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

The success of the Hyperliquid points system lies in its ability to balance user stickiness mechanisms with the quality of its underlying products.

Authored by: Three Sigma

Compiled by Felix, PANews

Hyperliquid breaks the airdrop mode, which is the topic of discussion in the crypto community. 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 project growth objectives, such as interacting with project platforms 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 promote competition and a sense of achievement. Additionally, the points system is used to guide users and roll out the final product.

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

Psychologically, points are a powerful behavioral driver that can enhance user engagement. Concepts like reward anticipation motivate users by promising future benefits, while the principle of reciprocity encourages users to remain loyal to systems rewarding their efforts. The visibility of points also promotes social comparison, motivating users to engage more deeply in competition.

2. Hyperliquid Points Program

Hyperliquid is a decentralized derivatives trading platform with its own L1, aiming 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 utilizes a point system to create the best token airdrop activity in the field of encryption. 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 feat, it is necessary to study the various factors that have propelled the platform to the pinnacle and made it the center of discussion.

Hyperliquid points season activity

The points program is the cornerstone of Hyperliquid's success, designed to reward users and encourage real interaction with the platform. Three main seasons have been launched during this period: closed alpha, open first season, and second season. Hyperliquid also implemented the unannounced 1.5th season and 2.5th season to provide additional points for real usage rather than simple point mining.

During the closed alpha phase ending 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 Season 1 officially launched on November 1, 2023, distributing 1 million points per week for six months to reward users who contribute to the growth of the protocol. This initial phase ends on May 1, 2024. In addition, users can earn fees and points through referrals. To further incentivize participation and distribution, the temporary Season 1.5 (May 1 to May 28, 2024) adopts a 2x points reward and distributes a total of 8 million points over four weeks.

The second season begins on May 29, 2024, distributing 700,000 points per week until September 29, 2024. After these 4 months comes the undisclosed 2.5th season, which runs from September 30, 2024, to November, distributing a total of 8.4 million points.

Earn rewards: what is known and what is not clear

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

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

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

Perpetual Trading and Season 1

Although the total points allocation for each season is known, the exact calculation of token allocation is still unclear. In the first season, as the perpetual contract market was not considered until the last few weeks, it is speculated that the points allocation 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.

Compared with the second season, the point distribution in the first season is more linear, and users who transfer more capital through perpetual contracts obviously earn more points. The point distribution may have a ceiling, or the cost of earning additional points may increase as certain thresholds are reached. However, there is a clear distinction between users with 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 were no signs that spot market trading or general trading would come with incentives. However, after May, the second season of point activities started, marking a shift in the reward mechanism.

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

In most airdrop mechanisms, whales dominate by staking or high trading volume. Hyperliquid, on the other hand, implements a mechanism to ensure fairer reward distribution. This design significantly boosts community sentiment towards the platform. By the start of the second quarter, points have been dispersed to users in the perpetual and spot markets. While the specific details of weekly point distribution have not been disclosed, unique spot market metrics (such as token holdings or liquidity contribution) may influence reward calculations.

Keeping these reward mechanisms opaque requires users to try and discover the best strategies themselves, preventing whale cheating and monopolizing point distribution. This approach generates a more fair reward structure, promoting inclusivity and participation of users with different capital levels.

3. Indicators

During the period of time analyzed in the chart, the open interest (OI) of contracts showed a continuous upward trend, closely related to the trading volume pattern, and there was no sign of wash trading throughout the year. Most of the activities seem to occur naturally, attracting the market's attention during active periods, while gradually decreasing during relatively calm summers when the overall market is in a sideways trend with a slight downward trend.

A key moment is the PURR airdrop, which has significantly boosted platform activity. After the end of the first season, the level of activity naturally declined, retaining only users who truly participated in the dApp. Subsequently, during the launch of the 1.5th season, these users were rewarded with additional bonus points, further motivating their participation.

The launch of the initial first season activity initially attracted less attention, but over the following months, even in a sluggish 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 lack of public rewards, and the general market belief that the platform's hype had faded, its metrics showed a significant increase. With the market rebounding after the U.S. election, Hyperliquid became the preferred platform for on-chain traders, outperforming its competitors.

The establishment of the Hyperliquid Foundation, combined with the upcoming confirmation of network tokens, solidifies the platform's position in the market. The sharp increase in exposure has stimulated exponential growth in relevant indicators, attracting new users who have shown a certain level of recognition for the platform, drawn by its powerful performance and innovative features.

4. What did other projects do?

In order to summarize and understand why the Hyperliquid points system succeeded while the points of other projects did not succeed, the following table compares the main features of this round's main airdrops and points systems.

5. Secrets of Success

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

The uniqueness of the Hyperliquid points system

Hyperliquid has introduced innovative elements, making its activities stand out. The system's limited points creation has established a fair and competitive environment, avoiding the dissatisfaction often caused by unrestricted points mining. In addition, users can also receive additional airdrops, increasing the perceived value of participation. Most importantly, points mining requires skill and effort, ensuring that the most committed and capable users are rewarded, while filtering out those seeking easy gains.

Common Features of Airdrops

Despite the uniqueness of Hyperliquid's activities, they share some common features with other airdrops. The total points are not disclosed in advance, thereby maintaining market interest and speculation. Like many other activities, it lasted for about 10 months and launched one or more point seasons before the token generation event. However, the lack of clear rules is a common drawback, leaving 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 an exclusive practice.

Lessons 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 expertise. This approach aligns participants 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 obtained through a combination of time, funds, and skills, rather than being free, which increases the perceived value of the token.

The ideal time for mining points seems to be around ten months. As presented by Hyperliquid and other leading activities, this period balances sustained participation and user fatigue. Simple programs like Grass that require minimal effort can withstand shorter periods, but higher commitments require longer periods to succeed.

A broader perspective: Products surpass points

The success of Hyperliquid goes far beyond its point system. It avoids high marketing costs, refuses to charge fees during promotions, and provides a user-centric platform. It is not constrained by external funds and investor-driven roadmaps, thus achieving a consistent, community-driven narrative. By focusing on perpetual contract trading, Hyperliquid has created an essential product 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 point activities not only filters out opportunistic miners but also establishes strong connections between top contributors and projects.