Today in Markets

DeFi's Airdrop Points Game

DeFi gets creative with onchain markets for offchain points
Feb 2, 20242 min read

Points trading is gaining traction among airdrop hunters seeking to monetize their points prior to the distribution of an actual token. How do platforms facilitate points trading, and is this a worthwhile speculative activity for anyone?

Among the most popular trading venues is Whales Market, an order book exchange offering pre-market trading for Aevo and points markets for EigenLayer, Hyperliquid, and friend.tech with ambitions to add additional markets for other hot crypto projects in the near future.

Today’s points are not tokenized; rather, their most important representation exists on the centralized database of the crypto project that issued it.

As such, Whales Market is forced to work around the fact that they do not possess title to the underlying by requiring sellers of points or pre-market tokens to deposit an amount of collateral equivalent to 100% of the purchaser's bid. When settlement can be made in a market, a 24-hour countdown is initiated for a seller to deliver, after which their collateral is forfeited to the borrower.

While the settlement rate on Whales Market’s JUP market neared 100%, past performance of a market is no guarantee that future settlement events will go as smoothly. Crypto is volatile and the 100% collateral requirement may prove insufficient, putting purchasers at risk of ending up with less than they bargained when a seller forfeits their collateral and it is insufficient to purchase the amount of tokens they agreed to deliver.

Further, the need to have a 100% over-collateralized market is an extremely onerous capital requirement that increases cost of being a seller, increasing the bid/ask spread and making it extremely difficult to make a market.

Points trading may feel like the topic de jour on Crypto Twitter, but it may be best to fade this meta and instead put your money to work earning actual points. For degens looking to trade pre-market tokens, perpetuals trading platforms like Aevo offer vastly superior products!


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