Airdrop and Points Farming

Many crypto protocols distribute free tokens ("airdrops") to early or active users once they launch a governance token, both as a reward for adoption and as a way to bootstrap a decentralized user base — and because past protocols have done this, users now deliberately use protocols before they have a token, specifically betting that usage will be rewarded later. "Points farming" is the more explicit modern version: a protocol publishes a points system for specific actions (depositing funds, trading a minimum volume, referring other users), openly telling users what to do to maximize a future token allocation, without yet promising exactly what the points will be worth. Farmers respond by performing the qualifying actions as cheaply as possible — often using minimal capital moved between many separate wallet addresses, since points and airdrops are frequently allocated per-address rather than per-user.

This creates an adversarial relationship between protocol designers and farmers: protocols try to design criteria that reward genuine usage, while farmers try to satisfy the letter of those criteria with the least genuine economic activity, and many protocols retroactively penalize addresses whose activity pattern (many similarly-sized transactions from clustered wallets) looks like farming rather than organic use.

High-profile airdrops such as Uniswap's and Arbitrum's, which handed thousands of dollars in tokens to early users regardless of how small their original activity was, are what cemented farming as a deliberate strategy rather than an incidental side effect — after those events, sophisticated users began treating "use every new protocol a little, across many wallets, before it has a token" as a standing, low-cost bet with occasionally very large payoffs.