Efficacy of Point Systems

Crypto points are the web3 version of traditional credit card rewards. The more you use a project (spending quota on your credit card), the more points (cashback, loyalty points) you get. However, the exchange rate or actual value of these points is dependent on the team setting the actual rules of the game. Players engage in this implicit game with their capital on the line and the expectation that they are rewarded with a future airdrop, helping to boost the project’s metrics in the process. This component of trust might quickly become predatory, subtly farming players and creating zero-sum games. At best, farmers might be happy with their airdrop allocation and be converted into actual organic users of the protocol. At worst, unsatisfactory distributions might cause the farmers to abandon in search of greener pastures, dumping the project’s token in the process.