Understanding the new meta of crypto points farming
Crypto points farming is a trend where users receive points for interacting with certain blockchain protocols.
These points may be converted into tokens during an airdrop, but their value is often uncertain.
Crypto points farming, while carrying certain risks, continues to be a focus for some in the cryptocurrency community.
What is Crypto Points Farming?
Crypto points farming is a new trend in the cryptocurrency world. It allows users to earn points by engaging with specific blockchain protocols. These points typically act as placeholders for a future airdrop of digital tokens.
However, valuing these points can be difficult for several reasons, and they might end up being just numbers with little to no future value.
How Does Crypto Points Farming Work?
Crypto points farming operates by incentivizing certain user behaviors. For instance, a user might receive points for connecting their wallet, executing a swap, or using a specific feature within an app. The points are typically centralized, meaning a specific project is disseminating and tracking their point system rather than recording those points on a blockchain.
Why Do Projects Use Points Systems?
Projects use points systems to enhance user loyalty, amplify engagement, and stoke the flames of airdrop speculation. By assigning a score to certain user actions within the app that align with the project’s goals, they can boost their key metrics.
For instance, a lending and borrowing platform might use points to increase its total value locked (TVL).
The Risks of Crypto Points Farming
Crypto points farming offers some potential benefits but comes with notable risks. The value of these points is typically unclear, and there is no assurance that they will be exchanged for tokens in an airdrop. Often, these points are recorded off the blockchain, meaning they lack inherent value and cannot be traded like traditional cryptocurrencies.
The Future of Crypto Points Farming
Crypto points farming is gaining attention in the cryptocurrency community despite its risks. Platforms like EigenLayer have seen active participation in this trend. As more projects introduce points systems to encourage user involvement, this aspect of cryptocurrency could keep evolving. It's crucial for users to understand the risks and make well-informed choices when engaging in crypto points farming.
