Crypto airdrops can be a successful way to attract users to a project. CoinGecko reports that airdrops distributed tokens worth $26.6 billion between 2020 and 2023. They usually aim to introduce a token on the market, reward early supporters, and spark interest among crypto fans. If executed properly, they can facilitate a project’s traction, but botched giveaways have a disastrous impact.
Unfair distribution, delayed schedules, and unrealistic expectations
Hamster Kombat, Catizen, and EigenLayer faced backlash for unfair distribution, delayed schedules, and unrealistic expectations, which caused a decline in trust and token prices. The Hamster airdrop was originally scheduled for July 2024 but faced delays due to technical issues. It took place in September, but less than 90% of the tokens were distributed, with the remainder postponed until July this year. The unexpected events frustrated airdrop participants, even leading some to call for a boycott.
Smog Token and Grass Protocol struggled with technical errors and exclusion of participants, drawing attention to the significance of transparency and proper planning when launching tokens.
Starknet’s airdrop disappointed users who expected the protocol to allocate more tokens. What’s more, the project announced that the allocation to the team and investors would unlock within two months, which caused further disgruntlement. The LayerZero airdrop also came under fire for undersized allocations, while the lack of Sybil controls irked the zkSync community.
According to Bitget’s 2024 Airdrop Research Report, most airdrops collapsed in two weeks. Despite an initial price surge, 88% of tokens airdropped in 2024 lost value within several months. Projects distributing more than 10% of the total supply saw stronger performance and retention, while those allocating less than 5% faced a quick sell-off following release.
Despite setting aside 15% of 1.67 billion EIGEN tokens for the community, EigenLayer allocated only 5% of those to early users. Initially, they were non-transferable, disappointing participants looking forward to immediate rewards. Eigen Labs contributors and investors received 55% of the tokens, raising concerns over potential sell-offs after the vesting period. In contrast, Ambire’s current Legends airdrop involves an allocation of 12.7% to the early backers with one-year vesting, and 30% will be allocated to early users and stakers and distributed over four years. Players of the Legends game receive $WALLET token rewards based on the points earned. A total of 195 million $WALLET will be allocated. Legends boasts one of the best airdrop farming mechanisms in 2025. Once one enrolls in the campaign, they earn points via on-chain activities on Ethereum, Base, Arbitrum, Optimism, and Scroll, resulting in a $WALLET allocation. They only need to download the Ambire extension, create a smart account in it, and join Ambire Legends.
In the context of airdrop farming, a “Sybil” is someone who creates multiple accounts or identities. The term comes from Flora Rheta Schreiber’s bestseller “Sybil,” written in 1973. It tells the story of a woman who had 16 personalities stemming from a dissociative identity disorder. The main farming method involves distributing cryptocurrency across multiple digital addresses. Each interaction from a different address can qualify for airdrop rewards, and the user gets more tokens as a result. Some crypto community members find that those who leverage this strategy are exploiting the system and look unfavorably upon them. When you take a deeper look, it emerges that airdrop farmers provide benefits that may outweigh the downsides, which is why projects like Ambire aim to attract them.
Farmers increase interest, improve fraud detection, and highlight vulnerabilities
Airdrop farmers use multiple wallets, thereby raising the number of active ones interacting with the project. This can increase confidence and interest, especially from investors who then raise their stakes in the project, increasing the funds available for airdropping.
Sybil farmers can help teams develop more reliable fraud prevention and identity verification technologies. Some highly intensive farming operations highlight vulnerabilities in a crypto project’s distribution mechanisms or blockchain network. This can prompt developers to improve distribution approaches, identity verification, and security measures to prevent exploits.
Finally, airdrop farmers pay their way. The protocol makes the same amount of money regardless of whether ten people farm a wallet each or one person farms 10. Farming as many as 1,000 wallets generates the equivalent in fees for 1,000 wallets. If those wallets add liquidity, the liquidity wallet pool becomes quite deep.
So, why do crypto airdrops go wrong?
Unexpected changes, technical errors, and unfair distribution are some of the biggest risks to airdrop prospects. EigenLayer lost credibility by changing the rules at the last minute. Unexpected shifts engender suspicion as crypto users have come to expect transparency. A clear whitepaper and well-defined roadmap keep participants on board.
Smart contracts are complex, rendering them error-prone. For example, Grass Protocol airdrop participants encountered error messages when trying to claim their tokens. Its diluted distribution and low token rewards also irked participants.
Due to market saturation, users have become highly selective. Smog Token’s capped distribution has been compared to more generous launches, which has sparked unfavorable reactions.
Projects like Catizen overestimated their ability to deliver, eroding their user base. It’s important to set realistic expectations for distribution and communicate about limitations openly.
Many projects struggle to balance between rooting out apparent Sybil farmers and maintaining a good number of active wallets. If they attract few farmers, the platforms start looking relatively unpopular and become unappealing to ordinary users and investors. Teams deploy advanced detection mechanisms to maintain integrity, but not at the expense of interest in the project.
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