VMP-44 - Revising Points markets to handle "Interim Airdrops"

As people may well be aware, Hyperliquid recently released an airdrop of a newly created spot token, PURR, to holders of points at a given cutoff date. This was of specific interest to the research team here as there is currently a live market for these points running on Vega, the settlement rules for which are derived from a research note written by the team.

This research note does not currently contain specifications for how such an event should be priced in to settlement, namely one where:

  1. Only a subset of points holders receive a token which
  2. Is not the final issuance from points, and they may continue to have future value.

As such, we have updated the research note to include a suggested amendment to how such markets are priced and settled to aim to include both this event and any future similar ones on this or other markets. The full change to the note can be found here and can be summarised as:

  1. Price the total value of the airdrop according to the same valuation rules as the final release.
  2. Record this total market valuation in some manner such that it can be included at settlement.
  3. At settlement time, divide that market valuation by the total number of points issued (as opposed to only those eligible at time of release) and add this to the value of any final settlement.

The recording of market valuation could be done in a number of ways. An optimal method would possibly involve a slightly amended oracle contract which can vote on interim values in addition to settling a final one which will sum up the interim values and perform the division to come to a final value. Given that this may take time to develop, an alternative methodology is also proposed in the note whereby a direct update to the IPFS settlement document could be proposed to the market which specifies a value the single UMA oracle settlement would use at termination. This would go through the Vega market update cycle exclusively until final settlement, so is likely less optimal, but may be a method to perform this inclusion if the community wishes to do it before any such contract to enact the first method can be created.

This forum post is designed to act as a staging point for any discussions on the above proposal or amendments to it people may desire. If there is no broad disagreement, a follow-up post (or comment below this) will discuss an example of how the PURR price specifically could be calculated.

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