens on the project’s own platform. This is usually done before the airdrop occurs to let users know what actions will be rewarded, unless the airdrop is guaranteed.

The problem is that cryptocurrency tokens are recorded on the blockchain, but points are not. That’s not to say there aren’t issues with tokens, from unclear circulating supply to confusing token unlocks, but the point is they’re much less transparent.

Let’s start with a simple metric. How many points are given in each project that provides this? With crypto tokens, you can use Etherscan to ping the blockchain to check token supply (or take a look at CoinGecko). In most cases, this information is not made public.

There are a few ways to get closer to this number. Most projects that offer points have public leaderboards, so you can guess the actual number by adding up the top 10 or top 100 accounts with the most points and extrapolating from there. Or maybe you just have to ask your team and hope they tell you.

However, some projects provide real-time numbers, such as the cryptocurrency wallet Rabby. Competitor Rainbow also offered real-time numbers in its Chrome extension, but this appears to have been removed recently.

However, some projects do not state how many points there are. Zhuoxun Yin, co-founder and COO of Magic Eden, said the company does not share the number of points, known as diamonds, provided. When asked for comment, Orbiter Finance said: “We don’t have a system in place to calculate all the points divided. Sorry, we have to keep this.”

As a result, it’s anyone’s guess, especially in these cases.

Why is this important?

There are two reasons why this is important:

First, let’s say you want to qualify for a potential airdrop and you want to do a few things to earn points. If you don’t know the total points supply, you have no idea whether 1 million points will get you 1% of the airdrop allocation or 0.0001%. You can guess this by looking at the leaderboard, but it’s still inaccurate.

Another reason is that people are now speculating about the points. If you assign potential value to something, people will find a way to trade it. A few years ago, people were trading Reddit’s moon tokens when they were on testnet (the tokens generally had no value). Last month, cryptocurrency media publisher CoinDesk placed a hold on DESK tokens after discovering that traders had set up a secondary market for them despite violating its terms of use. Surprisingly, the same thing happened with points.

Points trading takes place on two main platforms: Whales Market and Pendle Finance. The core idea of the Whales Market is that traders bet on the value of potential tokens into which points can be converted. So when someone makes a transaction to buy points, they won’t receive any points, but they will receive whatever tokens the seller receives going forward. With Pendle, traders can get up to 74x leverage on their points or access the underlying asset at a discounted price with no points exposure.

However, these traders are betting on limited information. Part of it is that point-token distribution is not predefined or guaranteed. The other part is that you don’t know how many points there are.

“I think this is where the speculation and magic happens with point yield trading,” said Pendle CEO TN Lee. “So no one knows how many points will be awarded. No one knows how many points it will take to actually be profitable or to get a profitable airdrop. So guessing allows users to actually guess and leverage or hedge their returns.”

Lee added that some Pendle team members are speculating that points might be more profitable than simply focusing on underlying assets like Ethereum. However, he said, “some users have been hedging against their points because they are oversaturated in the sense that it doesn’t really matter what they accumulate because the points are so inflated that the numbers are ridiculous. It’s all off-chain so you can’t really track it.” “There is none,” he added.

The inability to track points makes traders more speculative.

Point count estimation

In a post about broke his approach Evaluate the points available for trading on these platforms. When looking at EigenLayer, he had to start from the total value fixed in the project and estimate the number of points based on that. Discord comments Each re-staked ETH earns 1 point per hour. Although this results in a reasonable estimate, it demonstrates the difficulty of obtaining even a rough estimate of the point distribution.

Point distributions also vary tremendously. For example, ClayStack has given out a total of 200,000 points so far, while MarginFi’s top 1,000 wallets have earned 42 billion points (this is an estimate based on summation from the leaderboard, not knowing the total amount). This will make a big difference when trading each point. Of course, other key factors are also involved.

If the point is a fad, this may not matter. However, with 115 billion points issued across 14 projects to date and an increasing number of cryptocurrency users trading points, it may be time for transparency.

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adminFebruary 17, 2024