Points farming is the practice of strategically using DeFi protocols or blockchains in order to accumulate protocol-specific “points” — off-chain reward units that protocols use as a proxy for user activity before distributing tokens. It became the dominant user acquisition and retention strategy in DeFi from 2023 onward.
Why Protocols Use Points
Points systems emerged as a bridge between “use the protocol now” and “receive tokens later”:
- Regulatory caution: Announcing a token launch carries legal risk. Points let protocols reward users without committing to a token distribution timeline
- Sybil resistance: Points can be weighted by deposit size, longevity, and behavior quality — filtering out low-effort farming
- Delayed commitment: Projects can adjust allocation formulas even mid-campaign
- User lock-in: Points create psychological investment; users stay to protect their accumulation
How Points Systems Work
- Protocol announces a points campaign (sometimes retroactively)
- Users earn points by: depositing assets, trading, borrowing, referring friends, holding positions over time, bridging assets, providing liquidity
- Points are tracked off-chain (usually) or on-chain
- When the token launches, a snapshot of points determines airdrop allocation
- Points convert to tokens at a ratio set by the protocol
Points Multipliers
Most protocols introduced tiered points:
- Base points: For simply depositing
- Loyalty multipliers: For keeping assets deposited longer
- Activity multipliers: For specific actions (referrals, certain pools)
- Referral codes: Bonus points for referred users and referrers
Major Points Campaigns (2023–2024)
| Protocol | Airdrop | Notes |
|---|---|---|
| EigenLayer | EIGEN | Multi-season points; some points never converted |
| Ethena | ENA | “Shards” system; large community airdrop |
| Hyperliquid | HYPE | “Points” for early perp traders; very generous allocation |
| Kelp DAO | KEP | rsETH points + miles system |
| Swell | SWELL | Layered pearls + waves system |
| Blast | BLAST | Gold points for bridge deposits |
Farmer Behavior and Meta
Professional points farmers (“airdrop hunters”) deploy capital across dozens of protocols simultaneously, often using:
- Multiple wallets (Sybil exploitation)
- Leverage to amplify deposit size cheaply
- Automated tools to maximize eligible actions
Protocols responded with Sybil detection algorithms, minimum thresholds, and caps on large wallets.
Risks of Points Farming
- No guarantee of token conversion: Points can be devalued, split, or never distributed
- Smart contract risk: Depositing assets in unaudited protocols for points
- Dilution risk: If millions of users farm, individual allocations shrink
- Tax complexity: Receiving airdropped tokens may create taxable events
Sources
- EigenLayer season documentation
- Ethena tokenomics documentation
- Community meta analysis: DefiLlama blog, Delphi Digital