In addition, some PoS projects have also solved the problem of insufficient user participation through ingenious design. For example, previous projects faced the problem of inaccurate and inefficient token airdrops, or insufficient engagement rate of addresses that hold tokens after the project was launched. Among them, the problems of airdrop are extremely grave. In ordinary investors’ or petty profit collectors’ eyes, airdrops are free lunch, so it’s better to sell out right after receiving them. That contradicts with the original intention of project runners in hope of generalizing the project and expanding the token holder group. But many project incentive systems are designed to require users to actively engage in. Here are some inspiring examples below.

Livepeer — the project with a cohesive overseas community

Livepeer is a decentralized video transcoding project that allows people to participate in video decoding with idle computing resources to earn ETH, while those with transcoding needs can sort for the Livepeer decentralized network with limited cost.

The project itself is down-to-earth, but the reason why Livepeer is so popular in overseas communities is its token economy design. Its “Merkle Mining Distribution” once has clogged the Ethereum network. The project’s inflation rate is very high, reaching 150%, which makes Livepeer still the highest-yielding project in the PoS world.

The design that Livepeer adopts to motivate users to actively participate in is divided into two parts:

Primitive Distribution

The aforementioned “Merkle Mining” is a special way for the Livepeer team to assign LPT tokens. The Livepeer team took a snapshot of an Ethereum height before distribution, and 2.4LPT was available for any of the 2.59 million Ethereum addresses with a balance greater than 0.1 ETH.

In the slow start phase, if you want to get 2.4LPT for free, you need to submit a Merkle certificate, which is very simple. The team has tools for that. You will earn free of tokens as long as you actively participate.

In the accelerated acquisition phase, there are still many tokens in each Ethereum snapshot address to be claimed, because the user did not take the initiative to submit the Merkle certificate. Therefore, in this stage miners are encouraged to help distribute the tokens. They receive the reward by helping the remaining snapshot address submit the Merkle Certificate (requires a fee). The reward, by defined ratio, will be given to the miners and the above mentioned Ethereum address users who have been successfully snapshot. As the miners competed to provide certificate to the users, the Ethereum Gas costs are greatly increased and the whole network is clogged. In that process, the miners spent a total of 2048 ETHs (equivalent to $47,000) to obtain LPT rewards.

Staking

The inflation rate of Livepeer token is stunning. The annualized income of participating in staking is as high as 150%. In the design of Livepeer’s economic model, it hopes that the holders will actively participate in the network, and the initial inflation rate is 0.05%, which will increase by 0.0003% each round. The interval between each round is 24 hours. When the participation rate of staking does not reach 50%, the inflation rate will continue to rise and has reached 53% currently.

Currently, the Livepeer blockchain has a staking ratio of 39%. If we divide the inflation rate with staking ratio. The current rate in the Livepeer blockchain is nearly 140%. In other words, if you are a Livepeer token holder and you are not involved in staking, your token will be heavily diluted and the inflation rate will continue to rise until the participation rate reaches 50%.