Hello everyone! Honestly, I’m surprised that no one before me has highlighted the topic of token distribution through a comprehensive approach involving three components: LXP, LXP-L, and on-chain activity. Most of the discussions I’ve come across typically propose basing the airdrop either solely on LXP or on a combination of LXP and LXP-L.
The main issue with most initiatives is that they often reflect the perspectives and interests of contributors only. In contrast, I’ve tried to craft this proposal by putting myself in the project’s shoes, recognizing its need to achieve the following goals when distributing tokens:
- Ensure maximum decentralization.
- Reward active users.
- Implement a fair scaling of rewards based on contributions.
- Effectively mitigate the impact of Sybil attacks, particularly industrial-scale farming, and ideally medium-to-small clusters as well.
- Balance the interests of the project with those of all contributors.
In my opinion, the value and contribution of a participant to the project’s ecosystem can be distilled into three separate components: LXP, LXP-L, and on-chain activity.
The First Pillar: LXP
Much has already been said about LXP in other discussions. This component reflects a contributor’s participation in all official activities organized by the team. However, it is the most vulnerable to abuse, especially by industrial-scale Sybil farms.
The Second Pillar: LXP-L
Though it may not be popular among some contributors, providing liquidity to the project is an incredibly valuable asset for the project’s growth. Ignoring this component and the contributions of participants in this activity would be unwise. However, it’s equally critical to balance the interests of liquidity whales with those of contributors providing smaller amounts of liquidity.
The Third Pillar: On-Chain Activity
This refers to all activity within the project that falls outside the scope of transactions conducted under LXP and LXP-L campaigns. This component is rarely considered in other proposals, yet on-chain activity offers significant insights into the strength and value of each wallet’s contribution to the project.
For example, just a few parameters could help determine a wallet’s value:
- Wallet age (date of the first transaction) and the duration between the first and the most recent transactions.
- Total number of transactions, as well as the average monthly transaction count (e.g., transactions over $10).
- Total transaction volume.
Calculating Contribution and Rewards
To determine each contributor’s share, it is essential to consider the cumulative value of all three components. This approach optimally protects the interests of both the contributors and the project. It also balances and fine-tunes the rewards for so-called “whales” and regular users alike.
Key Considerations for Reward Calculations
While I am not claiming to have finalized the formula for calculating activity contributions, I propose the following principles:
- Relative, not absolute values: Contribution from each component should be calculated as a percentage relative to all wallets, rather than using absolute figures. For instance, only wallets in the top 50% of LXP contributors should qualify for the airdrop, rather than requiring a specific number of points (e.g., 1,000 XP).
- Holistic scoring across components: The participation of each wallet across all components (LXP, LXP-L, on-chain activity) is crucial. For example, a wallet ranked in the top 10% for LXP, LXP-L, and on-chain activity should receive a more significant reward than a wallet ranked in the top 1% for LXP-L but only in the top 50% for on-chain activity and with no LXP score.
The idea is simple: the final reward for each user should be influenced by their combined performance across all three components.
Expected Benefits
This approach ensures the following:
- Fair distribution of rewards among users, properly recognizing their efforts.
- Prevention of scenarios where a whale simply buys a large number of NFTs or deposits significant funds at the end of the activities to gain LXP-L points. At the same time, such participants remain eligible for rewards.
- Effective filtering of Sybil farms that focus exclusively on farming LXP or LXP-L while neglecting other activities.
- Promotion of decentralization in the ecosystem.
By basing the distribution on a balanced evaluation of these three pillars, Linea can achieve both fairness and efficiency in token allocation.