How to Earn Drift Points: Potential Drift Protocol Airdrop

How to Earn Drift Points

You can earn Drift Points on Drift Protocol by providing liquidity and engaging in perpetuals and spot trading, along with providing Backstop AMM Liquidity, where you act as a counterparty to other Drift traders.

Key Takeaways

• Drift Protocol is an open-source decentralized exchange built on Solana offering transparent and non-custodial trading products.

• This year, Drift Protocol raised $23.50 million in a Series A funding round led by Polychain Capital and other notable investors.

• The protocol is rewarding users with Drift Points for participating on the platform through various trading activities.

What Is Drift Protocol?

Drift Protocol is a decentralized exchange (DEX) that is open-source and built on the Solana blockchain. It offers transparent and non-custodial trading for users by ensuring all deposits, withdrawals, and trades are executed on-chain. This provides users with full custody of their assets and peer-to-peer trading through its integration with the Phantom wallet. Based on information from DefiLlama, Drift Protocol has a TVL of almost $340 million. According to information from Drift Protocol, it also has a cumulative trading volume of $18.98 billion and over 169,000 users.

The DEX platform has various trading options including spot trading, perpetuals trading, borrowing, lending, staking, and providing liquidity. On top of that, Drift Protocol provides features like automatic yield on deposits and leveraged staking with annual yields up to 10%. Drift Protocol employs liquidity mechanisms such as Just-in-Time (JIT) Auction Liquidity, Limit Orderbook Liquidity, and Automated Market Maker (AMM) Liquidity in order to enhance trading efficiency and liquidity provision. 

Users who provide liquidity are referred to as Market Makers and can use the Just-in-Time (JIT) Auction mechanism to facilitate liquidity provision to users who take liquidity from the exchange, also known as Takers. Orders are routed through the Just-in-Time as a five seconds Dutch auction where market makers compete to submit quotes to the user within the time period.

Drift Protocol is the first perpetual swap exchange to leverage a Dynamic AMM (DAMM) which introduces repegging and adjustable k mechanisms to recalibrate liquidity in a trading pool based on demand. As a result, DAMMs are more flexible, leading to better capital efficiency and reduced slippage. 

In January this year, Drift Protocol successfully raised $23.50 million in a Series A funding round led by Polychain Capital and notable investors including Solana founders Anatoly Yakovenko and Raj Gokal, Ethereal Ventures, Bixin Ventures, and Folius Ventures. Previously in 2021, the protocol raised $3.80 million in a seed funding round led by Multicoin Capital and Jump Capital.

Drift Protocol announced the project’s Launch Airdrop on May 1, 2024, with 120 million DRIFT tokens to be distributed to eligible participants. The total Airdrop supply was 12% of the token supply and approximately 150,000 wallet addresses were eligible to claim. All DRIFT from the Launch Airdrop was claimable for three months starting from the highly anticipated Token Generation Event (TGE) which took place on May 16, 2024. 

Now, users can participate in Drift’s first ever on-chain loyalty program known as FUEL. It is designed to recognize those who continue to use Drift such as actively trading perpetuals or staking. The FUEL program will track participation across a broad range of activity throughout the Drift ecosystem and reward users with FUEL. Drift has stated that in the future, users will be able to redeem FUEL for DRIFT with the redemption mechanism being announced at a later date.

Step 1A: Connect to Drift

Visit https://app.drift.trade/ and Connect your wallet.

You will need to agree to the Drift Terms and Conditions before proceeding to connect your wallet.

Choose your wallet to connect to the protocol. In this example, we are using the Phantom wallet.

Do note that you will need a minimum amount of 0.06134784 SOL to cover account creation. If you do not have enough, you can choose to deposit SOL tokens in this step. 

Once you have enough SOL tokens, you can create your account. This will cost 0.0413 SOL and you need to acknowledge the below terms before the connection is completed.

Step 1B: Adjust your Settings

At the bottom of your screen, click the toggle to engage Pro mode. This will display the Orderbook.

You can also select Margin Trading Disabled which is indicated with the left arrow in the image above. This will let you set your margin and leverage settings in the pop-up window. If you prefer the safest option, you can opt for None under max leverage while the highest and most aggressive option is 15x.

Step 2: Stake DRIFT

Staking DRIFT will earn you 10 FUEL for every DRIFT staked for 28 days. If you do not already have DRIFT, you can buy some at https://app.drift.trade/DRIFT.

Once you have DRIFT, head over to https://app.drift.trade/drift-staking where you can Stake it. 

Simply choose how much DRIFT you want to stake. Do note that withdrawing your funds is only available 13 days after you submit an unstake request.

Step 3A: Provide Liquidity and Perform Perpetuals and Spot Trading (Optional)

Under Trade in your top menu, you can choose between Perpetuals and Spot. 

Our first example will be with Perpetuals. Here you can choose to place Long or Short orders, input the limit price, and the size of your order. Place your limit order as close to the market price, in order to have it filled quickly.

A method to keep your order in the Orderbook for longer is with Oracle Limit orders. Under Order Type select Oracle Limit and you can then input the oracle price offset. 

The offset represents the price above or below the current Oracle Price you want. Therefore, if your order has an offset of 1, you want to be filled at 1 dollar above the oracle price. For a short order, you typically want to use a positive offset and vice versa for long orders. 

Do note that these orders will be filled at any time the offset is met as long as the account collateral is sufficient.

Next up is Spot trading which orders can be placed similarly to Perpetuals by inputting your limit price, and the size of your order.

Again, you can choose to perform Oracle Limit orders just like with Perpetuals.

Step 3B: Provide Taker and Maker Volume (Optional)

By providing volume as a taker or maker, you will earn 1 FUEL for every $1 in volume. A Maker adds liquidity through transactions such as a limit buy order below the current market price or a limit sell order above the current exchange rate. Meanwhile, a taker takes liquidity by placing orders that execute instantly. 

We have included this step as optional since it requires you to invest more capital, carry out multiple transactions, and pay for additional fees. 

You can follow Step 3A in the guide above on how to Provide Liquidity and Perform Perpetuals and Spot Trading. However, do note that in that step we recommended that your limit order be as close to market price. This will allow you to provide volume as a taker. If you want to provide volume as a maker, all you need to do is input a limit buy order that’s below market price or a limit sell order above market price.

Step 4: Stake SOL for dSOL (Optional)

You can stake your SOL to the Drift validator by swapping it for dSOL to earn 5 FUEL for every $1 deposited for 28 days. At the time of writing, there is also an additional 5x booster available. Since it is a liquid staking token, you can earn yield from it while maintaining the ability to unstake anytime. 

Go to https://app.drift.trade/earn/dsol-liquid-staking and Stake your desired amount of SOL by confirming the transaction in your wallet.

Step 5: Deposit Through Lending

In the top menu, click on Earn and go to Lend/Borrow.

You can then choose which token you want to deposit. Some tokens will provide a higher lending annual percentage rate (APR) while SOL and dSOL offer a much lower rate. However, at the time of writing, depositing dSOL provides a boost of 5 FUEL for every $1 of dSOL deposited for 28 days. You can check if there are any boosts for other tokens before deciding which one to Deposit. 

Input the amount of the token to deposit and Confirm the transaction in your wallet.

Conclusion

Drift Protocol is providing a decentralized exchange platform for users to perform various trading options including spot trading, perpetuals trading, borrowing, lending, staking, and providing liquidity on the Solana blockchain. With the introduction of Drift Points earlier this year and the current FUEL loyalty program, the protocol aims to incentivize users to provide liquidity and increase trading activity. Many are looking forward to the platform’s continued growth while also rewarding users. 

As mentioned above, an airdrop has not been confirmed by Drift Protocol and following the steps in this guide does not guarantee an airdrop allocation.