'Introduction to Points as a Service'
Points Points Points..
The hype for Points started at the end of 2023, with Jito's massive airdrop igniting Solana and users flocking to participate in hopes of catching the next airdrop (I was also part of the herd). Jito acted as a catalyst for on-chain activity on Solana, and as the Bitcoin ETF was approved, all factors led to a positive outcome and the rise of a bull run.
The history of points goes back to the past three centuries; points started around the 17th century in the US, and the modern version of it was initiated in 1981 by American Airlines with the Frequent Flyers program. Points are categorized under Rewards and Loyalty Programs. In the normal world, points began as a way to reward the loyalty of a user—which is the repeat usage of a product or service. In crypto, as every protocol is trying to attract attention and capital initially, points help kickstart the adoption of a product. A user will prioritize protocol X over protocol Y if X has a points program and Y doesn’t. And the reason is quite simple: the perception that points equal tokens.
In crypto, points were introduced by Blur as part of their incentive plan; it all started in October 2022. Blur designed a mechanism whereby each action a user performs on the protocol would earn points, and it incentivized existing users of NFT protocols(Vampire Attack) by offering a boost on their activity. Friend.tech introduced points in 2023, many protocols subsequently started to offer points; every product incorporated a points mechanism in some way—using a testnet of a chain earns points, building apps on a new L2 earns developer points, and lending to our protocol earns points. The start of the Solana season brought points into the limelight. There were differing stances across the community regarding points; initially, the opposition was significant, but as everyone adopted it and in the wake of airdrops, the community forgot the initial resistance and moved on. Now, it's a standardized go-to-market plan. As of today, there are around 57 active points protocols and chains.
‘’Block posted on January 26th that around 40 billion points had been given out. As of today, Athena only has given over a trillion points to its users’’
Points are just an instrument for incentivization—they may never be converted to tokens, which is a risk with points. However, considering the current market environment, launching points is often an indication of a forthcoming token. Points help assure users that as they accumulate points, they will be eligible for an airdrop. Points are usually off-chain, which helps since there is no data on supply, so folks use different methods to value points. Points also give a team time to understand user behavior and community sentiment, then make changes to its future drops. Almost every drop this cycle had changes due to negative sentiment from the community. Thus, as they are points, it’s easier to retroactively unfold decisions. Launching a claim and then unlocking supply are also crucial steps—so points help provide time to work on these aspects in a better way versus directly launching a token, after which you can't change tokenomics or execution.
Points also act as a loop to encourage more frequent app use, as accumulating points makes you think you will earn more compared to a random airdrop. Teams sometimes disclose information about how points are calculated—for instance, Margnfi stated that every dollar lent equals one point, and borrowing equals four points. With this information, a user can sometimes try to game the protocol, as they know which actions will earn them more points. As the power lies with the team, they continue to monitor where users are focusing and adjust the metrics to ensure all features are used. As protocols issue more and more points, it leads to the dilution of airdrops. There is a popular meme after the points cycle stating that initially, airdrop farms are the farmers, but with points, protocols are farming the farmers. Points have become the new normal, so teams need to innovate on which user actions should be eligible for points and how to grab attention beyond just issuing points for every interaction.
As points have become mainstream, a new category of apps has emerged that provide Points Programs as a service—essentially SaaS for Points, or PaaS. These solutions help teams launch their Points Programs with the help of their SDKs. It’s still early for this space, as teams have just launched, so it would be difficult to quantify their results. I wanted to cover this topic and make folks aware that these solutions exist and what they offer.
Stack
Stack has started building a tool for Points Program Management. It launched an SDK that allows teams to integrate a Points System into their app. How does it work? A team needs to specify 'events'—actions in the dapp—and set how many points each is worth. Stack will read the on-chain or off-chain event and add points accordingly. Stack provides a complete overview, including Leaderboard Rank and Points per wallet. Additionally, as a team sets up points, redemption is also part of the process, which Stack handles.
Stack is not limited to an SDK, it is extending itself to launching its own chain, known as Stack Chain, it is built as an L3 using OP stack and Base as security, and it is currently live. This development helps them achieve a low-cost solution for on-chain points that align with the Ethereum community. Stack Chain operates a core points protocol, which includes all developer tooling such as SDKs and UIs. They were very strategic in choosing both OP stack and Base, as OP is widely used and Base is appropriate for consumer interest. According to the team, points will be an on-chain parameter similar to other standards such as NFTs and stablecoins.
Similar to Stack’s on-chain points primitive, Stackr Labs is building a micro-rollup service. It introduced the concept that micro-rollups should be used to build point systems. Rollups basically execute data off-chain and then submit this data to the host chain i.e L1. Micro-rollups are app-specific rollups, which are architecturally designed to optimize for a particular use case. Stackr's case is that as micro-rollups enable off-chain execution and settle on L1, they ensure that the data is verifiable and auditable. In the case of off-chain points, teams have the power to modify the points for the user. Since it's a rollup, it is cost-efficient to operate. This ensures that points are auditable and transparent.Fuul
Fuul is a web3 native marketing tool that helps launch affiliate, referral, points, and ambassador programs. Using Fuul, teams can award points for a variety of actions: a) in-app/on-chain activities, b) referrals, and c) social media engagement. This flexibility ensures that community remains engaged, rewarded, and motivated. Fuul tracks on-chain events, which can be as simple as a swap, holding a token, or lending for a particular amount of time. These combinations of actions are rewarded with points to the user through their API and SDK. By providing other marketing services, Fuul positions itself in a stronger and broader market—allowing early-stage teams to use Fuul for all related services.
Absinthe Labs
Absinthe Labs is building an incentives affiliate network, and as part of this roadmap, their first product will be a no-code points-as-a-service platform. Absinthe views points as a fundamental way to measure and align user effort. They also enable the aggregation of points from questing platforms like Galxe and Layer3 into the project's native points program. Additionally, it can track token holders, stakers, NFT holders, and Discord roles. Recently, Aethir used Absinthe to launch their points program. Absinthe is currently in beta stage.
Samudai
Samudai builds growth tools for communities. In its suite of products, it offers Community OS, which is a workspace app designed to efficiently manage tasks within an organization. Xcaster is a plugin that enables cross-posting between X and Warpcast. The third product they are working on is Points OS, a no-code tool for offering points programs, which is currently in beta.
Plex.cash
Plex is developed by the team at Fetcch Labs. The Plex SDK is a no-code campaign builder that lets anyone create, deploy, edit, and customize campaigns. Teams can also run growth marketing campaigns across X and Farcaster. It provides a unified dashboard that offers a complete view of campaigns, helping to reward the right set of users. It is compatible with nearly all EVM and non-EVM chains. Additionally, it plans to enable derivative product integrations of points.
Quest as a service
Quest as a Service is one of the most used growth tools in our ecosystem and is one of the few categories of products that have found Product-Market Fit (PMF). Quest as a Service essentially involves embedding a quest page into your own website for a specific in-app feature. These represent a different form of a points program, which we can consider as a sub-campaign. Quests are generally offered to newcomers and include tasks such as following the socials of projects, visiting the website daily, etc. They typically offer XP, which is a form of points, and dynamic NFTs based on the user's level. Platforms such as Galaxe, Zealy, and Layer3, etc., offer these services.
Do traditional Points as service can work?
Points have been used for a long time in e-commerce and other business areas. However, we can't use those same solutions for crypto. Crypto-native points solutions read transaction events and then assign points accordingly which is the core and is a new concept for traditional platforms. (Points are offered by fintech apps for making payments, which is relatable in a way, but not from an application point of view) The only common aspect is following socials. (One hacky way to do it is by using your frontend—how you set up Product Analytics. This involves using events on your website to indicate that an action has already happened, based on which something could be explored) Additionally, since there was a time when Google did not allow cryptocurrency ads, these solutions might also avoid working with us. While points are common, their application and thought are very native to crypto, so only native solutions can effectively address this.
Points as a Service is a value-add for teams who want to move fast and capture mindshare by launching points programs quickly. Points = airdrops attract attention in a bull market, which we are in now (mid to long term view). In a bear market, attention is low, teams are not focused on launching tokens, and there is no pressure to ship—so teams might try to do it on their own to save costs in a challenging environment. This could impact the growth of PaaS, which applies to our whole industry. Overall, this category is still very early, as the concept of points as a meta started in January this year.