Unf*cking Incentives: Better retention on Airdrops & Grants

Transcript

[Music] Hi everyone, thanks for coming. Uh, I'm VJ. I am the CEO and founder of Superfluid Labs. If you want to know how that relates to Superflu and all that other stuff, please find me afterwards. I'm not going to talk about it here. So, the title of this presentation is unfucking incentives. And the reason that it's called unfucking incentives is because the incentives are um to get started. Um you know all of us I think here know that incentives are a critical part of how we think about crypto and its essential value ad as a kind of technology category and so you know I think it's important to address some of the ways in which we are deeply

far from from the promise uh in several different categories. Um yeah fixing retention outcomes air drops and grants. Wow, this these slides are this is not how these slides are supposed to look. So just have to work around it. Um so so what's so up anyway? All right, there's supposed to be a big picture here and the big picture is this like kind of gothic illustration of Mollo. Um maybe actually as a sort of intro question. How many people here have read medit meditations on Molloc?

All right, only one hand. So, in my sort of like intro to to crypto, it was one of the the cannon reads, and I really recommend anyone out here in the audience who hasn't goes and reads it. Um, it's by by a guy called Scott Alexander, otherwise known as Slate Star Codeex. And this sort of, you know, this essay um is really interesting because it basically paints a bunch of scenarios which sort of, you know, describe the ways that individuals and groups set up systems that fail so catastrophically that it's easier for us to interpret, you know, the catastrophic failure as having some sort of agent itself, you know, a demon called Mollik in this case, rather than, you know, understand intrinsically that the system itself is

at fault. Uh and this is kind of like you know a problem that can be mapped to lots of different areas. Things like arms races, e uh environmental collapse and all these things that we are experiencing today in crypto. And really, you know, this is a a way of sort of saying that like many of the systems that we've built up around tokens around token distribution today are so messed up that they lead to, you know, terribly unoptimal outcomes. And it's only by looking at the essential system itself that we've set up, you know, taking a mirror to it that we can think about, you know, the ways that we can fix that.

So, you know, a few of the few of the different categories in which um I think we can observe how messed up it is today. Like most token launches, paint the chart red. We've all seen kind of the meme chart, the the token that launches with a massive day one valuation, crashes immediately, never recovers. you know the team erect have to keep working on it for how many years and no one is happy from you know aside from maybe a few early investors who cashed out early you know the second thing is that there's really no reward for conviction like if if you find a project out there that you actually feel deeply personally passionate about you get stuck in and you think you know like I want to be a part of this this community I want to build in this community I'm a you know deep um day one

user of this product like there is no reward for you sticking around when the chart's going to look that bad like you don't get sort of financially compensated you don't get extra rewards all these kind of things like people do a one-day airdrop and then that's it that's the end of their relationship with you and I think at the root of all of this is this idea of fake metrics and fake success people have in their head you know these quite exotic ideas of what kind of user numbers what kind of FTVs their tokens are realistic and reasonable and you know everyone will sort of point uh every possible you know mechanic at their disposal to achieving these these these outcomes, but these aren't the essential outcomes of any kind of crypto project. These aren't PMF. These aren't the impact that you want to achieve. These are just kind of

um wrapping paper. All right. So, you know, how can we how can we improve? Like number one area of improvement is to be more honest. I think like if you take a long hard look in the mirror and you think about what kind of impact you want to achieve, then it's never these these things like it's never basically buying fans um and users with a massive day one airdrop. Your your your airdrop gets farmed like essentially you have this one one opportunity then in a single time airdrop to to reward the right people and if you get it wrong then you're you're screwed over forever. There's no recovery from that amount of capital allocation.

And I think, you know, those of us who've sort of spent time outside of web web 3 will know that um like if you sort of matched up the the spend that you make on those kind of uh airdrops against the lifetime value of those users, the number of users you acquire, most of you would never work in marketing again if you sort of uh achieve those levels of failure. Um day one FTV. I think you know many people out there have this idea in mind. They want to be included in the top 100, top 200 tokens. Realistically, so many of these tokens are being launched, you know, pre-product market fit and and may maybe even pre-product and like I think that's a perfectly acceptable thing to do. I think one of the really interesting use cases of crypto is capital uh all allocation and capital

accumul accumulation. Um but fundamentally if you're chasing an FDV that maps to you know a significantly larger project with with more history and certainly projects that have a lot more product market fit then, you know, it's an unrealistic expectation. And then the last one I think is sort of dunking on your competitors. We've all seen people, you know, compare, you know, metric for metric against their competitors. Like the number of wallets that that were on your test net, number of wallets that on their test net, like the number of transactions per second, you know, the total amount of TVL that they bought, all of these things are so unrealistic that, you know, seeing people sling on the timeline between their various different totally unrealistic metrics is starting to become a meme. And I think we all have

to call it out where it where it comes up. Again, these slides are super messed up. So, this is not how it's supposed to look. Cool. I think I've done that. And I think when we sort of boil down to a fundamental, you know, reason why and and since I gave a similar talk in Denver, this has pretty much been the end the end result of all these conversations is that people are chasing the same things. people are chasing CX listings, you know, where we know CXs require very specific target numbers of users that are achieved by pretty much no one in crypto without a lot of fudging of numbers. VC money again like you know venture capitalists very reasonably trying to compare like for like um but when all of your competitors are showing you fake data then

realistically you know your only choice to raise money is to propose the same data or better for your own product and it's a kind of arms race. And the last thing I think is dumping on retail. Like we've all seen this um you know the amount of shady back room deals that go on with tokens and sort of you know circulate I think around day one launches and all this kind of stuff. Uh I think I think it still needs a significant amount of more calling out and more shining a light on it um for us to kind of really move past it. And I think ultimately you know the the sort of secondary point here is don't be lazy. Like if you are a well-meaning founder, a builder who has kind of a long-term perspective on on what you're trying to achieve and you really want to

drive impact, then what you should be doing is thinking about, you know, what does it look like past day one. So a few things that that I would sort of propose people take a really hard look at. The first one is to choose better metrics. What gets measured gets optimized. Um you know, you should never be celebrating the amount of value, the amount of money that you've paid out. um you should never you should never sort of be celebrating TVL incentives alone because it's you know it is the most easiest easiest and most measurable metric but it's also the most easy easily gamified there is entire sort of stack of tooling built around you know acquiring users like mercenary users people acquiring mercenary TVL like that ceases to be a useful metric at the point in which there is an industry out

there ready to supply you for it what you should really be chasing is the one core metric for you and your product that actually measures product market fit Second thing I think is transparency. Um you know one of the ways that people really get around exploiting users for their time and attention uh and really I think the market is this idea that you know people have expectations about rewards and airdrops and you know what kind of what kind of an allocation certain activities and you know behaviors are going to achieve. uh and fundamentally I think that um you know using abusing these behaviors these speculative sort of you know behaviors at vend users um without giving them trans without giving transparency about the kinds of things you're going to reward up front and the kind of

behaviors you want to incentivize again maybe by focusing on on a one core metric that actually is your end impact goal um then you know we can achieve we can achieve a lot more by being transparent and fine finally I want to get people sort of around their heads around the idea programmatic rewards. So there are quite a few teams now who are moving in this this direct dimension. I think you'll you'll have seen people like optimism doing a very advanced version of it an IGEN layer obviously. Um but you know the idea of a sort of one-time you know retroactive airdrop for all of your users just to set up your ecosystem forever I think is completely misguided.

You know it's not uh like rewards don't work this way uh for retention and that's what we can see on all those charts. Um, the more times you give yourself basically to kind of distribute rewards and incentives to end users, the more opportunities you give yourself to succeed, you know, the more you learn about your end users, the more you can tune and optimize for a better outcome. And so, you know, is that it? Is that how simple it is? Wow. Okay, none of these slides are working. I'm gonna have to talk over them. So I think like you know all of us can probably agree on the fundamental which is that like the best reward system you could possibly design would be based on real impact metrics

for your protocol for your business. It would be transparent and it would probably be fully on chain after all that is what we're building here. Uh and then last of all I think um it would be recurring and programmatic you know over time over an extended period of time where you can learn and iterate on on your um you know your learnings and and your mistakes and fundamentally that is what money streaming is about. So um yeah feel free to catch me afterwards if you want to learn more about super fluid. Thank you very much.

Uh have any questions by the way? Thank you very much.