Crypto Points Programs: Incentives, Airdrop Farming, and Risks

Summary

This report explains crypto points programs as off-chain systems that track user activity according to rules set by a decentralized application. Projects use points to encourage actions such as trading, referring users, or avoiding competing platforms, often amid expectations that points may later influence token rewards. The report places these programs in the history of airdrop farming, where users engage with projects in hopes of qualifying for future distributions.

Examples include Tensor’s seasonal NFT marketplace program, which changed eligibility rules over time and eventually coincided with a token airdrop, and Blur’s points-based trading incentives. The report emphasizes that points generally have no independent monetary value, are not recorded on-chain, and may be subject to opaque redemption terms or changing criteria. These features can encourage engagement but also create uncertainty, speculative behavior, and user backlash. The legal treatment of points in the United States remains unsettled, and the document’s examples do not establish that future programs will convert points into tokens or provide predictable rewards.

Key ideas

• Points programs let application teams reward selected user actions through issuer-controlled, usually off-chain accounting.
• Users may farm points because they expect a future token conversion, though conversion and rates are not guaranteed.
• Programs can reward platform use, loyalty, referrals, and other behaviors, with criteria changing between seasons.
• Opaque redemption terms can fuel speculation and make points farming resemble ordinary airdrop farming.
• The report identifies legal uncertainty in the United States and notes that points generally lack independent monetary value.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.