Recent research shows that airdrop size has a surprisingly limited impact on token price performance.
Despite the common belief that larger token airdrops lead to significant price movements, the results of many studies suggest otherwise.
The size of airdrops has less impact on price action
Airdrops, a method of distributing newly issued tokens to selected wallets, have become a common practice in cryptocurrencies. They often help establish initial float, enable on-chain governance and power transactions, reward early contributors, and attract new users. The actual impact of these distributions on token prices, however, remains a matter of debate.
A comprehensive study analyzing over 2 million events across 40 different protocols found that token distribution size does not significantly impact price performance or volatility.
“Large anticipated token distribution events typically create selling pressure and stabilize at a trough after some time,” the study says.
Another study by CoinGecko supports this view, highlighting that 23 of the 50 largest token distributions saw peak token prices within the first two weeks of their airdrop date. This immediate interest often leads to a short-term price increase, followed by stabilization as the market adjusts.
The type of recipient plays a key role in shaping token prices. Airdrops to core users already engaged in the protocol result in better pricing results. These users are more likely to hold or buy more tokens, which leads to less volatility and more stable prices. Conversely, widespread drops to a wider audience often result in more immediate sales.
“The general public was twice as likely to sell their tokens, causing greater volatility and more significant price declines,” the analysts note.
This strategic focus helps drive token value and reduce price volatility after a drop, indicating stronger retention and community engagement. For example, small token distributions to mainstream users resulted in 4-8 times more buyers than other categories.
In summary, airdrop volume has little impact on token prices. Instead, the type of audience and their involvement in the project significantly influence price dynamics. These findings challenge the traditional belief that larger drops lead to better outcomes, highlighting the importance of recipient behavior.
