Many crypto startups are introducing loyalty point systems to foster user engagement.

This shift comes as these companies move away from the previously popular strategy of token airdrops, where free crypto tokens are distributed to users. This is partly due to the realization that airdrops have not significantly impacted user retention and the increasing regulatory focus on the tokens.

However, these emerging loyalty programs have been criticized for lacking clarity. Many startups have not detailed how these points can be redeemed, leading to user dissatisfaction and concerns from experts about potential regulatory issues.

One notable example of this trend is the blockchain project Blast, which has drawn significant interest by offering points to its users. Despite not having an operational blockchain, Blast has attracted over $1.3 billion in crypto investments from participants eager to find out how to utilize their accumulated points, with details promised to be revealed on May 24.

Critics point out that loyalty points lack this capacity, unlike token airdrops, which have been effective in distributing a project’s token supply more broadly. Additionally, since most loyalty programs are not blockchain-based, their operations remain less transparent. Consequently, these loyalty points’ overall scale and impact within the market are more challenging to assess.