DeFi
Decentralized finance (DeFi) platforms aim to increase adoption, user engagement, total value locked (TVL), and trading volumes. This case study will demonstrate how Quest Protocol’s systems for tokenized achievements like XP points, badges, quests, levels, leaderboards, and more can align with and amplify these core platform growth metrics.
XP System for DeFi Communities
We talked about the XP System and how it is revolutionary here, let's dive straight into implementing the XP system for DeFi Dapp & Communities. The XP algorithm is defined as:
XP Earned = Effort Level x Importance Multiplier x Base Points (usually 10)
Effort Level goes from E1 (tasks will 0-1 min to complete) to E10 (tasks will take >1 year to complete) and similarly Importance goes from I1 (straightforward, low impact task) to I10 (Super high importance, money-making task).
Let's dive deep into some actions for a defi project that can be categorized into these effort and importance levels.
Effort Level
Example Tasks
E1 (0-1 min)
Like a social post, Check announcement, Join discord
E2 (1-5 min)
Comment on a governance proposal, Share link on socials, Answer poll question
E3 (5-15 min)
Provide UI/UX feedback, Refer 1 friend, Customize profile
E4 (15-30 min)
Participating in a discussion in discord, Watch tutorial videos, Read latest news update
E5 (>30 min)
Attend governance call, Watching a live stream, Take beginner knowledge quiz, Listen to team AMA
E6 (>2 hr)
Participating in a community event (such as a Q&A session or a meet-and-greet), Organize gaming session
E7 (>1 day)
Organizing an IRL event, Participate in a hackathon, Provide code contribution, Write a platform review article
E8 (>1 week)
Contributing consistently to the community over a period of time, Participate in governance working group, Organize local community meetup
E9 (>1 mo)
Maintaining a high level of activity and contribution to the community for an extended period, Get code contribution approved, Establish outreach partnership, Launch media site
E10 (> 1 year)
Remaining an active and contributing member of the community for over a year, achieving a high level of recognition or status within the community, Organize conference
Hopefully after reading the above actions, you will get an idea of the effort levels for every action, it can be directly related to the time it takes to complete the action.
Now let's talk a little about the importance levels of various actions that users can perform within a defi community.
Importance
Example Tasks
I1
Like posts, Click links, Take basic quizzes
I2
Comment on social, Customize profile, Tag friends
I3
Provide feedback, Set price alerts, Re-Share content, Refer friends
I4
Attend AMA event, Be active on Discord, Create social post
I5
Publish tutorial video, Write help guide, Organize game night
I6
Identify platform bug, Submit code tweak, Work on minor feature
I7
Develop core feature, Test protocol upgrades, Improve UX
I8
Organize local meetups, Forge partnerships, Influencer Promotion on socials
I9
Get elected delegate, Launch media outlet, Drive governance changes
I10
Architect protocol enhancements, Coordinate major events, Lead working groups
Basically, the XP system guidelines are built on the principles of awarding long-term and high-importance actions much more than short-term ones.
In some cases, we can also keep the XP calculation formula to have exponential relation instead of simple multiplication but that would demotivate newer folks joining the community and hence our standard formula is simple yet incentivizes all kinds of users entering your protocol.
Badge Taxonomy for Status and Recognition
XP provides a great way to know the status and level of a person in a community but doesn't give the right set of specifics on what all the user has achieved to reach the current level, that is where badges come in. They are soul-bound ERC 1155 NFTs which users get when they complete a milestone.
It's not only super helpful to understand more specifics about the user but can also form sub-communities in the community based on interests and achievements. eg: A discord channel or a space in the metaverse can only be accessed by folks who have earned the delegate badge.
As mentioned, Badges in DeFi projects serve as a visual and tangible representation of a user's achievements, skills, and contributions. Here are some badge ideas that can be awarded to users in DeFi projects:
Newbie Badge:
Criteria: Awarded to users who complete their first transaction or participate in their first DeFi activity.
Effort/Importance: E2/I2
Liquidity Provider Badge:
Criteria: Given to users who contribute to a liquidity pool for a certain period.
Effort/Importance: E5/I5
Governance Guru Badge:
Criteria: For users actively participating in governance votes and discussions.
Effort/Importance: E4/I7
Staking Star Badge:
Criteria: Awarded to users who stake a significant amount of tokens or for an extended duration.
Effort/Importance: E6/I6
Yield Farmer Badge:
Criteria: For users who engage in yield farming and achieve certain profit milestones.
Effort/Importance: E7/I8
Community Champion Badge:
Criteria: Given to users who contribute to community growth, such as through referrals or content creation.
Effort/Importance: E3/I6
Risk Taker Badge:
Criteria: For users who participate in high-risk/high-reward pools or strategies.
Effort/Importance: E8/I9
DeFi Educator Badge:
Criteria: Awarded to users who create educational content or guides for the community.
Effort/Importance: E4/I7
Bug Bounty Hunter Badge:
Criteria: For users who successfully identify and report platform vulnerabilities.
Effort/Importance: E9/I10
DeFi Delegate Badge:
Criteria: Given to users elected for significant community roles or responsibilities.
Effort/Importance: E8/I10
and so on ...
Incorporating a badge system like this into a DeFi platform can significantly enhance user engagement and community building. By recognizing and rewarding users' efforts and achievements, platforms can create a more dynamic, interactive, and loyal user base, driving overall growth and success.
Many other things are supported by Quest Protocol like Skill & Score, Gems, NFTs, Custom Rewards etc. but for this use case, we will limit it to the information above.
XP System for DeFi Communities
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