Module 4.1.1｜What is AirdropFi

Origin of AirdropFi

The concept of AirdropFi emerged as a strategic evolution of traditional airdrops, focusing on engaging users before a protocol's official launch by distributing points that can later be exchanged for tokens. While not revolutionary, this model addresses specific challenges related to user perception and value.

Key aspects of AirdropFi

• Point Distribution: Instead of directly giving away tokens, AirdropFi distributes points that users can accumulate through various activities within the platform. These points can eventually be exchanged for tokens once they are launched.

• Diverse User Perceptions: There exists a gap between users who perceive little tangible value in non-transferable points and those who actively collect them in anticipation of future benefits. AirdropFi aims to bridge this gap by creating incentives for both types of users.

• Leveraging Points: In NX Finance, users can leverage their accumulated points up to 10x. This means that users can farm points more efficiently with the same amount of funds. Although they must pay interest to lenders (who may not see the same value in points), it can be worthwhile for leveragers to sacrifice part of that interest if they believe the future value of the airdropped tokens justifies it.

• Interest Payments: Leveragers incur borrowing costs when utilizing their leverage but can still earn interest on their investments before leveraging their points. This dynamic allows them to maximize potential returns while managing associated risks.

Through PointFi, NX Finance enhances user engagement and loyalty while creating a more interactive and rewarding DeFi experience. Users can maximize their returns not only through yield generation but also by actively participating in the governance and evolution of the platform.