Optimism

Optimism is a project built on Ethereum focused on building optimistic rollups for scaling.  Recently, they launched their own native coin, OP, and airdropped it to wallets around the globe.  This set into motion the community at large, and since then the team behind Optimism have been rolling out more and more utility for their users, and more and more incentives to onboard to the Optimism ecosystem. For example, Optimism’s liquidity mining programme on Aave has been extremely succsessful, and there is now over $2 billion in value on Aave’s Optimism market.

Alignment of incentives

Rather than just a completely random airdrop, the Optimism team decided to distribute various rounds of the airdrop depending on a few factors.  Firstly, there was an allocation for people who had used Optimism before (92,157 addresses), and a second allocation for people who had used Optimism several times (19,174 addresses).  There were further allocations for DAO voters (84,015), multisig signers (19,542), Gitcoin donors (23,925) and users who had been “priced out of Ethereum” and used layer twos or sidechains (74,272).

This isn’t the first time that an airdrop has been designed in such a careful manner. In late 2020, BadgerDAO made the decision to conduct an airdrop, but also tailored it to focus on people who shared the community’s values.  In the case of BADGER, the token was airdropped preferentially to people who already owned WBTC or renBTC on Ethereum (since Badger is focused on using DeFi to generate yield on Bitcoin), and to those who were active participants in DAO governance.

Liquidity mining programme

One of the advantages that newer Turing complete blockchains have is that DeFi is now so much more established than it was, and this means that liquidity mining programmes can be constructed to incentivise people to use particular dApps.

One of the most successful pioneers of this process has been Emin Gun Sirer, who has used to the Avalanche Rush programme to generate interest and usage right across the board for the Avalanche ecosystem.

The Avalanche Rush programme was particularly good at attracting new interest in the ecosystem thanks to their own partnerships with Aave.  As one of the largest dApps in DeFi, and certainly the largest multi-chain dApp, Aave is in a unique position to align incentives between various different projects.

Optimism have done very much the same thing – mirroring the success of other projects that have successfully partnered with Aave, such as Polygon, Avalanche, and Fantom. Those who deposit assets to the lending market and those who borrow from it are both rewarded with an additional APR denominated in OP.

As of the time of writing, the TVL on Aave’s Optimism market has now surpassed $2 billion.

The future of incentives programmes – tokens for every company

Incentive programmes like the aforementioned are only possible because there is some value in the network anyway – if there were no value then the yield being paid out would be worthless, and wouldn’t function as an incentive.

The theory behind these is that by offering better rates of interest for lending WBTC, ETH, or stablecoins (as well as the native currency of the specific blockchain: MATIC, AVAX, FTM, OP…), to supplement the rates that would have been paid out solely from the fees generated from lending. Aave itself has even run a liquidity mining programme to reward depositors with stkAAVE for using their V2 markets.

This was largely forced thanks to Aave’s main competitor, Compound, attracting large amounts of liquidity thanks to their own programme. In this case, the programme also doubled as a way to ensure that the goals of the Aave DAO were aligned with the goals of their users – if a significant number of users are gaining voting power, then there is a better alignment of incentives.

Overall, it seems that the OP airdrop has been a resounding success, and the ecosystem is healthy and thriving.  Integrating these incentives into dApps is a huge advantage that many blockchains seeking mass adoption will have to do: partnerships are key for onboarding more users, and Optimism is doing it well.

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