Airdrops and points: how they work, how to judge them

How an airdrop is built

An airdrop is a distribution of new tokens to people who used something before it had a token. It is one of the nicest things in crypto: early users get a share of what they helped build. Almost every design has the same parts.

1. The snapshot

   A block or date after which activity no longer counts. Retroactive drops announce it after the fact, so it cannot be gamed.

2. The criteria

   Rules that turn activity into an allocation: how long you were active, how many months, how much volume, whether you bridged, whether you provided liquidity.

3. The sybil filter

   A pass that removes addresses believed to be one person or bot pretending to be many.

4. The claim

   A window in which eligible addresses claim, sometimes with part of the allocation vesting over months or rewarded for staking instead of selling.

Two real designs show the range. Uniswap’s token launched on September 16, 2020 with a flat retroactive drop: 400 UNI to each of 251,534 addresses that had used the protocol before a September 1 snapshot, including more than 12,000 that had only ever sent failed transactions. Arbitrum’s March 2023 drop was scored. Its published criteria awarded one point per qualifying behavior (activity across distinct months, transaction counts, value moved, funds bridged), with a snapshot on February 6, 2023, a minimum of 3 points, a cap of 15, and allocations from 625 to 10,250 ARB. Claims ran from March 23 to September 24, 2023, and then closed for good.

Sybil filtering: why fifty wallets rarely beat one

A sybil is one person posing as many. Because a flat or capped drop pays per address, splitting activity across dozens of wallets looks tempting, and every serious team designs against it. Arbitrum’s published rules are a good sample of the simple end:

• All of a wallet’s transactions within a 48 hour window cost it a point.
• A balance under 0.005 ETH with at most one contract interaction cost another.
• Addresses flagged in an earlier sybil hunting bounty run by Hop were disqualified outright.

The more thorough filters cluster addresses by how they were funded, what they did in what order, and when. Wallets funded from one source, doing the same things minutes apart, are easy to spot. The result is that a farm of thin wallets often earns nothing, while one real wallet used naturally over many months scores well. That is the design working as intended, and it is covered in the glossary entry on sybil resistance.

Points programs: the tally before the token

Points are a running score kept by the project, usually offchain, that signals a future reward without promising one. They let a team reward behavior continuously and tune it as it goes. Hyperliquid’s program is a clear example from its own documentation: it began on November 1, 2023, distributed 1,000,000 points a week for six months, then 700,000 a week from May 29, 2024 until November 2024, and its token launched at the end of that month.

The same page states that the project reserves the right to modify previous point distributions at its sole discretion. Look for a sentence like that in the terms of any program you join, because it is the key to understanding points:

The math of farming

Using a protocol because you want to, and receiving an airdrop later, is a pure bonus. Using it only for a hoped for airdrop is an investment, and it deserves the same arithmetic as any other.

An illustrative case: $10,000 parked in a protocol for six months. At an illustrative 4% a year elsewhere, the opportunity cost is $200. Gas, bridging and swap fees add $200. Allow for a 1% chance of losing the deposit to a hack or failure, another $100. Total cost: $500.

Then tax takes its share of whatever arrives, since the airdrop is income when you receive it, and the token price after launch can be well below the first quote. The break even allocation at a 50% chance is $1,000 before tax. Two habits keep the math honest: farm protocols you would use anyway, and value the time you spend, which the table leaves out.

Judging a program before you commit

• Who pays for the points? A protocol with real fee revenue can reward users from strength. One whose only activity is points farming tends to lose its users at the claim.
• What share of supply is for the community? Look for a published split, and for team and investor lockups. Arbitrum’s team and investor tokens were locked for a year and then unlocked monthly over three more.
• What does participating lock up? Deposits with long withdrawal delays, or loops through several protocols, add risk that a simple swap does not.
• Is anyone excluded? Some drops exclude certain countries or require identity checks at claim. Read the terms before you farm, not after.
• How does it rank you? A published scoring method is a good sign. Unexplained changes are a signal too.

For the supply side of the question, see tokenomics and the dilution calculator.

Claiming safely

Fake claim pages are among the most common drainer lures, because they arrive exactly when people expect to sign something. Arbitrum’s airdrop documentation opens by naming the only official claim website. Treat that as the standard:

1. Reach the claim page yourself

   From a bookmark or the project’s verified accounts, never from a reply, a direct message or a search advert.

2. Keep farming apart from savings

   A wallet used to chase airdrops should not also hold your savings, so a bad claim costs only what is in it. See structuring your wallets.

3. Read the signature

   A claim is a transaction to a claim contract. A request for an unlimited approval, a permit or a signature you cannot read is the attack. See reading what you sign.

4. Ignore surprise tokens

   Unknown tokens that appear in your wallet with a big price tag are bait for a page that drains you. Holding them is harmless; interacting is not.

Tax: income when you can move it

In the US, the IRS has ruled directly on one kind of airdrop, the kind that follows a hard fork. Rev. Rul. 2019-24 and the IRS digital asset FAQs treat those tokens as ordinary income equal to their fair market value when the transfer is recorded onchain, provided you have dominion and control, meaning you can transfer, sell or otherwise dispose of them. That value becomes your cost basis. Practitioners generally apply the same logic to ordinary protocol airdrops, so for a drop you must claim, the income usually arises at the claim. Unclaimed tokens and points are grayer, as the income guide explains.

A worked example. You claim 1,000 tokens when they trade at $1.20. That is $1,200 of ordinary income, and your basis is $1.20 a token. If you later sell at $0.60, you have a $600 capital loss, and you still owed income tax on the $1,200. Losses offset capital gains before ordinary income, so the two do not simply cancel. Record the price source and the time you used, especially for thinly traded new tokens, and keep it with your records.

After the claim

The claim is where the airdrop ends and ordinary token ownership begins, and the first weeks follow a familiar pattern. Many recipients sell soon after claiming: some to cover the tax on what they just received, some because they only came for the drop. Early liquidity is thin, so the first prices can swing hard in both directions.

Three things shape what happens next, and all of them are public:

None of this tells you what the price will do. It tells you what supply is coming and when, which is the part you can know. Our guide to researching a token turns this into a routine, and the glossary entry on unlocks covers the vocabulary.

Common questions

Where to go next