Unf**king Incentives: Better Retention With Grants and Rewards | Vijay Michalik - Superfluid

[Music] that incentives are [ __ ] um all of us have seen airdrops rewards grants paid out over the last 6 12 months 3 years 5 years in crypto uh for tokens that eventually have charts that look awful have retention that's actually terrible and you be fir of making some of those calls with your Capital if you a regular web 2 company so I'm here talk about some of the ways we might unpick that and unfuck it uh all right so so this is actually a a little illustration uh of Moc um and for those of you aren't familiar there's this great essay by a guy called Scott Alexander who used to publish under slate star codex and a bunch of people at least when I joined the ethereum space around 2017 were sending around to each other all the time and it's it's a great essay basically about how even in systems where everyone's in rationally you can have really awful outcomes things like you know climate collapse things like arms races uh and only by painting it like as if it's all done in worship of this this actor this um this God or demon uh does it actually show that in contrast that it is actually the system itself which is causing all of these issues and and this is basically what it looks like to to give out air drops without as much thought and as much design as you're putting into your protocols your products and and what about it is specifically bugged I think all of us have seen launches that pain the chart red everyone is celebrating dumping their tokens everyone's celebrating the amount of money they earn there are civils uh there are farmers and essentially your token is distributes to people who have no care or interest about the thing that you build uh and and this is starting to become a common and more frequent pattern secondly the people who are most interested most invested in your community and your ecosystem people you want to be your long-term stakeholders and the people who have thought about it dreamed about the thing you're building people who are most aligned with you don't get extra rewards for their conviction maybe if they're whales maybe if they're people who have figured out all the different checklist items that you're going to put into your airdrop criteria maybe then but conviction holding your token participating in governance and sticking around for the long term is not rewarded and the last thing is that the kinds of things we're celebrating with these airdrop launches are insane if you take a look at the mirror some of the things that people are celebrating are you know the number of wallet addresses they hit um or the amount of money that they've given out but these aren't actually business kind of kpis these aren't goals these are basically Hollow metrics and that are inflated by various things like the market um spammers and more more amongst that as well so where do we go from here what are the things that we can change what is the direction we can move I think the number one thing that we should all be doing is being more honest I think there are lots of ways that we are deceiving ourselves as an industry individually and collectively that we can all reflect on and think you know if I was looking at this in an objective way if I wasn't comparing myself to all the other project launches if I was thinking about this in terms of Roi terms of the capital spent what was it what would I actually take away from this experience what were the things I I learned and measured to be and I think these are things we can see very commonly uh amongst airdrops and amongst token launchers we can see people pretty much using their airdrop to buy fans and users and I think ultimately you do this with a one time 5% of your token Supply 10% 15% air drop you're buying them and you're getting an awful this is a thing you get to do one time when you're giving away that much of your token Supply and essentially you if you if you get it wrong you're kind of [ __ ] uh and I think ultimately if you compare the cost the cost of customer acquisition and then the lifetime value you get out of those customers as we would do with the marketing spend in web 2 um you would actually get PR terrible numbers and You' probably be fired if you're marketer day one FTV this is another thing people always comparing themselves against you know the top 100 projects in the market and it's insane to me the number of people who get up on stage celebrating their pre-product prep pmf uh token launch at the fdv of something that's been out there and live in the market providing value like unisoft and ARB you know other kind of top 10 top 20 projects that have you know substantial amount of pmf I think it's insane to be to be targeting that kind of valuation and and lastly I think well thirdly CX listings we know that there is this kind of invisible criteria of things that that um cxs want to see they want to see you have 100K plus followers on Twitter you know they want to see you have hundreds of thousands of users aird dropped but ultimately I think many of us would agree these projects don't have 100,000 real users that's those are wallets those are easily farmed easily spammed and similarly on Twitter you know projects that have started 3 or 6 months ago with over 100,000 users or following them it's not realistic uh and I think for the most part we aren't growing the ecosystem far fast enough for to achieve these kinds of uh this kind of attention for new Pro projects and the last one I think is dunking your competitors everyone would like to be showing better numbers better metrics than their competitors But ultimately what it boils down to is you trying to measure the fakest data you can to out fake your competitors and I think this is one of those kind of multipolar traps one of those Moc inspiring um kind of actions that we are doing where we're we're finding more and more fake data and more and more fake things to optimize for and I think the second big point after being honest is not being lazy I think when you look out there in terms of what is available to you in terms of data in terms of observing past airdrops in terms of looking at how your users behaving and more I think there are lots of ways that we can immediately take action to basically build smarter air drops um use rewards and air drops basically in a productive way rather than in this kind of value destroying way so number one I would say many of us could choose better metrics TBL is basically the number one metric use in our industry and I think the reason is that it is easy to track uh and it's become a meme there are lots of projects who will do better be better served hunting around for that one core metric uh that actually defines their product Market fit you know 1 2 3 five metrics and then sort of continually optimize towards retention rather than chasing TBL which as we know can be bought with incentives and it's often fleeting once the token is dropped number two I would say be transparent we have definitely fallen into a trap of awarding more points than tokens and ultimately I think there are as the market is catching up in terms of maturity we're seeing more and more that users get that they're being farmed by these projects and that and they actually have no visibility on what their eventual you know allocation is going to be they don't know what the ROI is of their you know their attention their actions uh and I think we're about to evolve out of that stage of the industry so anyone who's left in that uh is going to fall foul and lastly I think the smartest teams in the space are rewarding programmatically what does that mean it means you aren't going to get everything right on day one you're going to try and get the best numbers the best metrics um that you can and understand you know your part to product Market fit but you are going to learn something doing that first drop you're going to learn you know who holds on to tokens you're going to incentivize people to sign up you're going to start measuring retention and after that that means you can do a second round informed and you can keep informing yourself on on subsequent rounds over and over again and the more rounds you give yourselves the better your overall final distribution is going to be so essentially I would recommend that you consider rewarding programmatically over time rather than in one go and I think ultimately if we did all of these things we would be in a far far better place than we are today where we are today there are there are token launches happening every day I think with the new Administration in the US there are people who are feeling far far far and Far more comfortable with launching their tokens and so you know even in the past couple of weeks I'm sure you've seen like a few dozen uh and I think by applying all of these different tactics we'll actually see much much better Roi for these projects much more sustainability and in the long run much more success for these projects rather than a fleeting slice of attention that is immediately kind of dumped on the market as and the token price following it and so I guess what I would like everyone to take away from this is that there are three kind of main main defining factors for for a good reward system and airdrop a reward system that is B Bas on real metrics not the ones that we have been artificially inflating to out compete each other ones that are tied to pmf transparent and onchain rewards ones that are you know locked tokens transferable tokens options non transferable tokens and options on chain where people can actually see what the you know eventual division of the the token pie they are getting and finally uh airdrops that are recurring that are programmatic where you're learning over time and you're continually applying your learnings to get more and more focused in on your your core User Group your target users and people who are going to stay aligned and associated with you for the long run and I know this is a very short talk um but um the question is who is doing that and I think if you go out there on Twitter you will find some great examples um I'm going to avoid Silling here but um follow me on Twitter follow super fluid and you can learn a bit more about how you can and you can actually see and experience some of these uh mechanics in practice um but feel free to catch me up you can to talk about super fluids streaming programmatic Awards thanks everyone