Arthur Hayes Argues for ‘Points’ System Instead of ICOs for Crypto Fundraising

cryptonews.com:

Due to growing regulatory challenges and concerns surrounding ICOs (Initial Coin Offerings) in the crypto industry, BitMEX CEO Arthur Hayes proposed a crypto ‘points’ system as an alternative on February 9.

Hayes shared his latest idea in a blog post called ‘Points Guard,’ emphasizing the development of sustainable Web3 services. He highlighted it as a novel approach for crypto-backed enterprises to secure funds and enhance engagement.

According to Hayes, the crypto points system is now the current bull run’s go-to pseudo-ICO fundraising and user acquisition tool. This is attributed to its amalgamation of ICO and yield farming benefits.

“Points Guard” is an essay on the new pseudo-ICO crypto fundraising and engagement method. If you don’t understand what points are and why they going to be used and abused, read on. https://t.co/fR5ruXX4cT pic.twitter.com/2E2d6yiERh

— Arthur Hayes (@CryptoHayes) February 8, 2024

For context, an ICO (initial coin offering) is a Web3 equivalent of a traditional initial public offering (IPO). It allows millions of retail investors to purchase a piece of a new protocol.

The issue with this system is that regulatory bodies usually label ICOs as ‘security.’ This is because financial authorities view the entire transaction as a contract promising the user profit in the future.

With an ICO, a blockchain protocol can easily get into regulatory battles with government authorities.

Yield farming, on the other hand, rewards users with new token emissions for utilizing the protocol.

Nevertheless, Hayes observed that challenges may arise regarding the finite token supply of digital assets if widespread participation occurs. This could lead to a decrease in the token’s price, diminishing the incentive for