What are Crypto Points? A Complete Guide 2024

Thus far, not less than 12 crypto projects have shared more than 40 billion points with many users. Let’s look at the points and why they’re being distributed. “Crypto points” are a system that web3 projects use to give value to specific activities. Web3 project developers could utilize them to gamify the protocol, govern votes, disincentivize airdrop farmers, etc. In addition to their benefit, users can earn crypto payments or other incentives such as point systems. Occasionally, crypto points are centralized; a particular web3 project spreads and tracks the point system instead of putting the points on the blockchain.

What are Crypto Points?

There is a method in which tokens are suddenly given to users who have previously used a cryptocurrency project’s platform. This phenomenon, referred to as an airdrop, has become very late. The recipients of the funds generally get significant advantages in this case. It is also, however, reminiscent of larger and larger numbers of airdrop farmers, some of whom may have been just headline-grabbing opportunists, who cultivated hype around projects they believed were going to launch an airdrop and, therefore, would be able to get a more significant piece of the pie if their prophecy would come true.

The point is a slight deviation from this pattern. They are applicable in incentivizing users to perform certain acts while having the option of total authority. The founders can, for instance, choose to reward point holders with tokens or not compensate them if they execute an airdrop. There is even a look at this from a lawyer’s point of view. Certain corporations could tell that adding points in the chain would not only make people believe in the future airdrop they are about to conduct but also give them a sneak peek of their plans.

What are Crypto Points for?

Depending on their objectives and intended use, cryptocurrency projects may adopt a “points” system in various ways. Some potential uses of a points system in Bitcoin projects are as follows: What are Crypto Points for?

Incentivizing activity

Cryptocurrency projects could use a points system to reward specific actions that benefit the ecosystem. For instance, a decentralized file storage project may use points to encourage users to host files or add storage space to the network. Incentives like tokens or other awards could be offered to users who engage in actions that further the project’s objectives in exchange for these points.

Gamification

With the help of gamification elements, some cryptocurrency projects have implemented a points system to encourage user engagement. Points can be earned by completing tasks, reaching milestones, or participating in community challenges. These points can unlock virtual rewards like badges or trophies, creating a sense of competition and community spirit.

Bridge to tokens

It’s worth mentioning that different cryptocurrency projects can implement point systems differently and that the value and utility of points within an ecosystem depend on the project’s goals and design. Sometimes, points are used as a step before users can acquire the project’s native tokens. Users can earn points through different actions and exchange them for tokens at a predetermined rate. This approach can help distribute tokens fairly or encourage early adoption and engagement before the complete token ecosystem is launched.

Why are More Web3 Projects Using Crypto Points?

Among the many potential uses for crypto points in a web3 project, the most common are incentives to increase ecosystem acceptance, community involvement, and user engagement. Some of these considerations may involve:

Dissuading airdrop farmers: Tokens are “airdropped” into the wallets of dedicated users as an early adopter reward from a cryptocurrency project. “airdrop farming” describes participating in cryptocurrency airdrops to receive the most rewards possible, often without contributing to the project. Cryptocurrency points farmers to remain within the ecosystem if they want to make more profit drops.
Incentivizing engagement: Project administrators can encourage user engagement by rewarding them with points when they use decentralized apps, participate in governance, provide liquidity, or recommend other users.
Community building: With crypto points, the project’s community can grow more robust and active. Participation in community debates, events, and initiatives may rise as users are driven to earn and accumulate points. Involvement from the local community has the potential to make this initiative more successful in the long run.
Driving adoption: Crypto points can strengthen and activate the project’s community. As users earn and accumulate points, participation in community debates, events, and initiatives may rise. Involvement from the local community has the potential to make this initiative more successful in the long run.
Enhancing governance: Within the project’s ecosystem, crypto points can be linked to governance privileges. Users with a particular point total may be eligible to vote on governance ideas, allowing them to influence the project’s destiny.

Are Crypto Points the Same as Cryptocurrencies?

Since crypto points are not in a fiat currency, they are distinct from cryptocurrencies. Put, crypto points do not have a price or market capitalization like cryptocurrencies like Bitcoin. Unlike cryptocurrencies maintained on a decentralized ledger known as a blockchain, Web3 projects also need to allocate and monitor the distributed crypto points.

Examples of Web3 Projects Using Crypto Points

The crypto wallet service Rainbow awarded points for connecting with Ethereum, exchanging assets via Rainbow, and referring a friend to the site.
Users interact with the platform by supplying points to Friend. Tech, a Web3 social networking software. If Friend. Tech decides to provide a token conversion; these points might be converted into tokens.
Users who list, bid, and lend assets on the NFT marketplace Blur earn points. An individual’s ‘Care Package,’ which contains things of varying rarities, is determined by their points.