What Is Token?

A token is a digital unit of value created and managed on a blockchain. In airdrop farming, tokens are the actual rewards you're competing for—they're what protocols distribute to users, testnet participants, or liquidity providers. Unlike traditional currency, tokens represent various things: voting power in a DAO (like Arbitrum's ARB token), access to protocol services (Uniswap's UNI), or claims on protocol fees and rewards.

Tokens become valuable through tokenomics—the design of how many exist, how they're released, and what rights they grant holders. When Arbitrum airdropped ARB tokens, holders gained governance rights and fee-sharing privileges. When Hyperliquid distributed HYPE tokens, they represented claims on exchange revenue. Understanding a token's purpose and supply structure is critical before farming for it—a token with massive unlock cliffs might drop 50% post-airdrop, while one with locked circulating supply might appreciate.

In yield farming and airdrop hunting, tokens are the end goal. You deposit capital into liquidity pools on Uniswap, stake on testnets, or provide liquidity on Jito to accumulate points or direct token allocations. The token's market price and your farming duration determine your actual profit. A 1,000 token airdrop sounds great until you realize it's a newly-issued token with 1 billion total supply and limited utility.

Token claims happen at specific moments—usually announced via token generation events (TGEs). You'll verify eligibility through wallet snapshots, connect your wallet to claim contracts, and receive tokens to your address. After claiming, tokens may have vesting schedules where you unlock them gradually over months or years (Arbitrum had a 4-year vesting schedule for some recipients). This affects when you can actually sell and realize gains.

For airdrop farmers, tokens represent both opportunity and risk. A successful farm like Arbitrum's early participants who earned thousands in ARB represented life-changing gains. But many tokens from lesser-known protocols have zero value months later. Always research: What problem does this token solve? Who controls it? What's the fully diluted valuation versus actual market cap? These questions determine whether you're farming for real value or just chasing hype.