Stack went to mainnet on Monday as a so-called point chain, built as layer-3 on top of Base.
DeFi projects have been lately incentivizing usage on their platforms through “points” or participation numbers that determine allocation in a future token airdrop.
Crypto Adapts to Points Mania. Users gain exposure to leverage at points on Pendle and trading points on Whales Market. DeFi-focused hedge funds are currently collecting worthless points on behalf of liquidity providers.
Read more: DeFi ‘points’ farming has reshaped the crypto investment landscape
But these points tend to live off-chain. Backed by new funding from investors including Archetype Ventures, Balaji Srinivasan and Farcaster co-founder Dan Romero, Stack hopes to turn points systems into an on-chain primitive. The project was founded by Graeme Boy, who previously co-founded decentralized publishing platform Mirror.
Stack is intentionally limited in size. In a Telegram post, Boy said points cannot be traded natively on Stack. According to Boy, this applies to Ethereum co-founder Vitalik Buterin’s vision for soul-bound tokens – essentially non-transferable NFTs.
Stack is built as a layer 3 blockchain, meaning the point attestation data is rolled up to Base’s layer 2 blockchain, which in turn is rolled up to Ethereum. Layer-3s “may not necessarily provide a secure solution” for DeFi, Stack said in a blog post, but they reap the benefits of blockchain transparency cheaply. Gas costs are low on Layer-3s because the data is double compressed before being sent to Ethereum.
As token airdrops become an increasingly popular means of starting projects, Stack’s boosters hope that on-chain points attestations will become table stakes in crypto.
Read more: ‘Blast radius’ of new users joining Solana DeFi for the points, liquidity ‘snowballs’
“Orchestrating airdrops has historically been extremely labor and cost intensive, [but] by shifting the focus to points and placing them on a [layer-3]In both cases, you dramatically reduce overhead while maintaining the auditability of the blockchain,” Katie Chiou, director at Stack investor Archetype Ventures, told Blockworks.
Points managed on Stack are not intended to be traded on open markets. However, points program managers could decide to make the points redeemable, said Bradley Freeman, Stack’s product marketing manager. He said this could be similar to American Express’ program, where points can be converted into Delta Skymiles.
Blockchain’s usefulness for customer rewards programs is not a new idea. Singapore Airlines started using a private blockchain for frequent flyer miles in 2018. Starbucks is still testing its NFT rewards program.
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To date, blockchain points programs have largely remained fringe initiatives. Not everyone is convinced of the need for a points chain.
“I can’t think of a reason why this is necessary. are points [ERC-20] tokens without transfer option,” wrote an X user.
Stack pitched its points chain idea to investors at the Coinbase Ventures Summit in Malibu in October 2023, the project said. Last week it announced a $3 million seed round. The project also received rave reviews from Base founder Jesse Pollak.
“Everything is going to move [on-chain] – points included. It is like that because [on-chain], [developers] can build faster, reach more users and share the open, transparent values of the [on-chain] economy,” Pollak said in a text message.
