Points Programs Surge in Crypto: Embracing Governance and Airdrop Rewards

Points systems are becoming a widely-adopted mechanism for crypto protocols to track and reward early adopters, with many protocols implementing points programs to determine airdrop allocations. Points don't have inherent economic value but are often treated as such, leading to speculation on the potential value of token allocations. Sybil farming, where users employ multiple addresses to accumulate points, has emerged. Despite their popularity, several notable crypto protocols have yet to conduct airdrops, including EigenLayer, Blast, Kamino, Swell, Kelp DAO, Marginfi, Hyperliquid, Drift, Parcl, Friend.Tech, Magic Eden, and Rainbow.

Points Programs: A Booming Trend in Crypto Governance and Airdrop Rewards

Points systems have emerged as a prominent offchain mechanism employed by crypto protocols to monitor and evaluate the participation of early adopters. A diverse range of crypto projects have embraced the use of points to determine the allocation of airdropped native tokens to their users.

Among the notable crypto projects that have implemented points programs and subsequently conducted airdrops to reward their early adopters include the NFT marketplace Blur, restaking platform EtherFi, and Solana-based DeFi protocol Jito.

The Nature of Points and Their Impact on Airdrop Allocation

In theory, points possess no inherent economic value and do not automatically guarantee the allocation of a protocol's native token. However, some individuals treat points as if they do, speculating on the potential value of airdrop allotments. This behavior, often referred to as "sybil farming," involves employing multiple addresses and automated bots to engage in transactions on a specific protocol over a sustained period to accumulate as many points as possible.

The use of points programs has gained popularity among crypto protocols, particularly after Blur's successful implementation of the practice in May 2022.

Top Crypto Projects with Points Programs and Upcoming Airdrops

Here is a comprehensive list of the top ten crypto protocols and projects that have enacted points programs but have not yet conducted a token airdrop, ranked by their total value locked (TVL):

1. EigenLayer: The second-largest DeFi protocol across all blockchain networks behind Lido Finance, EigenLayer boasts a TVL exceeding $13.6 billion since launching limited restaking on Ethereum mainnet in June 2023. The highly-anticipated EigenLayer airdrop date remains undisclosed, but speculations point towards a possible release within this quarter, especially following the team's announcement of EigenDA's launch on mainnet, the first active validated service deployed on EigenLayer.
2. Blast: This layer 2 scaling rollup introduced a points program even before its network became operational, highlighting the integral role points programs have played in the inception of some crypto protocols. While Blast was still in its testing phase, the team opened up deposits into its smart contracts, allowing crypto users to bridge ETH to the layer 2 network, earn a yield on their deposits, and accumulate points redeemable in May, according to the project's website.
3. Kamino: Points programs have also found their way into lending protocols like Kamino, a Solana-based platform with a TVL of almost $1.31 billion, marking an impressive growth of over 482% from its $225 million TVL at the beginning of 2024, as reported by DefiLlama.
4. Swell: Swell, an Ethereum staking protocol with a TVL of over $1.23 billion, has implemented a points program that allows users to earn "pearls" redeemable for SWELL tokens at its token genesis event. Each pearl represents a portion of the $SWELL airdrop, and ultimately grants holders governance tokens for Swell's decentralized autonomous organization (DAO).
5. Kelp DAO: Kelp DAO, a liquid restaking solution for public blockchain networks, has also rolled out a points program. With a TVL of $821 million, a 486% increase since the start of the year when it stood at $140 million, Kelp DAO introduced "Kelp Miles" which serve as an "additional layer of incentives to restakers" that complement the points earned on EigenLayer.
6. Marginfi: Marginfi, a lending platform native to the Solana blockchain network, has a TVL of $543.42 million, a roughly 50% increase since January 1 when users had only locked $364 million into the platform. While Marginfi's points system allows users to accumulate points based on their usage and interaction with the DeFi application, its documents emphasize that points have no monetary value and do not guarantee the availability of any specific redemption of rewards.
7. Hyperliquid: Hyperliquid, a perpetual trading exchange with about $373 million in TVL, also operates a points program. Hyperliquid has a dedicated tab on its interface that displays total points and rankings relative to other users. According to the project's website, 1,000,000 points will be distributed weekly to users for six months, starting November 1, as a reward for their contributions to the protocol's success.
8. Drift: Drift, a Solana-based exchange for perpetual futures, has yet to launch its token but has been conducting a points program for several months. The protocol rewards its users in various ways, including acting as market makers by providing liquidity on the platform's order book or as traders generating trading volume on Drift's perpetual and spot markets.
9. Parcl: Parcl, a perpetual trading platform focused on real estate markets, recently ended the third season of its points program on April 1 and is currently finalizing its initial allocation of PRCL. The project's initial token allocation is reportedly imminent.
10. Friend.Tech: Friend.Tech, a decentralized social network, allows users to invest in "shares" of individuals, which unlocks "a direct line of communication to them by gaining entry into an exclusive chatroom." The platform has incorporated a points system, and the team has indicated that 100% of its onchain points will be distributed to community users instead of venture capital firms.

Notable Crypto Projects with Points Programs but No TVL

In addition to the above-listed projects with TVL, several prominent crypto projects with points programs do not operate with a total value locked amount:

1. Magic Eden: Magic Eden is a marketplace for non-fungible tokens (NFTs) on various blockchain networks, including Solana, Bitcoin, Ethereum, and Polygon. Collectors, creators, and traders can participate in Magic Eden's rewards programs, which involve earning "Diamonds," Magic Eden's version of points.
2. Rainbow: Rainbow, an Ethereum-based self-custodial wallet, has also adopted a points program. "Rainbow Points are the first step towards including our community in the future success of Rainbow," wrote the team on its website. "It's a program designed to make your Rainbow experience more fun and rewarding."

Conclusion

Points programs have become an integral aspect of crypto governance and airdrop rewards. While they do not inherently guarantee a token allocation, their potential influence on the distribution of native tokens has led to speculation and strategic accumulation of points by some users. The increasing adoption of points programs among crypto protocols demonstrates their effectiveness in fostering early adopter participation and aligning incentives within the community.