What is a points program, and how does it differ from liquidity mining covered in an earlier article?
Liquidity mining covered in an earlier article involves a protocol that already has a formal governance token, directly using this token as a reward, distributed to users providing liquidity — the reward's nature is clear and tradeable from the start; a points program, by contrast, occurs before a token formally launches — a protocol designs a points system, and a user completing a specific behavior (such as depositing an asset into a certain vault, or continuously using a certain trading interface) accumulates a corresponding amount of points. These points themselves aren't a token, usually can't be directly traded on the market, and no protocol promises these points will definitely convert into anything in the future — but users generally, based on experience from similar past cases, expect these points might have a chance to convert into a formal token's airdrop allocation in the future.
The key difference from liquidity mining lies in 'certainty': liquidity mining's reward is a clear, immediately-in-hand token; a points program is essentially a psychological game of expectation, 'possibly valuable in the future, but entirely uncertain currently' — a protocol usually doesn't explicitly promise points will definitely convert into a token, what the conversion ratio would be, or even whether a token will genuinely be issued. A user participating in a points program is, to some extent, betting on an as-yet-unclear future promise, rather than obtaining a concrete return with confirmable value in the present the way liquidity mining does.
Why does a points program emerge, and what problem is a protocol trying to solve?
Before formally launching a governance token, a protocol usually faces a dilemma: launching a token too early, when the protocol's own product and user base haven't yet matured, could leave the token price lacking support, dropping sharply right after listing; but providing entirely no form of incentive at all makes it hard to attract sufficient user participation during the product's early stage, accumulating the necessary usage data and capital scale to prove this product genuinely has market demand.
What a points program aims to solve is exactly this dilemma of 'the product isn't ready to issue a token yet, but early users need attracting' — by offering a points system with no explicit promise, but generally expected by the market to convert into a future reward, a protocol can still effectively attract user participation without needing to immediately issue a token. This mechanism, to some extent, is a flexible strategy of 'first cultivate a user base, then decide whether and how to issue a token' — the protocol retains maximum flexibility, able to decide how to design the final token allocation plan based on early participation, without needing to fix every tokenomics detail during the product's early stage.
How does a points program actually work, and what does the complete flow look like from user participation to potentially eventually receiving a token?
A typical points program flow involves several steps:
Worth noting: quite a few protocols set up an anti-Sybil-attack (referring to the same person creating a large number of wallet addresses to repeatedly participate, attempting to obtain an excessive allocation) review mechanism, excluding addresses judged to have obtained points through this kind of method when finally allocating the token.
What's the practical impact of a points program on everyday users, and how can you assess the actual risk and value of participating in this kind of program?
For an everyday user, a points program offers a channel to participate in an early ecosystem and accumulate potential future reward without needing to immediately hold a certain token — theoretically letting a user get ahead of a possible airdrop opportunity at a relatively lower direct capital cost. But participating in this kind of program carries a few concrete risks worth assessing: entire uncertainty — a protocol has no obligation to guarantee points will definitely convert into a token, and even with multiple successful past cases, that doesn't mean every points program ultimately delivers. Committing capital to a protocol purely to farm points, rather than because you genuinely value that product itself, to some extent bears the concrete risk of 'this bet ultimately not paying off'; dilution risk — similar logic to what's covered in an earlier article — the more users flood into the same points program, theoretically the lower the proportion each person ultimately gets allocated. Early participation usually has a better chance of securing a relatively advantageous allocation ratio than joining later once the program is already widely known.
When assessing whether to participate, it's worth honestly answering a question: if this points program ultimately never delivers at all, with the token genuinely never issued, is the capital and time you committed still worthwhile — if you originally already valued this protocol's product's actual usage value, then even if the points ultimately never convert, your capital was still invested in a product you approve of, bearing a relatively reasonable opportunity cost; but if you purely used a product you originally had no interest in reluctantly just to farm points, once it never delivers, this time and effort committed could end up entirely meaningless.
EigenLayer is one of the most representative points program cases, having accumulated deposits exceeding $16 billion in value before its formal token launched, with users obtaining 'restaked points' by staking specific assets — some liquid restaking protocols even let users simultaneously obtain multiple points (their own protocol's points plus EigenLayer's own points), to some extent forming an operating pattern of participating in multiple points programs simultaneously to stack expected value. When the formal token EIGEN's airdrop was announced in May 2024, however, it triggered a fair amount of community dissatisfaction — some early depositors complained the airdrop was initially set as non-transferable, and not all depositors who had ever participated in accumulating points got included within the allocation scope. This incident is also viewed by some industry commentators as a concrete turning point where the points program mechanism moved from high expectation toward reality's check.
The advantage is letting a protocol, during a stage not yet ready to formally issue a token, still effectively attract early user participation and accumulate necessary usage data and capital scale, while users can get ahead of a possible future airdrop opportunity at a relatively lower barrier; the drawback is points themselves carry no formal promise whatsoever — whether it ultimately delivers, and what the conversion ratio would be, entirely depends on the protocol's unilateral decision afterward. A user bears the concrete uncertainty of 'committing time and capital yet potentially getting nothing at all,' and the more people a points program attracts, the more likely it dilutes the actual proportion each early participant ultimately obtains.