The Problem with Points

This podcast episode explores the use of points in the crypto industry and the challenges and unintended consequences associated with relying solely on points. The conversation highlights the experiences of Rabbithole, a platform that removed points to foster sustainable behavior and attract users who value intrinsic value. The episode also discusses the future of token distribution, the value of understanding user behavior, and the challenges of token issuance and distribution in the crypto space. It emphasizes the need for aligning user behavior with the intended goals of a platform and the importance of experimentation and flexibility in token distribution. The chapter concludes by exploring the challenges and strategies for distribution in the crypto industry and the potential of innovative business models and embedded wallets. Takeaways • Points can be an effective mechanism for driving user engagement and revenue in the crypto industry, but relying solely on points can lead to a toxic community and unrealistic expectations of future rewards. • Removing points from a platform can be a bold move aimed at fostering sustainable behavior and attracting users who value intrinsic value rather than speculative gains. • Token distribution in the crypto space is evolving, with a focus on transaction-driven models and the importance of aligning user expectations with the actual value received. • Understanding user behavior and flexibility are crucial in token distribution to prioritize user loyalty and meaningful interactions. • On-chain quests present potential opportunities, but regulatory questions and the gamification aspect of points need to be addressed. • User expectations and the actual value delivered in points-based systems should be carefully balanced to avoid disappointment and maintain user satisfaction. • Protocol rewards and driving on-chain actions are important for revenue generation, while off-chain actions may attract attention but may not contribute significantly to revenue. • More actions in protocols are expected to shift to the on-chain realm over time, and finding the right model and balance between attention-driven and on-chain results is crucial. • Token issuance and distribution face challenges and complexities, and regulatory clarity would greatly simplify the process. • Distribution is crucial in the crypto industry, and a combination of traditional and on-chain incentives can be effective in gaining distribution. • Early-stage teams face challenges in acquiring and distributing their crypto projects, and alternative methods such as rewards and Discord can be explored. • Embedded wallets show promise in addressing fragmentation issues, and a seamless user experience is important for the success of crypto projects. • Continuous exploration, innovation, and collaboration are key in the evolving crypto landscape.