What is Points Programme (Crypto)

Crypto points programmes are pre-token incentive systems where protocols reward early users and liquidity providers with off-chain points — which are later converted into token allocations at the protocol's token launch. Points emerged in 2023-2024 as a dominant mechanism for bootstrapping DeFi liquidity and user bases before a token generation event. THE EVOLUTION FROM RETROACTIVE AIRDROPS Earlier DeFi protocols distributed retroactive airdrops — simply snapshotting addresses that had used the protocol before a surprise announcement and distributing tokens. Uniswap (UNI), Paraswap, and dYdX used this model. Problems: Users discovered the airdrop and immediately sold. No ongoing engagement incentive. Gaming by wallets that interacted minimally. Points programmes solved these issues by: Making the incentive visible in advance (users know points lead to tokens). Rewarding ongoing, sustained activity rather than one-time interaction. Allowing tiered rewards based on volume, duration, and engagement depth. HOW POINTS PROGRAMMES WORK Protocol announces that user activity will earn "points" (often branded with creative names: miles, XP, gems, diamonds). Points accrue based on: TVL deposited (more capital = more points per day), transaction volume, referrals of new users, duration of capital commitment (early depositors may earn 2x points), specific actions (cross-chain bridging, using new features). At token launch, points are converted to token allocations — some fixed ratio of tokens per point. MAJOR POINTS PROGRAMME EXAMPLES EigenLayer (EIGEN): Points for restaking ETH, converted to EIGEN at launch. Pendle Finance: Points for providing liquidity in specific pools. EtherFi: Points for liquid staking, converted to ETHFI at launch. Hyperliquid: Volume-based points converted to HYPE airdrop. POINTS FARMING STRATEGIES AND RISKS Capital efficiency: Identify protocols offering the best points-per-dollar-per-day ratios. Multiplier mechanics: Referral bonuses, early depositor bonuses, NFT multipliers. Risk: Capital is locked in unaudited smart contracts during points farming. Token conversion is at the protocol's discretion — points terms can change. Many points programmes have disappointed with lower-than-expected allocations.

Terms in addition to the Points Programme (Crypto)

Blockchain

A blockchain is a subset of a distributed database. The Bitcoin inventors originally prototyped the system in 2008. This modern database is made up of separate blocks that are connected together in a chronological chain. Blockchains may be used to store a wide range of data types. It has mostly been utilized as a public ledger for bitcoin transactions to date. A peer-to-peer network comprised of independent nodes uses a consensus process to ensure the blockchain's security and legitimacy. Each node in the network keeps a public and immutable copy of the data.

2 Factor Authentication (2FA)

2 Factor Authentication is a security measure with two layers. It is used by the majority of cryptocurrency exchanges. To log in, you must provide not only a password, but also a code obtained, for example, from the Google authenticator.

Airdrop

An airdrop is a method of distributing coins. End users can typically obtain coins for free or in exchange for doing a small task, such as subscribing to a newsletter, sending a tweet, or inviting others via a personal affiliate link. Cryptocurrency airdrops — the act of depositing cryptocurrency into public crypto wallets — are utilized as a marketing, liquidity creation, and network bootstrapping technique for many different types of blockchain initiatives.

Altcoin

Altcoin - "alternative coin" - is any kind of digital currency other than Bitcoin. Since the launch of Bitcoin, the world's first digital currency, many altcoins (as well as supporting blockchains) have been created. Altcoin digital currencies share many similarities to Bitcoin, but consistently and have significant differences. There are about 20,000 altcoins, and this number is expected to grow significantly in the coming years. Altcoins often develop Bitcoin features. Ethereum, currently the most widely used blockchain, supports digital contracts and separate applications where Bitcoin does not. Altcoins are also often created to cater to the needs of different users. The Litecoin blockchain, for example, can process payments quarterly for the duration of Bitcoin.

Cold Storage

Cold storage is the way to store cryptocurrency offline. The word refers to the use of offline wallets that are not connected to the internet. Cold storage is the most secure way to keep cryptocurrencies since an offline currency becomes less likely to be hacked and stolen. Paper wallets, printed renditions of private keys, and offline hardware and software wallets are all examples of cold storage.