Crypto Points. So far, at least 12 crypto projects have distributed over 40 billion points to thousands of users. Let’s examine what points are and why they’re being handed out. “Crypto points” are a system web3 projects use to assign value to certain behaviours. Web3 project developers can use them to gamify their protocol, help with governance or voting, discourage airdrop farmers, and more. With these points, users can earn cryptocurrency payments or other rewards. Sometimes, crypto points are centralized; a specific web3 project is responsible for disseminating and tracking their point system rather than recording those points on a blockchain.
What are Crypto Points?
Airdrops, in which tokens are abruptly given out to users who have previously used a cryptocurrency project’s platform, have been increasingly common in recent years. The beneficiaries frequently reaped substantial benefits from this. But this also led to a lot of airdrop farming, as speculators attempted to generate a lot of buzz for projects they thought would do an airdrop so they could get a more significant cut if it happened.
Points represent a development of this pattern to some extent. You can use them to encourage specific actions while maintaining complete control of the project creators. If the founders decide to execute an airdrop, they can reward point holders with tokens or choose not to compensate them. Additionally, there is a regulatory perspective. Specific projects might see giving points as a sneaky technique to get people excited about an impending airdrop without anyone knowing.
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:
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.
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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.
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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.
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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. Participation from the local community has the potential to make this initiative more successful in the long run.
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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.