Change in points system

Proposals
1

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:

  1. 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.

  2. 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.

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:

  1. 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.

  2. 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.

  3. 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.
    • 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.

This rewards high contributors in proportion to their impact, while keeping early LPs incentivized.

Why This System Works:

  1. Fairness Across All Participants:

    • Early adopters are rewarded through higher initial points pools.
    • Consistent contributors benefit from proportional, transparent rewards.

  2. Sustainability:

    • Capping points ensures they retain value over time and prevents dilution.
    • Encourages ongoing participation rather than opportunistic farming.

  3. User Incentives:

    • A linear airdrop system ensures that real users (not farmers) benefit, as linear structures reward genuine engagement over exploitation.

  4. 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:

  1. Does This Penalize New Users?

    • No. Fixed monthly pools ensure all participants are rewarded fairly based on their relative contributions in each cycle.

  2. Will It Affect Liquidity?

    • With TVL rewards intact and a loyalty multiplier, long-term LPs remain incentivized.

  3. 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.

10 Likes
2

good evening, no.

  • oumar
6 Likes
3

Here are a few thoughts on how to improve the points system, and on your prop

Data
Before proposing any improvements, we need data to address the distribution of points among users, wallets, and the allocation of points between fees and TVL. Without this, it will be difficult to create an effective proposal.
And i think it will be really difficult to adress it without team data
2. Learning from HL’s Program
You mentioned HL’s points program; here are some ideas inspired by it:

  • Introduce a phased approach: Allocate points during phases when Meteora needs to grow or achieve specific goals. For HL, it was much easier to distribute points in the beginning phases. for HLP (liquidity at first, points was insane) As TVL and volume have grown, the same ratio could be adjusted to balance between fees and TVL.
    Now TVL has growth but onchain volume also, and memecoin are complex to adress as data
  • The supply cap on points seems effective. Weekly rewards and phase-based rewards are a good structure.
  • Avoid disclosing the points formula
  • allocating 33% of total supply to airdrop :slight_smile:
  • change retroactivily the formula could be kinda strange, but if data and repartition is broken could be understandable
1 Like
4

DATA: Met team have entire data + is capable of scraping all the available data through chain over entire period of Meteora’s existence that is not a problem

  1. Yes proposal is more so directed towards Capping points supply, and yeah formula being hidden is good for most, but shall be transparent post snapshot, 33% supply does not make sense here, if I understand 10% stimulus proposal properly it was nice on % distributed.
5

Hey,

Some quick background on myself:

  • LPing since 2020 on Uniswap (part of my Uniswap airdrop was thanks to liquidity provision).
  • Significant airdrop recipient for Season 1 of Blur (NFT Marketplace) due to liquidity provision.

While I agree that historical contributions should be rewarded, I believe the multiplier already serves this purpose effectively. However, I disagree with the heavy skew toward rewarding participants just for being early. The reward mechanism needs to align with what I think should be the main criterion: user experience—and this isn’t about LPers, but about the platform’s end users.

User Experience as the Core Metric

The ultimate measure of user experience is reduced slippage for trades. Fees generated serve as a proxy for user experience. The more fees an LP generates, the more trades they’ve facilitated, resulting in users enjoying better prices and a smoother trading experience.

Allocating rewards based on time instead of impact doesn’t align with this metric. Here’s a hypothetical example to illustrate my point (extreme for clarity):

  • Month 1: $100 in swap volume.
  • Month 2: $100,000 in swap volume.

Which month should be rewarded more? I would argue Month 2, since the platform faced 1,000x greater market demand. This isn’t to say rewards should be allocated directly by monthly volume, as that would only favor larger wallets during peak times. However, your proposed monthly cap skews too heavily in favor of early contributors, even when late-stage contributors provide significant value.

Contribution Timing vs. Impact

Being late but contributing significantly to user experience through larger LP positions is just as impactful as being early with smaller contributions. To demonstrate this, here are some general comparisons:

  • Scenario 1:
    • Early LPer: $1,000/month from December 2023, $12,000 total fees generated.
    • Late LPer: $12,000 fees generated in November 2024.
    • Outcome: Early LPer should definitely earn more, as they contributed over a longer period.
  • Scenario 2:
    • Early LPer: $1,000/month from December 2023, $12,000 total fees generated.
    • Late LPer: $36,000 fees generated in November 2024.
    • Outcome: The late LPer likely had a greater impact on user experience and should receive equal or greater rewards.

TVL Should Be Minimized

I believe TVL is largely irrelevant as a metric. While it serves as a measure of liquidity depth, it doesn’t necessarily correlate with user experience. A large TVL with minimal fee generation has far less impact than a moderate TVL generating high fees. Your proposed 0.1% TVL to 99.9% fees ratio feels about right and should remain unchanged or even be adjusted further in favor of fees.

Risk and Market Need

This airdrop is not a typical user-focused airdrop; it’s designed for service providers—LPs offering market-making services. LPing inherently involves risk, particularly for volatile pairs (X-SOL or X-USDC). The risk taken by LPs is more significant during high-volume periods when slippage reduction and user experience improvements are crucial.

The proposed monthly cap on rewards completely disregards this dynamic. Using swap volume data for Raydium as a proxy (since Meteora data is limited), we can see the disproportionate effect:

  • February 2024: ~$1.4 billion in exchange volume.
  • November 2024: ~$35.6 billion in exchange volume.

With the proposed 1.7x multiplier for February, the capped rewards make it so that an LPer in November would need to generate 43 times the fees to earn the same rewards as an LPer from February.

Even without the 1.7x multiplier, the November LPer still has to generate 25 times the fees to be on par.

This level of skew is heavy-handed and counterintuitive, especially considering the importance of market need and user experience during peak activity.

Larger Wallets Will Tend To Earn More

Larger wallets will inevitably receive more rewards—it’s the nature of things in DeFi and markets in general. Early contributions should offset this to some extent, but the multiplier already accomplishes that. If necessary, I’d even support higher multipliers, such as:

  • 2x for November 2023.
  • Decreasing by 0.2x per month until reaching 1x.

This ensures early adopters are rewarded while still incentivizing impactful contributions from latecomers.

A Balanced Proposal: Use an S-Curve

My proposed solution is simple: apply an S-curve transformation to the original points system, while increasing the multipliers. This ensures:

  • Minimum meaningful contributions are required to earn airdrop rewards.
  • The vast majority of contributors fall within the middle of the curve, receiving rewards proportional to their impact.
  • Diminishing returns for whales at the higher end, preventing excessive rewards for extreme outliers (e.g., $4m in fees vs. $8m in fees would receive similar rewards).

Final Thoughts

Rewarding early contributors is important, but skewing heavily toward early activity undermines the contributions of those who provide liquidity at critical growth stages. The current proposal risks alienating larger LPs—those who stabilize the platform during peak activity—and introduces inefficiencies by capping rewards in dynamic market conditions.

4 Likes
6

Solid additions, I generally agree with you here.

Still though I think additional benefits for early users is great and will help provide a more fair airdrop imo. The exact %'s though is something up for debate of course but in general I would consider this a great addition to the current proposal

2 Likes
7

Yep it’s right to keep users

8

I agree with the proposal :pray:

9

No reason to incentivize any short term users. Long term users are here to stay

10

+1 on this, really well thought out and like the fees=userexperience.

imo the system in place or even with your additional multiplier scales well and covers early users. another note on the ‘whale’ wallets, most whales are likely going to be in lower risk (and lower fee) pools, especially if a latecomer and not wanting to risk initial capital. the opportunity with the existing weight on TVL vs fees is that a small LP could have crushed on points by hitting the pools on tickers too early or far down risk curve for whales. it rewards being smart and being an MM where there is market need, and imo did not require a ton of capital to do well on leaderboard rankings

11

Could be more loyal, yes