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Bounty Programs in 2023 

Karolina

10 Jul 2023
Bounty Programs in 2023 

In the ever-evolving world of blockchain, artificial intelligence (AI), and cryptocurrencies, bounty programs have emerged as a popular strategy for incentivizing participants. This article explores the concept of bounty programs and their relevance in 2023, shedding light on their origins, purpose, and key considerations for companies utilizing them in the cryptocurrency industry.

Table of Contents

Understanding Bounty Programs

Bounty programs play a significant role in the world of cryptocurrencies and blockchain. These programs are designed to incentivize a wide range of participants involved in an initial coin offering (ICO) to contribute to its success. In order to fully grasp the concept of bounty programs, it is crucial to delve into their definition, background, and key takeaways.

Definition and Background

Bounty programs are incentives offered to participants involved in an ICO.

  • ICOs are the cryptocurrency industry's equivalent of initial public offerings (IPOs) in traditional finance.
  • The origins of bounty programs can be traced back to the digital video gaming world, where rewards were given to gamers who identified bugs in games.

Key Takeaways

  • Bounty programs are used to incentivize developers and marketers before and after an ICO.
  • Participants in bounty programs can receive cash rewards or tokens that can be redeemed later.
  • Bounty programs operate in a legal gray area, often walking a fine line between marketing and potential fraud.
  • The Securities and Exchange Commission (SEC) has used ICO bounty programs as evidence of criminal activity.

Understanding the fundamentals of bounty programs is crucial for individuals and companies operating in the cryptocurrency space. These programs serve as a mechanism to engage participants and promote ICOs, but it is essential to navigate the legal and ethical considerations associated with their implementation.

Post-ICO Bounty Programs

After the completion of an initial coin offering (ICO), bounty programs can continue to play a crucial role in the development and promotion of the blockchain project. Post-ICO bounty programs focus on fine-tuning the released blockchain, addressing bugs, and expanding the project's global reach. Let's explore the key aspects of post-ICO bounty programs.

1. Post-ICO Stage Overview

   - The focus shifts from fundraising to refining and optimizing the blockchain project.

   - Bounty programs continue to incentivize participants to contribute their skills and expertise.

2. Bug Bounty Programs

   - Developers and coders are incentivized to detect and report any flaws or vulnerabilities in the blockchain.

3. Translators and Global Reach

   - Post-ICO bounty programs may engage translators to ensure the project's documentation and materials are accessible worldwide.

   - These translators help bridge language barriers and contribute to the project's global adoption and expansion.

Post-ICO bounty programs provide ongoing opportunities for developers and other participants to contribute to the project's success. By addressing bugs and facilitating global accessibility, these programs enhance the blockchain's functionality and reach.

Examples of Crypto Bug Bounty Programs in 2023

Boba Network

Currently, the L2 scaling solution Boba is experiencing a series of successes, as numerous projects are employing its hybrid compute solution for multi-chain dApps. On January 13th, they initiated a new bounty program offering a maximum payout of an impressive $1M. The reward distribution is based on the vulnerability's threat level discovered.

To categorize the discovered bugs' severity, Boba is using a five-tier scale, encompassing not only issues affecting the protocol but also those related to smart contracts and apps developed on the platform. With a minimum reward of $50,000 available, skilled developers have strong incentives to meticulously examine Boba and uncover any vulnerabilities they might find.

Balancer

Widely battle-tested and often replicated, the Balancer multi-chain liquidity protocol remains vigilant in identifying threats. Through the Immunefi bounty program, rewards ranging from $50,000 to $1M are offered based on the severity of discovered vulnerabilities. 

Medium-level threats don't necessitate a Proof of Concept, but they have a maximum payout limit of 25 ETH. In contrast, high-level threats demand a PoC and come with more significant rewards. The maximum payout for high-severity smart contract vulnerabilities is set at 10% of the economic damage caused.

Dexalot

Dexalot, a decentralized exchange built on Avalanche, emulates the appearance and functionality of a centralized exchange, featuring a central limit order book. This allows users to securely and efficiently trade cryptocurrencies without slippage or custody risks. On January 13, Dexalot initiated its bug bounty program, offering rewards of up to $100,000 for each critical bug discovered.

In collaboration with HackenProof, the program will grant rewards ranging from $1,000 for minor vulnerabilities to $100,000 for critical ones. Eligible vulnerabilities include those related to fund theft or loss, unauthorized transactions, and transaction manipulation.

Bug bounties present an excellent opportunity for individuals with technical expertise who enjoy dissecting protocols line by line. Discovering a significant vulnerability could result in a substantial reward. So go ahead and fire up your Github to start downloading those repositories.

Criticism of Bounty Programs

While bounty programs have gained popularity, they have also faced criticism, particularly due to potential unethical practices and regulatory concerns. Understanding the criticisms surrounding bounty programs is essential for companies considering their implementation.

1. Comparison to Pump-and-Dump Schemes

   - Some critics draw parallels between ICO bounty programs and pump-and-dump schemes.

   - Allegations suggest that participants may engage in disguised promotion while appearing as disinterested parties, potentially misleading investors.

2. Regulatory Concerns and SEC Warning

   - The Securities and Exchange Commission (SEC) has raised concerns about fraudulent ICOs utilizing bounty programs.

It is crucial for companies and individuals to exercise caution and ensure ethical practices when implementing bounty programs. Adhering to regulatory guidelines and maintaining transparency can help mitigate potential risks and criticisms associated with these programs.

Conclusion

Bounty programs have become an integral part of the cryptocurrency industry, providing incentives for participants in ICOs and beyond. By understanding the origins, stages, and criticisms surrounding bounty programs, companies can make informed decisions about their implementation.

As the cryptocurrency industry evolves, companies must navigate the fine line between effective marketing strategies and potential legal and ethical risks associated with bounty programs. By adhering to best practices, maintaining transparency, and being mindful of regulatory guidelines, businesses can leverage bounty programs effectively to promote their blockchain, AI, and cryptocurrency projects.

Nextrope Tokenization Launchpad Platform

Nextrope Launchpad Platform is a White Label solution in a Software-as-a-Service model that helps you launch your project within a month and fundraise with Initial Coin Offering (ICO) or Security Token Offering (STO).

Tagi

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Aethir Tokenomics – Case Study

Kajetan Olas

22 Nov 2024
Aethir Tokenomics – Case Study

Authors of the contents are not affiliated to the reviewed project in any way and none of the information presented should be taken as financial advice.

In this article we analyze tokenomics of Aethir - a project providing on-demand cloud compute resources for the AI, Gaming, and virtualized compute sectors.
Aethir aims to aggregate enterprise-grade GPUs from multiple providers into a DePIN (Decentralized Physical Infrastructure Network). Its competitive edge comes from utlizing the GPUs for very specific use-cases, such as low-latency rendering for online games.
Due to decentralized nature of its infrastructure Aethir can meet the demands of online-gaming in any region. This is especially important for some gamer-abundant regions in Asia with underdeveloped cloud infrastructure that causes high latency ("lags").
We will analyze Aethir's tokenomics, give our opinion on what was done well, and provide specific recommendations on how to improve it.

Evaluation Summary

Aethir Tokenomics Structure

The total supply of ATH tokens is capped at 42 billion ATH. This fixed cap provides a predictable supply environment, and the complete emissions schedule is listed here. As of November 2024 there are approximately 5.2 Billion ATH in circulation. In a year from now (November 2025), the circulating supply will almost triple, and will amount to approximately 15 Billion ATH. By November 2028, today's circulating supply will be diluted by around 86%.

From an investor standpoint the rational decision would be to stake their tokens and hope for rewards that will balance the inflation. Currently the estimated APR for 3-year staking is 195% and for 4-year staking APR is 261%. The rewards are paid out weekly. Furthermore, stakers can expect to get additional rewards from partnered AI projects.

Staking Incentives

Rewards are calculated based on the staking duration and staked amount. These factors are equally important and they linearly influence weekly rewards. This means that someone who stakes 100 ATH for 2 weeks will have the same weekly rewards as someone who stakes 200 ATH for 1 week. This mechanism greatly emphasizes long-term holding. That's because holding a token makes sense only if you go for long-term staking. E.g. a whale staking $200k with 1 week lockup. will have the same weekly rewards as person staking $1k with 4 year lockup. Furthermore the ATH staking rewards are fixed and divided among stakers. Therefore Increase of user base is likely to come with decrease in rewards.
We believe the main weak-point of Aethirs staking is the lack of equivalency between rewards paid out to the users and value generated for the protocol as a result of staking.

Token Distribution

The token distribution of $ATH is well designed and comes with long vesting time-frames. 18-month cliff and 36-moths subsequent linear vesting is applied to team's allocation. This is higher than industry standard and is a sign of long-term commitment.

  • Checkers and Compute Providers: 50%
  • Ecosystem: 15%
  • Team: 12.5%
  • Investors: 11.5%
  • Airdrop: 6%
  • Advisors: 5%

Aethir's airdrop is divided into 3 phases to ensure that only loyal users get rewarded. This mechanism is very-well thought and we rate it highly. It fosters high community engagement within the first months of the project and sets the ground for potentially giving more-control to the DAO.

Governance and Community-Led Development

Aethir’s governance model promotes community-led decision-making in a very practical way. Instead of rushing with creation of a DAO for PR and marketing purposes Aethir is trying to make it the right way. They support projects building on their infrastructure and regularly share updates with their community in the most professional manner.

We believe Aethir would benefit from implementing reputation boosted voting. An example of such system is described here. The core assumption is to abandon the simplistic: 1 token = 1 vote and go towards: Votes = tokens * reputation_based_multiplication_factor.

In the attached example, reputation_based_multiplication_factor rises exponentially with the number of standard deviations above norm, with regard to user's rating. For compute compute providers at Aethir, user's rating could be replaced by provider's uptime.

Perspectives for the future

While it's important to analyze aspects such as supply-side tokenomics, or governance, we must keep in mind that 95% of project's success depends on demand-side. In this regard the outlook for Aethir may be very bright. The project declares $36M annual reccuring revenue. Revenue like this is very rare in the web3 space. Many projects are not able to generate any revenue after succesfull ICO event, due to lack fo product-market-fit.

If you're looking to create a robust tokenomics model and go through institutional-grade testing please reach out to contact@nextrope.com. Our team is ready to help you with the token engineering process and ensure your project’s resilience in the long term.

Tagi

Nextrope Partners with Hacken to Enhance Blockchain Security

Miłosz

21 Nov 2024
Nextrope Partners with Hacken to Enhance Blockchain Security
Location: Gdynia, Poland
Date: November 12, 2024

Nextrope announces a strategic partnership with Hacken, a renowned blockchain security auditor. It marks a significant step in delivering reliable decentralized solutions. After several successful collaborations resulting in flawless smart contract audits, the alliance solidifies the synergy between Nextrope's innovative blockchain development and Hacken's top-tier security auditing services. Together, we aim to set new benchmarks, ensuring that security is an integral part of blockchain technology.

Strengthening Blockchain Security

The partnership aims to fortify the security protocols within blockchain ecosystems. By integrating Hacken's comprehensive security audits with Nextrope's cutting-edge blockchain solutions, we are poised to offer unparalleled security features in our projects.

"Blockchain security should never be an afterthought"

"Our partnership with Hacken underscores our dedication to embedding security at the core of our blockchain solutions. Together, we're building a safer future for the industry."

said Mateusz Mach, CEO of Nextrope

About Nextrope

Nextrope is a forward-thinking blockchain development house specializing in creating innovative solutions for businesses worldwide. With a team of experienced developers and blockchain experts, Nextrope delivers high-quality, scalable, and secure blockchain applications tailored to meet the unique needs of each client.

About Hacken

Hacken is a leading blockchain security auditor known for its rigorous smart contract audits and security assessments. With a mission to make the industry safer, Hacken provides complex security services that help companies identify and mitigate vulnerabilities in their applications.

Looking Ahead

As a joint mission, both Nextrope and Hacken are committed to continuous innovation. We look forward to the exciting opportunities this partnership will bring and are eager to implement a more secure blockchain environment for all.

For more information, please contact:

Nextrope

Hacken

Join us on our journey to deliver top-notch blockchain tech and a safer future for the industry!

Tagi