In the field of blockchain, airdrop refers to the act of sending free tokens or cryptocurrencies to a specific digital wallet address. In layman's terms, airdrop is the act of a project giving away crypto assets to users for free. The project is not interested in charity, but through airdrops:
Promotion: The project team hopes to make potential investors and users aware of the project through airdrop tokens, thereby achieving the purpose of promotion.
Give back to the community: Give back to community users, hoping that they will continue to support and promote the development of the project in the future.
Obtaining user volume data: In order to attract venture capital (VC), project owners need to show good user volume data. Therefore, sometimes they hint to users that they may receive airdrop rewards by using the product. This has become a consensus in the industry: early experience project products may receive airdrops.
When ordinary users get the airdrop tokens, they can:
Participate in governance: Participate in the governance of the project and vote for the future direction of the project.
Hold and wait for appreciation: The cost of the tokens airdropped in the early stage is very low, and high-quality projects are worth waiting for the price to rise.
Cash out: Sell directly on the exchange to accumulate your original capital.
The History of Airdrops
Origin of the Airdrop
2014: The first crypto airdrop was launched by a project called "Auroracoin". It distributed free tokens to all citizens of Iceland to promote the adoption of new crypto tokens. However, the project and the tokens ultimately failed. The airdrop at that time did not require any interaction or other requirements, as long as you confirmed that you were a member of the community.
Airdrop Development
In the early days of blockchain crowdfunding, Initial Coin Offering (ICO) took center stage. With the ICO boom, airdrops have become increasingly popular, and a large number of new web3 projects have begun using airdrops as a way to attract potential investors and users.
2017: Electroneum successfully used the airdrop strategy to airdrop more than 5,000 tokens to users for free. The event attracted more than 120,000 users to download the app and create accounts in the first two weeks. In this gold rush, a large number of startups emerged, the market was oversaturated, and investors were tired. In addition, in 2017, countries and regions such as Japan, the United States, Canada, and Hong Kong issued laws and regulations to regulate ICOs. In the same year, the People's Bank of China and seven other departments jointly announced that token issuance and financing were suspected of being illegal and should be stopped immediately. The withdrawal of ICOs accelerated the development of airdrops.
2018: Ontology airdropped its native cryptocurrency ONT to NEO investors and 1,000 ONT to users who subscribed to its newsletter. In the same year, the Enumivo (ENU) project announced that it would imitate EOS and airdrop a large amount of ENU for free, further promoting airdrops as a means to increase the number and stickiness of community users.
Airdrops are booming
The rise of DeFi has brought about a new form of airdrop, in which web3 projects distribute tokens to liquidity providers or users participating in liquidity mining activities.
September 2020: Uniswap launched the UNI token and carried out an airdrop. As long as users have used Uniswap before September 1, 2020, regardless of whether they successfully redeemed or not, they can receive 400 UNI airdrops (about US$1,400, calculated based on the closing price on the first day of listing).
This airdrop completely ignited the entire DeFi airdrop and became the most influential event in the history of DeFi. Similarly, projects such as 1inch, DYDX, and Paraswap also carried out airdrops between 2020 and 2021. In addition, projects in different tracks such as Gitcoin (funding platform), Immutable X (NFT layer2), Ethereum Name Service (ENS) (domain name track), Terra Name Service (TNS) (domain name track), Dappradar (statistics website), etc. also carried out airdrops during the same period. The income of ordinary players ranged from hundreds to thousands of dollars.
Today, airdrops have become an important part of the crypto market, and both projects and airdrops have experienced tremendous growth. For example, Arbitrum's airdrop received more than 42 million ARB in the first hour, becoming the most sensational airdrop in 2023. Although in the early days of airdrops, wool parties who used a large number of addresses to interact in batches were regarded as speculators, the short-term good user data is not good for serious project parties.
At the same time, witches will cause token hoarding by brushing the volume, which will affect the fairness of project token distribution. However, the demise of ICO and the monopoly of VC on early project tokens seem to have given the "Mao Party" a sense of justice and correctness like the Liangshan heroes. Airdrops to early users have become politically correct. Mao is essentially an investment in the original shares of blockchain star startups, and it is becoming a quasi-primary market investment. From an ecological perspective, "Mao Party" has become an important part of the development of the Web3 ecosystem. Novice users enter the Web3 field and obtain considerable benefits through airdrop expectations. The project party has achieved the purpose of educating users and stress testing the project through the interactive tasks of the test network.
In addition, the project party can ensure the decentralization of token distribution through airdrops, rather than highly concentrated on the team and VC. Today's "money-making" ecology has become a "conspiracy" between project parties, users and VC institutions. Each party takes what it needs and ultimately extracts profits from the secondary token market.
Evolution of airdrop rules
As crypto airdrops continue to evolve, the rules for airdrops have become increasingly complex. The development process is roughly as follows:
Confirming community members: For example, Ripple (XRP) in 2013 and Stellar (XLM) in 2014 used Facebook binding or mobile phone verification to confirm community members, which mobilized the stickiness of fans and attracted the attention of the public.
Simple registration or 0 transfer: For example, in 2017, for Avocado (ENU), you only need to transfer 0 ETH to the contract address to get the airdrop. In the same year, Ontology airdropped to NEO holders in their wallets at a ratio of 5:1.
Simple interactive sunshine type: such as projects such as Uni, 1inch, dYdX and ENS in 2020-2021. As long as you have used these platforms or hold related tokens, you can get airdrops.
Checking Sybils and multi-dimensional screening: For example, Optimism (OP) in 2022 comprehensively evaluates the number of airdrops through multi-dimensional factors such as active users, DAO governance participation, multi-signature participation, Gitcoin donations, and cross-chain bridge users, and removes 17,000 Sybil addresses. Similarly, the rules of Arbitrum (ARB) in 2023 are also very complex, involving cross-chain bridges, transaction frequency and interaction, transaction value screening, and liquidity proof.
According to several historical stages and classic cases of airdrops, we can see that the wild growth period of airdrops has passed, and the existence of airdrop studios has limited the effectiveness of project parties in promoting projects through airdrops. From 2020 to 2021, the stories of getting rich quickly brought by airdrops attracted a large number of off-site personnel to experience new products, and also attracted many studios dedicated to airdrops. However, although these studios are heavy users in the circle, they have caused certain losses to the purpose of project parties to promote projects through airdrops. Therefore, the evolution of airdrops is almost equivalent to the history of anti-witch.
Where will airdrops go in the future?
After LayerZero and ZkSync released airdrops one after another, in addition to criticism of these projects, there was also a voice within the community that "airdrops are dead" and ordinary people no longer have the opportunity to get rich through airdrops.
In fact, with the development of blockchain technology and the market, it is inevitable that the early dividends of airdrops will gradually disappear. It will be increasingly difficult to see sunshine-like airdrops without witch censorship and thresholds like Uniswap in the future.
Instead, checking for witches has become a routine process for project parties, and even complex rules and DID verification may appear. This is because in the process of development, things often have loopholes, and when these loopholes are exploited by people with ulterior motives, things often cannot play their original role.
Therefore, in order to prevent abuse, the rules will only continue to be improved and tightened.
In this three-party game between VC, project owners and users, all parties are growing. The technology of the hair-pulling studios is becoming more and more mature, and the hair-pulling party members are constantly optimizing their boutique accounts, making the hair-pulling track more and more competitive. In order to make hair, the cost invested by everyone will only get higher and higher, while the expected benefits will get less and less.
Large airdrops from early projects like Uniswap will become increasingly rare, and the early dividends of this track are gradually disappearing. So, from the current perspective, how should we as users respond? We need to stand at a higher dimension to examine and analyze the current environment and put ourselves into the perspective of the project.
If I were the project owner, in the current environment, how would I optimally allocate my airdrop tokens? This way, we can better participate in the next project. At the same time, we must also adjust our mindset, accept the reality of missing out on early dividends, and stay calm when dealing with projects that have put in effort but have not achieved good results.
Looking back at the airdrops of these two major projects, the main contradiction at present lies in the imbalance between the community's expectations for airdrops and the project's airdrop strategies. It has become a consensus within the community that each project will airdrop to participants or contributors. Users believe that the development of the project is inseparable from their participation, and airdrops are a reward for their hard work, rather than a reward from the project to early contributors. From the perspective of the project, airdrops are just a means.
Project owners reward early contributors through airdrops as a means of community building, project development, and token dispersion. In the eyes of powerful project owners, airdrops are a reward rather than a reward for users. Project owners need to balance the price and market value of tokens when they go online, thereby balancing the total token value that airdroppers can get and the price and willingness of secondary market investors to buy tokens.
Under the premise that the total value of the airdrop is fixed, the project owner needs to think about how to reasonably distribute the token share of each participant. If the distribution group is too large, the total amount each user receives will be low; if users are to be guaranteed to receive a satisfactory airdrop, the number of eligible people needs to be limited. In addition, the project owner also needs to consider how to reasonably distribute the proportion of participants with different contribution levels.
The current mainstream practice is to first check the witches and exclude fake users who only want to get airdrops from the airdrop list, and then allocate different amounts of token airdrops through points based on the user's contribution.
When the past methods are known and copied by everyone and become ineffective, we can no longer simply copy the rules of a project to a new project to obtain qualifications, but should jump out of the vision of the majority and predict the behavior of the majority and the possible rules of the project. We return to the first principles and analyze which factors will affect the share of the airdrop.
The first thing to consider is the financing situation of the project. Although the community is currently resistant to VC projects and is more open to Meme projects, if we are starting with airdrops, a project with high financing has a better chance of developing to the coin issuance stage, and is also more likely to have a higher market value when issuing coins.
Without considering the project structure and airdrop allocation ratio, the overall airdrop amount will be higher. However, such projects are often accompanied by higher attention, which means that more competitors are trying to share this big pie, leading to more involution as a whole.
Therefore, the best way is to ambush projects that have raised large amounts of money but have not received widespread attention. In such projects, you can deploy multiple accounts to get low-level airdrops without witches. Such projects are often not so involuted, and the project owners do not need to screen out many users, and often give low-level accounts a constant minimum living allowance airdrop. For projects with huge financing amounts and explosive popularity, such as ZkSync and LayerZero, it is not completely impossible to participate, but it is necessary to control costs and expectations, and figure out the rules while doing a good job.
The control of expectations lies in no longer accepting PUA from project parties. For those project parties that have long overdrawn token airdrops to the present as a marketing tool, and whose various rules are ambiguous and have been delaying the announcement of details and token issuance, we should not expect them to have a big vision.
How will such a project party treat community supporters when issuing coins? It is extremely important to judge the behavior and motivation of the project party. Users are not fools, and every behavior and speech of the project party will be seen. Therefore, control expectations and costs, and give up when it is time to give up, or just change a project. For suitable projects, if they are very competitive, you have to speculate on the intentions of the project party and even use on-chain data analysis.
At present, for projects with a large number of users, the distribution model often screens out most low-value users, and then distributes the remaining users, setting a minimum guarantee and an upper limit, which may be relatively linear in the middle. On the other hand, the project side will tend to support users to support their direct income or liquidity, that is, to support the internal ecosystem.
From these two perspectives, it is recommended that users consider a small number of premium accounts based on the amount of funds for such projects, and truly support the corresponding calls of the project party to ensure that they can obtain airdrop quotas and avoid being wiped out. If you think that the project party is constantly PUA and the investment is not proportional to the expected output, you should boldly abandon the project.
