The Tie Research

Labs Case Study: Using Bonuses for Nodle’s Crowdloan

By Jack Melnick
April 18, 2023

The Scenario:

Our client, Nodle, is a decentralized, IoT platform seeking to formally launch through a Polkadot crowdloan. As part of this process, they needed to effectively incentivize investors to contribute to their campaign. This Auction is particularly important (closing on 3/10), as platforms are competing for the final available slot. 

Our team at Token Labs sought to use a combination of quantitative and qualitative analysis to inform Nodle’s team over this crucial period. At the start of the final auction period, Nodle was trailing Equilibrium, the leader, by a wide margin- 1.3mn DOT to 872k DOT. 

Data & Strategy: 

We began by examining Equilibrium, noticing two key strategies that were particularly effective: the ‘moon bonus’ and the ‘flash bonus’. Bonuses give depositors a multiplier on their loaned tokens, further incentivizing users to lock funds. In the past, Equilibrium had run small bonuses (5-20%) and referral programs in the past, but they didn’t see nearly the same effect.

Digging into the data turned up what we hypothesized- each of the two bonuses had a significant, but quickly diminishing, effect on the amount of DOT donated to the crowdloan. However, Nodle hadn't run a bonus campaign yet.

Doing so this late would likely leave a sour taste in the mouth of earlier donators, who had faithfully stuck by Nodle through ten prior auctions. Later contributors would receive a greater number of NODL per DOT than prior donators, who had been around longer. Our goal was to come up with a strategy that would provide a bonus boost while mitigating this downside.

The final recommendation was for Nodle to run a bonus campaign that offered significant initial rewards. This would hopefully incentivize 'mercenary' new voters, who just seek highest DOT return. On top of this, we suggested that they multiply the bonus for returning contributors. This also serves as a 'Right of First Refusal' for long-term fans of the project. By donating at a higher rate, they are given an opportunity to maintain share of final project rewards despite bonuses for new lockers.

Nodle ultimately rolled out a program that offered new users 100% bonus NODL per DOT, while giving returning contributors 200%.

Result and Analysis:

The immediate boost from the bonus was felt. Nodle surged up to equal with Equilibrium, and has maintained a narrow lead as the auction reaches its final days.

While getting that bump in DOT locked was part of the goal, we also wanted to see a breakdown of the contributions. Was the strategy effective in encouraging both new and returning capital? To do this, the team took a deep-dive into the historical crowdloan trends of Nodle's top 25 donating wallets.

For the 25 Wallets:

4 were Multi-Sig Protocol Wallets

8 were Genesis (2/1 or older) Donators who didn't donate a second time.

6 were New (3/1 onward) Donators

7 were Returning Donators (Genesis + New)

So, of the current top-25 Nodle campaign donators, 56% made contributions as a result of the new campaign. Of the 14 contributors, it was ~equally split between new and returning donators, suggesting that the incentives did a good job of appealing to both key user groups.

The multi-sig wallet for Parallel.Finance shows 1.75mn total Nodle votes compared to 710,000 for Equilibrium. Interestingly, Equilibrium has around 1450 donations through the platform compared to Nodle's 1200, suggesting that the average DOT contribution for NODL is almost three times (!) as large.

The second leg of the push was driven largely by new, smaller donations. This suggests that the bonus push was effective in reaching and incentivizing new IoT interested users. On the morning of 3/10, the crowdloan period ended, with Nodle securing victory after claiming 70+% of the total blocks.

If you're interested in learning more about Nodle Network, you can check their page.

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Jack Melnick

Jack Melnick

Jack Melnick, Author at The Tie

VP of Research
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