Good Morning,
This proposal outlines improvements to the points system for MET TGE, designed to ensure fairness, reward loyalty, and incentivize meaningful contributions. These changes will strengthen the platform by fostering long-term engagement, boosting TVL, and aligning rewards with true value creation.
Current Points System and Its Shortcomings:
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Mechanism:
- 1 point per $1 of TVL per day.
- 1,000 points per $1 of fees earned per day.
- Multipliers for loyal LPs:
- 1.5x multiplier for those who started before Dec 1, continuing until launch.
- 1.2x multiplier for those who started before the points launch and continue through to launch.
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Key Issues:
- Disproportionate Value Recognition:
- A user contributing $100 TVL in December 2023 helped significantly during Meteora’s early stages, contributing 0.001% of the total TVL.
- Today, a user contributing $10,000 TVL only impacts 0.00001% of the total TVL—a 100x difference in proportional contribution.
- Infinite Points Supply:
- The current system lacks a cap, diluting rewards and reducing the value of points for genuine contributors over time.
- Short-term Incentives:
- The system prioritizes immediate TVL and fees without rewarding sustained loyalty or early adoption.
- Disproportionate Value Recognition:
The Proposed Solution:
To address these challenges, we propose a fixed monthly points distribution system, inspired by successful protocols like Hyperliquid. The core idea is to balance fairness, loyalty, and sustainability.
Key Features:
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Fixed Monthly Points Allocation:
- Allocate 1 billion (1B) points per month, divided as follows:
- 0.1% (1 million points) for TVL contributions.
- 99.9% (999 million points) for fees earned.
- This maintains the current reward structure (1 point per $1 TVL, 1,000 points per $1 fees) while ensuring predictable and fair allocation.
- Allocate 1 billion (1B) points per month, divided as follows:
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Loyalty Bonus with Decreasing Points Pool:
- To reward early adopters, start with a larger pool that gradually decreases:
- November 2023: 2 billion points.
- December 2023: 1.9 billion points.
- …
- August 2024 onwards: 1 billion points/month.
- To reward early adopters, start with a larger pool that gradually decreases:
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Dynamic Rewards by Contribution:
- Points are distributed proportionally based on user contributions (TVL/fees) relative to the total.
Example: How the Revised System Works
Let’s break it down with an example:
- Scenario: A user contributes $100,000 TVL and another contributes $10,000 in fees in December 2023, when 1.9B points are distributed.
- TVL Pool: 1M points are allocated for all TVL contributors.
- If total platform TVL is $100M, a $100K contributor receives:
- (100,000 / 100,000,000) × 1,000,000 = 1,000 points.
- If total platform TVL is $100M, a $100K contributor receives:
- Fee Pool: 999M points are allocated for fees.
- If total fees generated are $10M, a $10K contributor receives:
- (10,000 / 10,000,000) × 999,000,000 = 999,000 points.
- If total fees generated are $10M, a $10K contributor receives:
- TVL Pool: 1M points are allocated for all TVL contributors.
This rewards high contributors in proportion to their impact, while keeping early LPs incentivized.
Why This System Works:
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Fairness Across All Participants:
- Early adopters are rewarded through higher initial points pools.
- Consistent contributors benefit from proportional, transparent rewards.
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Sustainability:
- Capping points ensures they retain value over time and prevents dilution.
- Encourages ongoing participation rather than opportunistic farming.
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User Incentives:
- A linear airdrop system ensures that real users (not farmers) benefit, as linear structures reward genuine engagement over exploitation.
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Boosts Platform Growth:
- Allocating most rewards (99.9%) to fees incentivizes users to generate economic activity.
- A small percentage (0.1%) allocated to TVL ensures capital inflow.
Addressing Possible Concerns:
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Does This Penalize New Users?
- No. Fixed monthly pools ensure all participants are rewarded fairly based on their relative contributions in each cycle.
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Will It Affect Liquidity?
- With TVL rewards intact and a loyalty multiplier, long-term LPs remain incentivized.
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Is This Too Complex?
- The system remains simple for users: contribute TVL or generate fees, and rewards are distributed automatically based on contributions.
Final Thoughts:
By capping the point supply and introducing proportional rewards, this system ensures fairness, sustainability, and value retention for all participants. It also positions Meteora as a leader in user-centric incentive structures, attracting and retaining loyal supporters.