The Good, The Bad, And The Pointless? Giving A Lift To Crypto Airdrops

Airdrops have become a staple feature of the crypto markets, and never more than when bullish periods are upon us. Even so, they’re one of the most difficult and potentially controversial acts to pull off, creating almost as many risks to a project as the opportunities they’re intended to generate.

In the first half of this year alone, some of the biggest controversies seem to have come from airdrops that set their communities alight – but not necessarily for the right reasons. One of the most high-profile was EigenLayers EIGEN airdrop, which attracted a backlash after imposing unpopular conditions on participation – including a ban on users from the US and several other countries and making tokens non-transferable.

However, EigenLayer wasn’t the first. Back in February, Starknet’s eagerly-awaited airdrop came in for criticism after the mechanics were revealed, disappointing users who were expecting to receive a higher allocation. The news that the allocation provided to the team and investors would unlock within two months became another target for critics.

Similar complaints of undersized allocations dogged the recent LayerZero airdrop, while zkSync also came under fire for a lack of Sybil controls, effectively turning the entire airdrop into a farming exercise involving a small handful of users harvesting tokens by using multiple accounts.

Of course, these are just the ones that made headlines – and avoiding controversy isn’t always necessarily a good thing if it means there’s no support for the effort. One report earlier this year implied that participation is becoming overrun by short-term scalpers seeking to exploit low circulating token supply for easy gains. So why bother launching an airdrop at all?

Well, an airdrop done right can generate a substantial amount of tangible and intangible value for a project – injecting token liquidity, fostering community engagement, and incentivizing future participation in the live project are just a few of the benefits. The most successful example is perhaps Uniswap’s 2020 “fair drop” which only exclusively rewarded past users, but Apecoin and Arbitrum both managed to pull off similar feats.

The fact that there’s still such a high level of interest and attention both in the press and on social media implies that the concept of airdrops still has sufficient traction among genuine participants, so how can projects capture a slice of the airdrop magic?

Learning from those who’ve done it before or spent enough time to know what works is perhaps the best advice for founders considering an airdrop. The research arm of VC fund Node Capital recently published its own comprehensive airdrop guide for founders. One of the first steps is knowing why you’re doing the airdrop. This may seem like an obvious statement, but without measurable metrics, it can be easy to lose sight. The Node guide advises:

“By articulating these targets, which are intended as realistic yet aspirational benchmarks, every initiative within the airdrop is purposefully crafted to propel your project towards its broader strategic ambitions. This approach ensures that each action taken is impactful and aligned with your community’s growth and prosperity, aiming to inspire and mobilize the entire community to action.”

Andre Cronje is widely considered to be the godfather of DeFi, so taking advice from him is a no-brainer for DeFi dApp founders. TapiocaDAO recently used one of his ideas to prevent Sybil attackers by using call options on airdropped tokens during its own launch.

My two cents worth – transparency is also key. If people know what they are getting into up front, it can help to avoid complaints further down the line. For instance, it’s well-known by now that regulations prohibit participation by US users, so a simple statement that the airdrop will follow regulatory requirements helps to set expectations from the outset. A full white paper in advance? Even better.

Unfortunately, there are no hard and fast rules for launching crypto airdrops, but “do as you would be done by” and following the guidance of those in the know are solid places to start.

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