New networks routinely distribute tokens to bootstrap activity, and the resulting figures look impressive until the programme ends. Understanding why requires looking at what the payment is buying.
The programme buys transactions, not users
An incentive scheme rewards measurable behaviour: bridging funds, supplying liquidity, making a number of transactions, holding a balance for a period.
Those metrics are what gets optimised. Participants perform exactly the actions that qualify, at the minimum cost that satisfies the criteria.
The network records the activity as adoption, but the underlying demand is for the reward rather than for anything the network does.
Farming is a professionalised activity
Where a reward is expected, participants spread activity across many addresses so that a per-address distribution pays them many times over.
Detection is difficult because the behaviour is indistinguishable from ordinary use, and filtering aggressively risks excluding genuine participants who happen to transact in small amounts.
Funding those addresses and paying their fees is a real expense, which sets a floor on how little the reward can be before the practice stops being worthwhile.
The result is that a substantial share of the distribution reaches people whose interest ends the moment the tokens are claimable.
Metrics inflate and then deflate
Address counts, transaction volume and total value locked all rise during a programme, and each is easy to influence with borrowed or recycled capital.
When the programme closes, the same metrics fall sharply, because the activity was a cost incurred to earn a reward that no longer exists.
The subsequent decline is often read as a loss of confidence when it is simply the removal of the subsidy that produced the numbers.
Distribution shapes what happens next
Tokens received at no cost carry no attachment, so recipients tend to sell promptly, which puts supply into a market that has just lost its activity.
Distributions weighted towards sustained behaviour rather than one-off actions retain more holders, though they also take longer to run and are harder to explain.
Announcing the criteria in advance invites optimisation against them, while announcing them afterwards leaves participants unsure whether their activity qualified, and neither approach removes the underlying problem.
What genuine retention looks like
The signal worth watching is activity that persists at ordinary fee levels once no reward is attached to it.
That means applications people return to because they solve a problem, and liquidity that stays because trading volume pays for it.
Incentives can buy attention while something is being built, but they cannot substitute for a reason to stay, and the gap becomes visible the moment payments stop.