How does the Hyperliquid points system create the most successful Airdrop in history?

Author: Three Sigma; Translation: Felix, PANews

Hyperliquid has broken the airdrop mode, which is the topic that the crypto community is talking about. This article aims to interpret Hyperliquid's point system and why it has become one of the most successful airdrops in history.

1. Brief Introduction to Points and Psychology

Points are a structured way to measure and reward user participation and loyalty within the ecosystem. They provide a framework for tracking activities and incentivizing behaviors that align with the project's growth goals, such as interacting with the project platform or contributing to the community. In the context of airdrops, points often determine eligibility and allocation quantity, transforming what would have been random rewards into an interactive process to foster competition and a sense of achievement. Additionally, the points system is also used to guide users and launch the final product.

The most important thing is that the real goal of launching a points system is to enhance the user base of the project, improve its liquidity, and ultimately improve all growth-related metrics. Some projects even use these metrics to finance at higher valuations, demonstrating the project's participation and attractiveness.

From a psychological perspective, points are a powerful behavioral driver that can enhance user engagement. Concepts like reward expectations motivate users by promising future benefits, while the principle of reciprocity encourages users to remain loyal to a system that rewards their efforts. The visibility of points also promotes social comparison, motivating users to participate more deeply in competition.

2. Hyperliquid Points Program

Hyperliquid is a decentralized derivatives trading platform with its own L1, designed to combine the speed and efficiency of CEX with the security and transparency of blockchain. Hyperliquid emerged in 2024 as the only well-known project without external funding.

In addition, Hyperliquid also uses a point system to create the best token airdrop activity in the cryptocurrency field. This airdrop operation has become one of the most successful airdrops in history in terms of scale and execution.

To understand how Hyperliquid achieved this, it is necessary to study the various factors that have propelled the platform to its peak and made it the center of attention.

Hyperliquid Points Seasonal Event

The points program is the cornerstone of Hyperliquid's success, designed to reward users and encourage real interaction with the platform. During this period, three major seasons were launched: closed alpha, open first season, and second season. Hyperliquid also implemented the unannounced 1.5th season and 2.5th season, providing additional points for real usage instead of mere point mining.

During the closed alpha phase, which ended on October 31, 2023, Hyperliquid distributed 446 million points among 11,500 active users. This phase rewarded early adopters who participated in testing the platform, laying the foundation for Hyperliquid's community-driven ethos.

The points program and the first season officially launched on November 1, 2023, distributing 1 million points every week for six months to reward users who contribute to the growth of the protocol. This initial phase will end on May 1, 2024. In addition, users can earn fees and points through referrals. To further incentivize participation and distribution, the temporary 1.5th season (May 1, 2024, to May 28, 2024) adopted a double points reward, distributing a total of 8 million points over four weeks.

The second season begins on May 29, 2024, with 700,000 points distributed weekly until September 29, 2024. After these 4 months, there is an undisclosed second 2.5 season, which lasts from September 30, 2024 to November, with a total of 8.4 million points distributed.

Earn Rewards: What Monks Know and Don't Know

Hyperliquid's reward system encourages users to participate in compliant activities, such as generating trading volume and depositing funds. However, manipulative behaviors such as fake trading, withdrawals, and mining with associated wallets will be penalized and marked as Sybil activity.

Although the distribution rate and the season period are transparent, the key details are still uncertain or not disclosed until a certain period of time, including the total points of the season, the existence of tokens, how points are converted into tokens, the exact criteria for earning points, and behaviors that may result in penalties.

This mixture of clarity and ambiguity focuses participants on meaningful contributions while speculating on the broader potential of the election system.

Perps Trading and Q1

Although the total points distribution for each season is known, the exact calculation for token distribution is still unclear. In the first season, it is speculated that the points distribution is based on typical indicators in the perpetual contract field, such as trading volume, number of trades, funding fees paid, liquidation volume, and user profit or loss, as perpetual contracts were not considered until the last few weeks.

Compared to the second season, the point allocation in the first season is more linear, and users who transfer more capital through perpetual contracts receive significantly more points. There may be a limit to the point allocation, or the cost of earning additional points may increase as certain thresholds are reached. However, there is a clear distinction between users who have more capital at that time and users who can only trade with a few thousand dollars.

Spot trading, retail and participation

The spot market was launched with the PURR airdrop before the end of the first quarter. Initially, there was no indication that spot market trading or general trading would come with incentives. However, after May, the start of the second quarter points activity marked a shift in the reward mechanism.

During the first season, the only way to earn points was by trading perpetual contracts, which naturally favored whales, high-frequency traders, and market makers as they had access to larger capital and advanced trading strategies. In the second season, a more inclusive system was introduced, allowing users to earn points not only by trading in the spot market but also by holding assets. This change made the competitive environment more fair, as the spot market lacked deep liquidity, placing retail traders and whales on equal footing and making it easier for participants with less capital to compete for points.

In most airdrop mechanisms, whales dominate by staking or utilizing their capital with high trading volume. Hyperliquid, on the other hand, has implemented a mechanism to ensure fairer distribution of rewards. This design significantly boosts positive sentiment within the community towards the platform. By the beginning of the second quarter, point distribution has been dispersed to users in the perpetual and spot markets. Although the specific details of weekly point distribution have not been disclosed, unique metrics in the spot market (such as token holdings or liquidity contribution) may impact reward calculations.

Keeping these reward mechanisms opaque requires users to try and discover the best strategies themselves, preventing whales from cheating and monopolizing point distribution. This approach results in a fairer reward structure and promotes inclusivity and participation among users with different capital levels.

3. Indicators

During the period analyzed in the chart, the open interest (OI) of contracts showed a continuous upward trend, closely related to the trading volume pattern, and there were no signs of wash trading throughout the year. Most of the activity seemed to occur naturally, attracting market attention during active periods, while activity gradually decreased during the relatively calm summer, when the overall market was in a sideways trend with a slight downward bias.

One key moment was the PURR airdrop, which drove significant growth in platform activity. After the end of the first season, the level of activity naturally declined, retaining only the users who truly participated in the dApp. Then, during the launch of season 1.5, these users received additional bonus points, further incentivizing their participation.

The launch of the initial first season activity attracted relatively little attention, but over the next few months, even in the downturn of the crypto market, the activity gradually increased. By the end of the second season, when the market was still recovering, Hyperliquid had become a hot topic. Despite the absence of public rewards, and the market generally believed that the platform's speculation had subsided, its indicators showed a substantial increase. With the market rebounding after the U.S. election, Hyperliquid became the preferred platform for on-chain traders, consistently outperforming its competitors.

The establishment of the Hyperliquid Foundation, coupled with the upcoming launch of network tokens, has solidified the platform's position in the market. This surge in exposure has stimulated exponential growth in relevant indicators, attracting new users who have maintained a certain level of recognition for the platform, drawn to its powerful performance and innovative features.

4. What did other projects do?

To summarize and understand why the Hyperliquid points system has been successful while the points of other projects have not been successful, the table below compares the main features of this round of airdrops and points systems.

5. Secret to Success

The success of the Hyperliquid points system lies in balancing user stickiness mechanisms with the quality of its underlying products. By analyzing its uniqueness and common features with other airdrop activities, key lessons can be drawn about improving user loyalty, token retention, and project growth.

The unique feature of the Hyperliquid points system

Hyperliquid introduces innovative elements that make its activities stand out. The system's limited points create a fair and competitive environment, avoiding user dissatisfaction often caused by unlimited points mining. In addition, users can also receive extra airdrops, increasing the perceived value of participation. Most importantly, points mining requires skills and effort, ensuring that the most dedicated and capable users receive rewards, while filtering out those seeking easy gains.

Common Features of Airdrops

Although Hyperliquid's activities are unique, they share some common features with other airdrops. The total points are not disclosed in advance, thus maintaining market interest and speculation. Like many other activities, it lasted for about 10 months and launched one or more points seasons before the token generation event. However, the lack of clear rules is a common drawback, allowing users to explore the reward mechanism on their own. Point mining also requires capital investment, which is a standard practice in similar activities, but sometimes it is an exclusive practice.

Lessons learned from future airdrops

If the goal is to distribute tokens to knowledgeable, loyal holders who understand the ecosystem, then users who receive airdrops need to work hard and have professional knowledge. This approach keeps participants aligned with the project's vision and reduces the possibility of post-TGE token dumping. Limiting the total points can further increase user satisfaction, cultivate trust, and alleviate excessive point mining. In addition, miners should feel that their rewards are earned through a combination of time, funds, and skills, rather than being free, which increases the perceived value of the tokens.

The ideal staking time seems to be around ten months. As demonstrated by Hyperliquid and other leading activities, this period balances sustained participation and user fatigue. Simple programs like Grass that require minimal effort can withstand a shorter time, but commitments that require high demands take longer to succeed.

A broader picture: products trump points

Hyperliquid's success far exceeds its point system. It avoids high marketing costs, refuses to charge fees during activities, and provides a user-centered platform. It is not constrained by external funding and investor-driven roadmaps, thus achieving a consistent, community-driven narrative. By focusing on perpetual contract trading, Hyperliquid has created a product that is essential even in a sluggish market, ensuring continuous trading activity.

The project's gradual approach has cultivated a loyal community that truly believes in its mission. Emphasizing effort and skills in the points activity not only filters out opportunistic miners, but also establishes strong connections between top contributors and the project.