Incentive Distribution Law: The Paradigm Shift of Web3 Odyssey from Zero-Sum Game to Win-Win Coexistence

In the evolution of Web3, the way incentives are distributed determines the life or death of an ecosystem. By 2026, we stand at a critical juncture: projects that once relied on simple “airdrop” tactics for false prosperity are rapidly declining, while protocols that grasp the essence of distribution principles are building genuine ecosystem moats. This report delves into how incentive mechanisms have evolved from unidirectional “project→user” traffic purchases to a bidirectional value co-creation model.

Breaking the Illusion of Incentives: Why Do Most Odyssey Projects Fail to Deliver?

Homogenization and the Trap of Incentive Entropy

When 90% of projects in the market copy the same incentive logic, the efficiency of distribution inevitably decays. Users are asked to repeatedly “cross-chain, stake, share” across dozens of similar protocols, but only receive devalued points in return. This is not project failure but the failure of the incentive distribution law—when rewards are infinitely diluted and scarcity disappears, incentive signals vanish as well.

Take Linea’s “The Surge” as an example. Initially, every user interaction earned clear point rewards. But as L2 point competition intensified, the same actions in later stages only yielded one-tenth of the original returns. Such drastic fluctuations in distribution rules directly caused users to shift from “actively participating” to “passively observing.”

The Truth Behind Witch Attacks and False Prosperity

Many project teams only learn the superficial aspects of “task design” but ignore the anti-witchcraft protections within the distribution mechanism. zkSync Era’s experience is typical: although on paper it has over 6 million active addresses, data analysis shows most are generated by automated scripts. These addresses quickly disappear after airdrops, and the project’s high distribution costs fail to translate into real ecosystem deposits.

The fundamental reason is: the distribution law is not properly implemented. Incentives are not flowing to genuine users but instead become ATMs for mechanical arbitrageurs. When the distribution mechanism lacks discrimination, the game of “bad money drives out good” inevitably plays out.

Disconnection Between Product and Incentives

Viral effects often stem from deep coupling between core product functions and reward mechanisms. But in reality, many Odyssey projects’ tasks are unrelated to product value—requiring privacy protocol users to promote on Twitter or forcing social sharing tasks.

This mismatch in incentive distribution attracts low-value “task-oriented” users. When tasks end, they disperse, and TVL collapses within 24 hours. The core issue is: projects fail to consider participants’ genuine motivations and long-term value when designing incentives.

User Segmentation and Distribution Logic: From Arbitrageurs to Ecosystem Builders

Participants in Web3 are not homogeneous “wallet addresses.” Understanding user differentiation is key to designing effective distribution laws.

Three Dimensions of User Segmentation

Gamma Layer — Arbitrageurs (AI bounty hunters)

• Psychological traits: Highly rational, emotionally detached from projects
• Behavior: Mechanical interactions, standardized paths, quick in-and-out
• Distribution needs: Sensitive to immediate, certain returns; highly risk-averse

Beta Layer — Explorers (hardcore users)

• Psychological traits: Driven by resonance, value experience and identity
• Behavior: Deep participation in beta testing, providing high-quality feedback, interactions with personal flair
• Distribution needs: Require both short-term incentives and long-term rights and ecosystem status

Alpha Layer — Builders (ecosystem pillars)

• Psychological traits: Driven by sovereignty, pursue governance and profit-sharing rights
• Behavior: Lock large funds for long periods, submit core code proposals, maintain infrastructure
• Distribution needs: Seek real income rights, governance weight, and long-term protocol growth benefits

Identity Evolution and Distribution Mechanism Synergy

The brilliance of the distribution law lies in guiding users toward positive identity evolution. An initial Gamma arbitrageur, motivated solely by quick gains, may gradually be attracted by the protocol’s product experience and technological advantages, eventually transforming into a Beta or Alpha user.

This transformation hinges on: binding distribution incentives to users’ deep engagement progress. Shallow participants earn basic points, while deep participants unlock higher multipliers of earnings and governance weight. When users see that “staying” yields longer-term benefits exceeding “arbitrage and leaving,” they will naturally complete the identity upgrade.

Incentive Compatibility Equation: How Mathematics Ensures Participant Interests Align

The key to transitioning from “traffic purchase” to “value co-creation” is establishing incentive compatibility constraints.

Seeking Nash Equilibrium

Let R© be the total reward for honest users, C© their fixed costs (gas, slippage, capital lock-up); E[R(s)] the expected gains for witch attackers, and C(s) their attack costs (servers, evasion detection).

A win-win distribution law must satisfy:
Net reward for honest participation > Net reward for witch attacks.
This implies:

• Increase defense C(s): Move beyond simple blacklists, incorporate AI behavioral entropy detection. Analyze interaction spatiotemporal patterns, fund flow linkages, and apply “gas fee penalty” mechanisms to directly undermine scripting profitability.

• Optimize R© incentive structure: Shift rewards from “pure governance tokens” to “hybrid benefit packages”—including real yield from transaction fees, permanent usage discounts, governance weight bonuses. Injecting real income is the strongest guarantee of incentive compatibility.

Dynamic Difficulty Adjustment (DDA)

Future distribution laws will no longer be static task lists. Borrowing from Bitcoin’s difficulty adjustment, advanced protocols will implement dynamic difficulty regulation.

When Odyssey enters a boom phase with rapid address growth and TVL surges, the system will automatically detect “overheating.” At this point, point capture algorithms will trigger increased difficulty:

• Funding threshold increases: The amount of interaction needed to earn the same points rises.
• Task complexity escalates: From simple “one-click swaps” to “multi-protocol strategies.”

This dynamic regulation protects both sides: for the protocol, DDA acts as a safety valve preventing traffic overload; for Alpha users, higher difficulty tasks filter out low-quality participants, ensuring distribution shares flow more accurately to genuine contributors.

Proof of Value and Contribution Density: Redefining Odyssey’s Success Metrics

By 2026, the vanity metric of “address count” has been thoroughly abandoned. Projects are shifting toward a Proof of Value (PoV) model.

Contribution Density Formula

Define contribution density D as:

D = [Σ (liquidity × lock duration) + γ × governance activities] / total rewards distributed

• Liquidity × lock duration: Measures the depth of capital “deposited” in the ecosystem, not just “entry and exit”
• γ (community contribution factor): Rewards active governance voting, technical documentation, positive social influence with 2x or higher multipliers
• Total rewards distributed: As denominator, balances inflation and ensures the true value of incentives

Fundamental Shift in Distribution Logic

Through the PoV model, projects gain not just a list of cold wallets but a genuine ecosystem participant map. Users realize that their “labor” rather than just “capital” can yield high returns.

This exemplifies the beauty of the distribution law: it harmonizes capital efficiency with human creativity, transforming Odyssey from a “numbers game” into a realm of genuine value co-creation.

From Fixed Tasks to Dynamic Distribution: How to Prevent Incentive Dilution

Multi-Dimensional Incentive Bundles

Future incentive distribution will no longer rely solely on tokens. The most effective distribution law will incorporate three dimensions:

Credit Dimension: Use soul-bound tokens (SBTs) or on-chain identity systems to permanently embed user contributions. High-credit users can unlock “no-deposit loans” or “task weight bonuses.”

Privilege Dimension: Embed rewards into product usage rights. Odyssey winners can gain “veto rights” in governance or “priority mining” in new projects.

Revenue Dimension: As compliance advances, distribution begins to anchor on actual protocol income—RWA bonds, DEX fee shares. Real income injection is the key to breaking false prosperity.

Anti-Witchcraft Pre-emptive Measures

Reject “post-hoc cleaning.” On launch day, AI behavioral fingerprinting will preemptively mark suspicious addresses. These addresses can complete tasks but only access “low-yield pools.”

Liquidity Release Mechanism

All rewards should not be released in a single TGE. Introduce smoothing mechanisms—based on user activity post-Odyssey, unlock over 6-12 months. This enforces “long-term incentive compatibility.”

Technical Foundations of Value Co-Creation: ZK Incentive Protocols and Cross-Chain Abstraction

Behavior Perception Engine

Future Odysseys will no longer rely on “manual check-ins.” Underlying protocols will automatically record deep user interactions within DApps: liquidity depth, transaction frequency, governance participation. Multi-dimensional modeling will identify whether users are “long-term holders,” “high-frequency liquidity providers,” or “governance participants.”

ZK Privacy Analysis and Precise Filtering

Protocols will use zero-knowledge proofs to perform precise filtering without revealing user privacy. Users can demonstrate “high-net-worth” or “experienced DeFi” status via ZK-STARKs, verifying past 180 days of non-repetitive interactions to generate a “unique human proof,” fundamentally blocking automation scripts.

Intent-Driven Cross-Chain Incentives

Users only need to express participation intent; underlying protocols will automatically coordinate cross-chain assets, balance gas fees, and execute contracts. This “seamless interaction, automatic incentives” mode will bring Odyssey back to the core of product value.

Practical Execution: 10 Golden Rules for Precise Incentive Distribution

Paradigm Shift in Core KPIs

Metric A: Sticky Capital Ratio = TVL (T+90 days) / Peak TVL
If below 20%, the distribution mechanism is fundamentally flawed. Real incentives should encourage users to stay.

Metric B: Net Contribution Score
Total protocol fees generated by an address divided by its incentive costs. Reflects distribution efficiency—are incentives translating into real value?

Metric C: Governance Active Entropy
Measures genuine participation depth in on-chain proposals, not just voting spam.

Tiered Distribution Architecture

Foundation Layer: For new users, core tasks like one-click swaps and social sharing. Incentives: SBT badges and future points. Goal: “Break the ice.”

Growth Layer: For active traders, tasks include deep liquidity provision and cross-chain staking. Incentives: native tokens and real-time fee discounts. Goal: “Lock funds.”

Ecosystem Layer: For core contributors, tasks include code submissions and governance proposals. Incentives: governance weight, RWA dividends. Goal: “Grant sovereignty.”

Risk Control and Circuit Breakers

Dynamic Incentive Coefficients: When daily interactions exceed 500% of baseline, system automatically reduces point coefficients to prevent script abuse.

Invisible Marking: Use AI fingerprinting to pre-mark suspicious addresses. These can perform tasks but only access low-yield pools.

Community Governance in Advance: Simulated voting on protocol parameter improvements as high-weight tasks, cultivating governance habits early.

From Marketing Campaigns to Normalized Incentives: The Endgame of Odyssey 3.0

Embedded Incentives (GaaS)

Odyssey will no longer be a webpage but embedded within smart contracts as dynamic logic. As users generate positive value, contracts will automatically recognize and distribute incentives in real-time.

Cross-Protocol Credit Lego

Performance in Protocol A can be proven via ZK to translate into initial reputation in Protocol B. The ultimate form is a universal “on-chain contribution score” replacing fragmented points.

This cross-protocol synergy will propel Web3 ecosystems from “stagnant fragmentation” to “incremental co-creation.”

Conclusion: From Confrontation to Coexistence — A Civilizational Shift

The essence of incentive distribution law is establishing precise value metrics in decentralized anonymous networks. By introducing dynamic difficulty adjustment and value proofs, the goal is not only to defend against witch attacks but to transform simple capital exchanges into quantifiable contribution densities.

The byproduct of this shift is on-chain credit. Credit is not generated ex nihilo but accumulated through countless high-entropy interactions, long-term staking, and governance participation—forming a “digital residual.” In future ecosystems, incentive mechanisms will no longer be just tools for token distribution but the crucible forging trust.

Ultimately, the end of Odyssey is not the conclusion of airdrops but the beginning of protocol-citizen covenant. When we dispel traffic bubbles with the mathematics and technology of the distribution law, what remains is a solid foundation of trust—Web3’s true transition from “speculative wilderness” to “value civilization.”

In this new paradigm, projects and users are no longer adversaries. Through precise distribution mechanisms, they become genuine co-creators of value—every authentic contribution is recorded by code, and every trustworthiness becomes a passport more scarce than capital.