Points Farming
Points farming is the practice of accumulating off-chain "points" issued by a protocol that the protocol may later use to determine token airdrop allocations. Points are not tokens, do not have a guaranteed conversion rate, and are entirely at the issuer's discretion.
✦ Key Insight
Points have become a dominant user-acquisition mechanism, with billions of dollars deposited into protocols chasing potential future airdrops. For traders, points sit somewhere between marketing program and unregistered security expectation — and understanding the mechanics matters because retroactive rules and disappointing conversions are common.
✕ Common Misconceptions
Locking large capital in low-yield positions purely for points with no guaranteed payout.
Ignoring smart-contract risk because the points "feel free."
Failing to track effective yield (estimated token value ÷ capital ÷ time) and comparing to alternatives.
Detailed Explanation
How It Works: A protocol awards points for actions: deposits, trading volume, referrals, holding tokens for longer durations. Points often compound or multiply based on tiers. At some future date the protocol "snapshots" points and uses them as one input into airdrop allocation, possibly alongside on-chain reputation filters.
FAQs:
Are points worth anything until conversion? No formally. Some protocols allow secondary trading of point claims at speculative discounts.
Can a protocol cancel my points? Yes. They are entirely off-chain promises subject to change.
In Practice
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