Hyperliquid’s points system has become one of the most successful airdrops in history. This article explores the mechanics of the points system and the reasons for its success, revealing how user participation and loyalty drive project development. This article is sourced from an article by Three Sigma, compiled and translated by PANews.
Introduction to points and psychology
Points are a structured way to measure and reward user participation and loyalty in an 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 typically determine eligibility and allocation of airdropped tokens, turning random rewards into an interactive process that promotes competition and a sense of achievement. Additionally, points systems are used to guide users and roll out the final product.
Most importantly, the real goal of implementing a points system is to enhance the user base of a project, increase its liquidity, and ultimately improve all growth-related metrics. Some projects even use these metrics to secure higher valuations for fundraising, proving the project’s engagement and attractiveness.
Psychologically, points are a powerful behavioral driver that can enhance user participation. Concepts such as reward expectancy motivate users through the promise of future benefits, while reciprocity encourages users to remain loyal to a system that rewards their efforts. The visibility of points also promotes social comparison, motivating users to engage more deeply in competition.
Hyperliquid’s points program
Hyperliquid is a decentralized derivatives trading platform with its own L1, aiming to combine the speed and efficiency of centralized exchanges with the security and transparency of blockchain. In 2024, Hyperliquid stood out as the only well-known project without external funding.
Furthermore, Hyperliquid has created the best token airdrop activity in the crypto space by utilizing a points system. This airdrop campaign has become one of the most successful in history in terms of scale and execution.
To understand how Hyperliquid achieved this, it is necessary to study the various factors that propelled the platform to its peak and made it the center of attention.
Hyperliquid Points Seasons
The points program is the cornerstone of Hyperliquid’s success, aiming to reward users and promote genuine interaction with the platform. Three major seasons were launched during this period: closed alpha, open first season, and second season. Hyperliquid also implemented undisclosed 1.5 seasons and 2.5 seasons, offering additional points for real usage rather than just mining points.
In the closed alpha phase that ended on October 31, 2023, Hyperliquid distributed 446 million points among 11,500 active users. This stage rewarded early adopters who participated in testing the platform, laying the foundation for Hyperliquid’s community-driven spirit.
The points program and the first season officially launched on November 1, 2023, distributing 1 million points per week over a six-month period to reward users contributing to the protocol’s growth. This initial stage concluded on May 1, 2024.
Additionally, users could earn fees and points through referrals. To further incentivize participation and distribution, the temporary 1.5 season (May 1 to May 28, 2024) adopted a 2x points reward and distributed 8 million points over four weeks.
The second season began on May 29, 2024, with 700,000 points distributed per week until September 29, 2024. Following that, the undisclosed 2.5 season lasted from September 30 to November 2024, distributing a total of 8.4 million points.
Earning rewards: What is known and what is unclear
Hyperliquid’s reward system encourages users to engage in compliant activities such as generating trading volume and depositing funds. However, manipulative behaviors such as wash trading, withdrawals, and mining using associated wallets are penalized and flagged as Sybil activities.
While the allocation rate and season duration are transparent, key details remain uncertain or are disclosed only after some time, including the total points for each season, the existence of tokens, how points are converted into tokens, the exact criteria for earning points, and behaviors that may lead to penalties.
This mix of clarity and ambiguity requires participants to experiment and discover the best strategies themselves, preventing whales from cheating and monopolizing point distribution. This approach has resulted in a fairer reward structure and facilitated the inclusion and participation of users with varying levels of capital.
Perps trading and the first season
While the total points allocation for each season is known, the exact calculation for token allocation remains unclear. In the first season, as the perpetual contract market was not considered until the final weeks, it is speculated that point distribution was based on typical indicators in the perpetual contract space, such as trading volume, number of trades, paid funding fees, liquidation volume, and user profit or loss.
Compared to the second season, the point distribution in the first season was more linear, with users transferring more capital through perpetual contracts receiving significantly more points. There may be a cap on point distribution or an increasing cost to earn additional points after reaching certain thresholds. However, there was a clear distinction between users with more capital and those who could only trade with a few thousand dollars.
Spot trading, retail, and participation
The spot market was introduced alongside the PURR airdrop before the end of the first season. Initially, there were no indications that spot market trading or general trading would come with incentives. However, after May, the second season of points activity was launched, marking a shift in the reward mechanism.
During the first season, the only way to earn points was through trading perpetual contracts, a system that naturally favored whales, high-frequency traders, and market makers as they had access to larger capital and advanced trading strategies. The second season introduced a more inclusive system, allowing users to earn points not only through spot market trading but also by holding assets. This change leveled the playing field in the competitive environment, as the spot market lacked deep liquidity, putting retail traders and whales on equal footing and making it easier for users with less capital to compete for points.
In most airdrop mechanisms, whales dominate through staking or high trading volumes. Hyperliquid, on the other hand, implemented mechanisms to ensure a more equitable distribution of rewards. This design significantly increased the community’s positive sentiment towards the platform.
By the start of the second season, point distribution had been decentralized among users in the perpetual and spot markets. While the specific breakdown of weekly point distribution remains undisclosed, indicators unique to the spot market, such as token holdings or liquidity contributions, may influence reward calculations.
The decision to keep the reward mechanisms opaque requires users to try and discover the best strategies themselves, preventing whales from cheating and monopolizing point distribution. This approach has resulted in a fairer reward structure, fostering inclusivity and participation among users with different capital levels.
Indicators
Within the analyzed timeframe in the chart above, open interest (OI) shows a consistent upward trend closely related to trading volume patterns, with no signs of wash trading throughout the year. Most activities appear to be organic, attracting market attention during active periods and gradually decreasing during the quieter summer months when the market is in a sideways trend with a slight decline.
A key moment was the PURR airdrop, which significantly boosted platform activity. After the end of the first season, activity naturally declined, retaining only users who were genuinely engaged with the dApp. Subsequently, during the launch of the 1.5 season, these users received additional point rewards, further incentivizing their participation.
The initial launch of the first season generated less attention, but over the following months, activity gradually increased even in the bearish crypto market. By the end of the second season, while the overall market was still recovering, Hyperliquid had become a hot topic. Despite the lack of public rewards and the market perception that the hype around the platform had faded, its indicators showed significant growth. With the market rebounding after the US election, Hyperliquid became the preferred platform for on-chain traders, outperforming its competitors.
The establishment of the Hyperliquid Foundation and the upcoming confirmation of the network’s token solidified the platform’s position in the market. This surge in exposure stimulated exponential growth in related indicators, attracting new users who recognized the platform’s strong performance and innovative features.
Other projects’ approaches
To summarize and understand why Hyperliquid’s points system succeeded where others failed, the table below compares the key features of the main airdrops in this cycle with their points systems:
Success factors
The success of Hyperliquid’s points system lies in its ability to balance user stickiness mechanisms with the quality of its underlying product. By analyzing its uniqueness and common characteristics with other airdrop activities, key lessons can be drawn about enhancing user loyalty, token retention, and project growth.
Uniqueness of Hyperliquid’s points system
Hyperliquid introduced innovative elements that set its activities apart. The limited points system created a fair and competitive environment, avoiding user dissatisfaction that often arises from unlimited point mining. Additionally, users could earn additional airdrops, increasing the perceived value of participation. Most importantly, point mining required skill and effort, ensuring that the most committed and capable users received rewards while filtering out users seeking easy gains.
Common characteristics of airdrops
While Hyperliquid’s activities have unique aspects, they share certain characteristics with other airdrops. The total points allocation is not disclosed in advance, maintaining market interest and speculation. Like many other activities, it lasted for approximately 10 months and launched one or more points seasons before token generation events. However, the lack of clear rules is a common drawback, requiring users to explore the reward mechanism themselves. Point mining also requires a capital investment, which is a standard practice in similar activities but can be exclusive at times.
Lessons for future airdrops
If the goal is to distribute tokens to knowledgeable, loyal holders who understand the ecosystem, users receiving the airdrop need to put in effort and possess expertise. This approach aligns participants with the project’s vision and reduces the likelihood of tokens being dumped immediately after the token generation event. Limiting the total points can further enhance user satisfaction, fostering trust and mitigating excessive point mining. Additionally, miners should feel that their rewards are earned through a combination of time, capital, and skill rather than free, increasing the perceived value of the tokens.
The ideal duration for point mining seems to be around ten months. As demonstrated by Hyperliquid and other leading activities, this period strikes a balance between sustained participation and user fatigue. Simpler tasks that require minimal effort, like Grass, can sustain shorter durations, while those that demand higher commitments require longer periods to be successful.
A broader picture: Product over points
Hyperliquid’s success extends beyond its points system. It avoided high marketing costs, refrained from charging fees during the activity, and provided a user-centered platform. It is not constrained by a roadmap driven by external funding and investors, achieving a consistent, community-driven narrative. By focusing on perpetual contract trading, Hyperliquid built an indispensable product even during market downturns, ensuring continuous trading activity.
The project’s incremental approach cultivated a loyal community that truly believes in its mission. The emphasis on effort and skill in the points activities filtered out speculative miners, and established a strong connection between top contributors and the project.
