「The Binance Alpha Play Failed」

@cz_binance @heyibinance Are your actuaries treating retail investors like Japanese people?👊🏻

Binance Alpha allows users to earn points with daily trading; the more points, the more airdrops. In just two months, it attracted countless new users and studios. However, today, Binance dealt a heavy blow to the low welfare dream of retail investors.

The introduction of point consumption has transformed points from "positive incentives" into "negative pressure."

"The more I trade → The more I earn"

has turned into

"If I don’t trade → I get deducted → I can only keep trading → but I don’t earn from trading

1. Point Calculation

1. Daily Points

⬩ Balance Points: $1000 → 2 points

⬩ Trading Volume Points: Trading Volume $4096 → 12 points

⬩ 15-Day Total: 14 points/day × 15 days = 210 points

2. Airdrops and Deductions

⬩ Current $RDAC Airdrop Threshold: 205 points, worth $36

⬩ After receiving the airdrop, deduct 15 points: 210 - 15 = 195 points.

⬩ Next day points: Gain 14 points, the oldest day’s 14 points expire, still 195 points. If there’s no increase in trading volume, points will remain at 195 for a long time.

3. Next Airdrop Threshold

⬩ If the threshold remains at 205 points, 195 points are insufficient, need to make up 10 points (trade an extra 0.67 points daily, make up 10 points in 15 days)

⬩ If the threshold rises to 220 points, need to make up 25 points (trade an extra 1.67 points daily, make up 25 points in 15 days)

2. Cost and Benefit Analysis

1. Trading Cost

⬩ Trading $4096 volume cost: $4/day

⬩ Total cost for 15 days: $4 × 15 = $60

⬩ Cost to make up points (taking making up 10 points as an example):

⬩ Earn 12 points for every $4096, 1 point requires about $341.33 trading volume (4096 ÷ 12)

⬩ To add 0.67 points daily, need to trade $228.69 ($341.33 × 0.67), costing about $0.22 (proportionally 4 ÷ 4096 × 228.69)

⬩ Extra cost to make up 10 points in 15 days: $0.22 × 15 = $3.3

⬩ Total cost: $60 + $3.3 = $63.3

2. Net Profit

⬩ $RDAC airdrop value: $36

⬩ Net profit: $36 - $63.3 = -$27.3 (loss)

3. Long-Term Impact

⬩ Points maintained at 195 points, if the threshold continues to rise (e.g., 220 points), need to trade an extra 1.67 points daily, increasing trading volume to $568.82 ($341.33 × 1.67), increasing cost to $0.56/day, extra cost over 15 days is $8.4, total cost $68.4, net profit $36 - $68.4 = -$32.4, greater loss.

3. Fatal Issues with the Point Consumption Mechanism

⬩ A vicious cycle of double consumption:

⬩ Daily adding 14 points, the oldest day’s 14 points expire, points can only be maintained (195 points). After deducting 15 points, cannot naturally recover, need to trade additionally.

⬩ High marginal cost of making up points: Making up 1 point requires $341.33 trading volume, costing about $0.33. The higher the threshold later, the more obvious the cost increases.

⬩ Cost-performance ratio collapses:

⬩ Airdrop value of $36 is far lower than the trading cost (starting from $63.3). Even with multiple airdrops, the deduction mechanism causes points to continuously decline, requiring constant increases in trading volume, with costs rising infinitely.

⬩ Retail investors' psychological expectations are shattered: A loss of $27.3 over 15 days is far below expected earnings, leading to a loss of motivation to participate.

⬩ End of dividends:

⬩ The point consumption mechanism effectively gives points a "pricing": 15 points valued at $36 (each point $2.4), but the cost to make up 15 points is about $115 ($341.33 × 15 ÷ 4096 × 4), each point costs about $7.67, leading to an inversion of value and cost.

⬩ To continue receiving airdrops, must maintain the threshold (195 points), diluting the airdrop value.

The Binance Alpha points system was originally an experiment combining user engagement with ecological incentives, aiming to filter out truly valued users willing to participate in new projects through trading volume, balance, and other behaviors. From the original design intent, it is not without meaning.

However, from the current operational results, issues such as complexity, mismatched returns, and rapid increase in marginal costs are destroying users' willingness to participate. Especially after the introduction of the "deduction mechanism," points have shifted from "accumulated assets" to "continuously consumed resources," trapping users in a negative cycle of continuous investment but diminishing returns.

The success of an incentive mechanism is not determined by how many participants there are initially, but by whether they are willing to stay long-term.