Many overnight success stories in the web3 consumer space have been driven by powerful referral mechanisms. Lacking the support of traditional web2 advertising, platforms such as Friendtech and Blast L2 have utilized viral growth hacks, like referral rewards, to rapidly scale peer-to-peer growth, achieving milestones of 50,000 users and $350M in TVL overnight, respectively. With an estimated 85% of users on web3 acquisition platforms being bots, the landscape of web3 growth, token valuations, and genuine user adoption becomes complex and opaque. Affiliate marketing platforms are centralized due to rewards being distributed through a single link. Hypercluster aims to create a permissionless referral system upon a bot-less social graph, built on automated smart contracts to drive powerful yet sustainable growth for web3 projects. There are three parts to Hypercluster’s referral system, inspired by different case studies and the works of our peers:
Rewards Conditions: While many airdrop campaigns (like Blur.io, Sushiswap, Arbitrum) filtered users and rewarded them on the basis of historical on-chain activity, leading to the proliferation of airdrop farmers and bots, Hypercluster intends to reward forward-facing on-chain activity. Simply put, it listens to events in the future and 'trickles' token rewards into the network. This is inspired by most consensus mechanisms in blockchains. Hypercluster democratizes this concept and makes it composable not only at the protocol level but also at the level of a singular milestone for a cluster of users.
Referral Social Graph: The binary tree structure (BST) of the referral system is inspired by computer science and mathematics. Unlike a Ponzi scheme, where early entrants at the top of the pyramid benefit directly from later entrants, Hypercluster distributes rewards based on a first-come, first-serve basis and not based on the productivity or investment of later entrants. Each user is limited to two referrals for simplicity and clarity. While the referral structure superficially resembles a Ponzi scheme, which may initially attract modern crypto users, its underlying mechanism is fundamentally different, emphasizing fairness and sustainability. This mechanism also exaggerates the effects of fear of missing out.
Anti-Sybil Mechanism: Inspired by Gitcoin’s roadmap for Sybil detection in Web 3 and Vitalik Buterin's essay on Credible Neutrality, our anti-Sybil mechanism avoids embedding biases towards specific people or outcomes. It focuses on open-source, publicly verifiable execution, simplicity, and a conservative approach to changes. We explore the mechanisms in greater detail in How we built it.
What it does
Automated Campaign Creation and Reward Distribution: Hypercluster empowers web3 projects to launch automated campaigns, rewarding users based on specific on-chain conditions. It requires locking reward tokens in a smart contract and generates unique referral links. These codes, shared by early adopters in their communities, help eliminate bots during the sign-up process. Rewards are then distributed based on how users were introduced to the platform when a designated on-chain event occurs.
Impact on Web3 Project Growth: This approach transforms referral generation, mitigates bot influence on metrics, and alters the distribution method of airdrops. By limiting referrals to two per wallet, the focus shifts to quality engagement. Dissociating from a zero-sum rewards model, Hypercluster aims for long-term sustainability over short-term growth. Its anti-botting features ensure rewards favor genuine users rather than bot operators.
New Standard of Metrics and Social Narrative: Hypercluster introduces a more accurate standard for evaluating project utilization, devoid of bot-driven volume. Its adoption as a referral protocol is accelerated by creating a social narrative that emphasizes genuine usage metrics.
Incentivizing User Referrals and Creating FOMO: The system encourages users to refer others by offering rewards only when referrals pass bot checks. Early entrants receive higher rewards, creating a sense of urgency (FOMO) for users to join early and actively seek referrals, thereby amplifying growth.
Security and Fairness in Reward Distribution: Tokens are securely locked in a smart contract, ensuring immutability and protecting users from potential 'rug pulls'. Unlike traditional affiliate marketing systems, a web3 referral network remains robust against individual blacklisted users, allowing uninterrupted reward flow.
Customizable Conditions and Infinite Outcomes: The protocol's flexibility allows campaign hosts to tailor milestones, catering to various objectives like TVL in DeFi, active wallet numbers in GameFi, or NFT minting in SocialFi. It even supports campaigns rewarding negative conditions, although this area is still experimental and requires further research.
User-Friendly and Whitelabeled Platform: Designed for ease of use, Hypercluster requires no coding experience, enabling marketing and business managers to craft campaigns directly. This user-friendly, whitelabel platform democratizes campaign creation.
Permissionless, Censorship-Resistant Contracts: The protocol generates universally accessible contracts without reliance on a central authority, ensuring permissionless operation and resistance to censorship.
Ethereum Attestation Service Integration: Incorporating the Ethereum Attestation Service, Hypercluster extends beyond referrals to enable on-chain attestations, positioning it as both a referral mechanism and an incentivized governance system.
Transparent and Fair Business Model: The protocol charges a modest fee of 2.5% from the locked pool, proportional to the amount claimed by users, establishing a transparent, simple, and result-oriented business model.
How we built it
Hypercluster is designed on three core principles: decentralized infrastructure, anti-sybil mechanisms, and gas optimization.
- Rewards Contract: Our rewards contract factory generates a smart wallet address that accepts and locks ERC20 tokens, distributing them to a custom subgraph upon meeting specified conditions. These conditions are stored as structs within the contract. To prevent exploitation, conditions in this early version are triggered only once per day. Supported by Chainlink CCIP, campaign hosts can stake tokens on various chains, allowing cross-chain claiming for users. In our demo, the conditions are set using Chainlink price feeds and automation, where a 5% price increase triggers a reward distribution of 1000 tokens per trigger, up to 300,000 tokens over 15 days.
- Social Graph: The social graph contract manages user registration. Utilizing a binary tree structure, users are labeled based on registration order, creating a tiered reward system. For example, User A, with two referrals (B users), each B user can make two referrals (C users), and so forth. Rewards are calculated as a percentage of locked rewards, distributed based on tier when conditions in the reward contract are met. The frontend retrieves eligible claim amounts from the subgraph, with claims contingent on user referrals and passing the bot check.
- Bot Checker: This component uses Chainlink functions to connect with an AI platform, analyzing on- and off-chain wallet data, transaction histories, and transfer patterns. Using statistical analysis and machine learning, it predicts if multiple wallets belong to a single entity. For instance, if a user like Vitalik tries to register with a new wallet, the bot checker identifies if it's linked to an already registered entity. To optimize for gas, batch checks are conducted every 24 hours, introducing a registration delay.
- Conclusion: Hypercluster's innovative approach to web3 challenges ensures a secure, efficient, and equitable platform. By leveraging advanced technologies like Chainlink and AI, we provide a novel solution for smarter airdrops.
Challenges we ran into
Balancing Gas Optimization and Accuracy with Chainlink: Choosing between Chainlink data feeds and data streams presented a challenge in balancing gas optimization against accuracy. After substantial discussions with the Chainlink architect solutions team, we decided to use data feeds. Our price deviation thresholds were less sensitive than those on a perpetuals platform, allowing us to prioritize gas optimization over extreme accuracy.
Resolving Multi-Inheritance Error: Integrating both Chainlink CCIP and Chainlink Functions in a single contract led to a 'multi-inheritance' error. To resolve this, we created separate contracts for each, ensuring smooth functionality.
Costs and Efficiency in AI Calls: The costs associated with AI calls via Chainlink functions were significant. To maintain gas efficiency, we implemented a delay in user registrations, enabling batch processing for entity recognition. This solution also introduced an automatic 24-hour hold on prize claims, an aspect that, in some cases, can be viewed more as a feature than a bug."
Accomplishments that we're proud of
- Originality at Its Core: Hypercluster stands out with its unique architecture, a blend of insights from real-life case studies, consumer behavior, mathematics and AI. This fusion of various disciplines results in a product that is not just original but also deeply rooted in practicality and forward-thinking design.
- Proven Usability: Putting our ideas to the test, we shared Hypercluster's specifications, presentation deck, and GitHub code with potential users and were thrilled to onboard six early pilot projects. These collaborations with Klink Finance, Eddy Finance, EarthStaking, Kosmos, Coinstore, Kosmos, and 4AM Marketing are a testament to the protocol’s real-world applicability and its appeal to early-stage projects.
- Immediate Impact and Potential: The introduction of our anti-bot mechanism is poised to reshape how projects approach their growth strategies and valuations. With targeted funding, attention to detail in design, and strategic execution, Hypercluster has the potential to set a new benchmark for sustainable growth in the burgeoning world of project development. With over $50M in token airdrops issued per month in 2021, taking 2.5% of claimed rewards, Hypercluster has the ability to generate $1.25M monthly protocol fees.
What we learned
- We learned how to utilize a few of Chainlink’s various products in an integrated fashion. These included Functions, Automation, Price Feeds and CCIP.
What's next for HYPERCLUSTER - The Web3 Automated Referral System
- Mainnet The next steps are testnet, audits and mainnet deployment on multiple networks.
- AI Model Training Further model training and new data sources to ensure the accuracy of the AI entity recognition model.
- Transition to V2 In line with the patterns observed in viral growth mechanisms, Hypercluster is designed to transition smoothly from a phase of rapid expansion to a phase of sustainable equilibrium. Our roadmap includes the development of a more robust, long-term reward protocol. This protocol is envisioned to dynamically shift based on predetermined on-chain conditions, aligning with the evolving needs of the project. For our V2 update, we plan to integrate a feature where a portion of protocol fees will be seamlessly redirected to fund the rewards system. This approach ensures a sustainable and self-replenishing reward pool.
- Social Gamification Additionally, we are exploring the integration of social gamification elements, such as point counters, leaderboards, and transparent proof of rewards. These features are aimed at enhancing user engagement and providing a more interactive experience, while maintaining the professional and sophisticated essence of the platform.