introduce
Points, points, points.
Since the launch of Friendtech’s points system last August, it has become an industry standard to reward early adopters of the protocol by awarding off-chain points (or tokens, XP or other synonyms). This was arguably the start of the current cycle of airdrops, prompting a series of projects to issue tokens over the past year. As with many coins in cryptocurrencies, a perceived gold rush caused the industry to become frothy and eventually fall out of favor.
Is it ripe for airdrops, or are we just letting off steam?
Airdrop performance
Airdropped tokens are notorious for their “falling, not rising” price movements. Of the 47 most talked about airdrops listed below (based on the popularity on my timeline), only 11 have seen price increases since their initial token generation event (TGE) as of August 25, 2024, with an average of The return rate is 49.56% (excluding $BONK). Meanwhile, the 36 coins that fell in price recorded an average loss of -62.15%. Of course, some tokens did rise, with an average gain of 162.23% from TGE to all-time highs (ATH) (excluding tokens that only fell but did not rise and $BONK). However, the average retracement of these coins from their all-time highs is -70.89%. While the retracement from ATH is also a symptom of market conditions, it is concerning that many of these coins have seen such large drops in a matter of months.
Chart source: CoinMarketCap and CoinGecko airdrop performance as of 25/8/24 from TGE to now, from TGE to ATH, and from ATH to now by industry. Outliers have their %s marked (BONK digits too large to display, 14,022.39% from TGE to now, 31,527.44% from TGE to ATH)
The trend is clear, excluding some popular industries in this cycle (such as memes and AI), airdrops since 2023 have mostly been in free fall (even if some of them have risen during the period).
Chart source: Average performance of CoinMarketCap and CoinGecko airdrop tokens from TGE to current, from TGE to ATH, and from ATH to current by industry as of August 25, 2024. Truncated outliers are highlighted in red
On average, only AI, Meme, and Modular airdrops have significantly increased since TGE, while the rest have all fallen significantly. Memes is far and away the strongest performing industry, up an astounding 2,300% on average since TGE, largely driven by $BONK. In fact, in my opinion, $BONK saved Solana, or “Soylana” two years ago, from the brink of despair post-FTX. Many Pumpfun ruggers owe this cartoon dog a debt of gratitude.
Chart source: Average performance of CoinMarketCap and CoinGecko airdrop tokens from TGE to current, from TGE to ATH, and from ATH to current by ecosystem as of August 25, 2024. Truncated outliers are highlighted in red.
When breaking down average airdrop returns by ecosystem, only the Solana airdrop has gone up on TGE so far, again primarily by $BONK. Ethereum-based airdrops performed the worst, but Cosmos-based airdrops had the most dramatic price movements. With an average ATH of 201% on TGE, dragged down by $TIA’s 850% gain, Cosmos-based airdrops are all the rage in Q4 2023. The airdrop based on Cosmos staking opens a short-lived sub-metaverse, that is, staking airdrops to obtain more airdrops, but this sub-metaverse is born quickly and dies quickly, because in addition to $DYM (down 61.1% from TGE), $ There were no noteworthy airdrops after TIA. This sub-metaverse is now long decayed, down 76% from ATH, awaiting potential resurrection when CT stops placing airdrops on TGE.
One could argue that the performance to date and the drop from ATH is due to the performance of the overall altcoin market rather than the airdrop, however, when comparing the performance of the TGE airdrop so far to the year-to-date performance of its underlying ecosystem token At the time, only 6/47 tokens (half of which were memes or AI) performed better than their ecosystem tokens.
Chart source: CoinMarketCap and CoinGecko airdrop token TGE relative performance to date against its ecosystem tokens as of August 25, 2024. Truncated outliers are highlighted in red
CT’s diagnosis blames the epidemic on the economics of low-float, high-FDV tokens—complaining that these tokens are merely exit vehicles for venture capital and therefore almost destined to only fall. While there is some merit to this argument, especially given that much of the utility of these tokens depends on governance rights of ambiguous value, there appears to be a deeper, more concerning issue. Projects that rely on usage, whether measured by TVL, transaction volume, or other metrics, paint a troubling post-TGE picture.
Layer2
Figure source: DefiLlama As of August 16, 2024, the TVL of L2 airdropped in 2024 changes over time. Dashed lines represent TGE dates
The much-hyped new Layer2 exhibits lackluster or merely downward trajectory in TVL growth. The Blast and zkSync Era are the most obvious examples - two heavily farming airdrops that the industry seemed to lose interest in after TGE. Manta Pacific continued to show strength initially, but this can be attributed to their "New Paradigm" campaign, which only enabled Manta Pacific's cross-chain on March 26, 2024, after which the chain's TVL dropped significantly - currently That's a 94% drop from ATH. A similar story may be playing out with Mode, which withheld 50% of its allocation from the first 2,000 wallets for 3 months on the condition that they do not cross-chain during this period. Beyond that, Mode's relative strength may be attributed to its Season 2 points program, which Manta doesn't have (although they do host a "Remortgage Paradigm" event), and its inclusion in Optimism's Superfest. Taiko chose TGE at the mainnet launch, and it looks like TGE has had a positive impact on TVL, however, TVL is only $14 million (0.73% of its token TVL) – clearly not attracting much interest from the industry.
The TVL of Starknet, which cannot be ignored, clearly did not follow this trend and spiked post-TGE. While this is certainly an impressive performance, its disconnect with market sentiment also raises suspicions.
Did the last eight people on Starknet actually succeed in reviving it? Before the Starknet cult crucified me, the Dune dashboard was inaccurate; DAU on 06/04/24 was actually 21.2k — down 94% from the all-time high two months ago (TokenTerminal). The first thing to note is that Starknet raised $282.5 million (CryptoRank) at an $8 billion valuation, which means TVL is still 18% less than the amount raised. By comparison, Blast has only raised $20 million, and its TVL is 190% higher than that — not impressive. Additionally, Nostra and Ekubo (both of which had disappointing airdrops) accounted for 85% of Starknet TVL.
Source: DefiLlamaNostra TVL changes over time
While it's unclear exactly what's driving Starknet TVL, some think Nostra is one to watch. NSTR has a market cap of $6.3 million (fully diluted) and an FDV/TVL ratio of 5%. NFA.
Cross-chain bridge
Looking at LayerZero’s daily transaction numbers, the picture becomes even clearer.
Image Source: DuneLayerzero Daily Deals by @cryptoded. $ZRO Snapshot#1Date: 1/5/24
After the first snapshot of the $ZRO airdrop was announced on January 5, 2024, daily trading volume plummeted 52% to approximately 45,000 transactions and is currently 92% below January 5, 2024 levels at less than 7,000 transactions. So far, grunts, witches (whatever you want to call them) have been the driving force behind cryptocurrency adoption, or at least the illusion of it. Even though LayerZero is "old school" in the sense that it doesn't have a points program, tokens are telegraphed all the time and users act accordingly, pushing as many transactions as humanly (or impersonally) as possible to maximize transform their airdrops. These deal numbers were an inflated indicator (CryptoRank) of LayerZero’s pitch to venture capital firms in April 2023 for its $120 million Series B funding round.
Figure source: DefiLlama TVL changes over time of airdrop chains before August 2023: Optimism, Aptos and Arbitrum
Contrast this performance with airdrops prior to August 2023, which may belong to the previous cycle, and a very different picture emerges (of course, we are talking about the performance of the project here, not its token performance). Aside from Aptos having to TGE on mainnet (because $APT is a Gas token), Optimism and Arbitrum were well established before releasing their governance tokens more than a year after mainnet went live. This contrasts with the more opportunistic environment of this cycle, with projects fast-tracking their mainnets and TGE to reap benefits. The Layer2 industry is still in its infancy at this point - a far cry from the once-a-month Layer2 feel of this cycle.
How Does the Meta Heal?
Looking back at the largest airdrops of all time (ranked by ATH value), at least 7 of them were unexpected surprises for those who received the airdrops, and this positive sentiment is likely what caused the token to rise shortly after the TGE.
Source: CoinGecko Research Top 10 Largest Cryptocurrency Airdrops
Last cycle, most airdrops were welcomed because they were viewed as free money. Yes, intentional airdrop farming becomes more popular towards the end of the cycle, but it is nowhere near as popular as it was this cycle. While Friend.tech's points system sparked initial excitement, it only took a few months for each project, which was waiting for the bear market to end, to create their own points program to turn this innovation into an exciting one. Tired cliché.
Farming points season after season requires more and more time and money, dimming the luster of airdrops. Airdrops are no longer “free money” but have real farming costs, and the reward rates are astounding considering time, liquidity, and fees, causing almost every recent airdrop to fall into a TGE death spiral.
It’s time to eliminate the points system. If the project recovers to a point where it no longer explicitly squeezes all the value out of the Grunt through points and leaderboards, and the overall market turns bullish, the Grunt may be able to profit again.
Is the harvest worth our plowing?
There are always dozens of projects in the TGE pipeline, so we'll discuss just a few here. See Cape's post for a complete list.
Linea and Scroll
Linea and Scroll are the last two large Layer 2s without tokens (assuming Base doesn’t issue tokens), with Scroll raising $80 million at a $1.8 billion valuation and Linea’s parent company Consensys raising $7 billion at a valuation A total of $725 million (CryptoRank). While Consensys has many other projects, including MetaMask, it's safe to assume Linea has significant financial backing. Compared to zkSync and Starknet, which raised $458 million and $282.5 million respectively at an $8 billion valuation (CryptoRank), Linea at least has the potential to be a decent startup, depending on how hot the overall market is. $STRK briefly hit an FDV peak of $50 billion just minutes after launch — more than 6x its valuation — while $ZK launched with an FDV of about $4.7 billion, for those who happened to submit projects at the Starknet Hackathon zkSync This is a very reliable airdrop for grunt and mercenary developers. Even though FDV rollouts will be considered zkSync FUD until March 2024, most dedicated grunts still get at least thousands of dollars worth of $ZK. For this reason, I think grunts who farmed before Linea surged and before Scroll pre-marked will be looking forward to a Christmas present in Q4. If you're late to the game, it'll take a lot of capital to catch up, but it might be worth it if you're farming multiple protocols at the same time (e.g. farming Kelp, Scroll, and Ambient with WRSETH/Ethereum liquidity on Ambient).
linear mathematics
According to WhalesMarket, $LXP and LXP-L are currently valued at $0.11 and $0.003 respectively, which means the average airdrop associated with LXP-L is just $109, while overall LXP-L airdrops exceed $234 million.
Image source: OpenBlock’s Linea Surge dashboard as of February 9, 2024.
According to @nvthao's Dune dashboard, most users (perhaps unique due to the Voyage Proof Humanity requirement) have 1,000-1,499 $LXP, which means that for most users, the pre-launch price is only around $137 - That's a pittance over months of friction and button clicking. There’s also the Linea Voyage testnet NFT, the Delta version of which is currently priced at 0.00187 Ethereum (~$5) on Element.
Image source: Duno As of 2/9/24, the Linea Voyage Dune dashboard was created by @nvthao.
If the early market is to be believed, the average Linea grunt will only get $251 from testnet sailing, a few mainnet sailings, and a 6V Surge, which is probably closer to $150 after gas fees - ouch. I personally believe that the early market was overly bearish due to the Layer2 airdrop trauma, and if the overall market sentiment turns bullish and CT's attitude towards airdrops returns to its pre-March direction, $LXP should be worth at least $0.50. Still, I think most regular people will be disappointed with Linea because as projects become more focused on TVL, trade pushing isn't as rewarding as it once was.
Doing the same calculation for more Chad users who have earned most $LXP and have Surge with over $20,000 from volt 1, we get:
Alpha NFT = 0.05991 Ethereum (approximately $151)
Top 4.3% $LXP holders = 4,000 $LXP ~ $440
First 1,500 $LXP-L holders = 3.5 million $LXP-L ~$105,000
Total = $11,091
I expect testnet NFTs and $LXP to be worth more at the TGE in Q4, plus I also expect some retroactive $LXP to be distributed for general activity ahead of the TGE. Regardless, this is already a pretty good airdrop for Surge to provide liquidity at an annualized gain of around 25%. Metadata is absolutely linear.
Scroll Maths
Scroll The math is simpler. Using the (very low volume) WhalesMarket market, the Scroll token is currently worth around $0.27, while most wallets with 0-100 tokens are worth $27, but we are only in the first phase, so expect this figure to increase rise. Top wallets with 5,000+ tokens saw a respectable 16.9% and $1,350+ in earnings.
Image source: Duno As of 2/9/24, @barsus777’s Scroll Marks Dune dashboard
There’s also Scroll Canvas, which requires more traditional transaction-based farming to collect more and more NFT tokens. While projects are no longer offering large token distributions to transaction-based campaigns, I find it hard to believe that badges have nothing to do with airdrop distributions. Given that it is separate from the points program, they may act as points multipliers.
Overall, unless you started farming before Marks was released, I think there are better places to park your funds. If you can farm for $10,000, it might be worth it. That being said, if CT's stance on airdrops returns to the direction it was before March, Cooks might be serious about it.
LRTs
Image source: Artemis 7 largest liquid Ethereum re-staking protocols Ethereum re-staking over time
Of the 7 largest Ethereum liquidity re-staking protocols by TVL, only 2 have conducted airdrops to date: Ether.Fi and Renzo. While their tokens have underperformed, down -60.4% and 79.7% respectively compared to TGE, Ether.Fi has shown considerable strength, solidifying its position as the top choice for LRT. Meanwhile, Renzo's TVL stagnated post-TGE, only to start falling significantly a few months later. This is most likely because withdrawals were only open in June, meaning that many bastards were left holding their $ezETH packets while $ezETH decoupled on the open market. After committing a chart crime on their X, it’s no surprise that there were no new Ethereum inflows post-TGE.
The other major LRTs haven't shown much growth since the airdrop craze died down, so I doubt there will be a Chef among them, although I'm still farming Kelp alongside Linea and Scroll.
We're still waiting for the $EIGEN TGE, however, at the pre-market price of $3.62 (WhalesMarket) most grunts won't come up with more than $400, even with the extra $100 $EIGEN. We could see Karak and Symbiotic entering TGE ahead of $EIGEN, but farming these is capital intensive.
Berachain and Monad
Finally, we have seen two of the most esoteric and high-profile projects: Berachain and Monad. While there has been a lot of interest in both projects in CT over the past 6 months, it is unclear how these airdrops will be conducted, and there is no mainnet date yet. Given that they raised $142 million at valuations of $420.69 million (haha) and $244 million, respectively, they're certainly a good deal for those who got allocations.
Starting with the less mysterious Berachain of the two, collecting a large number of (expensive) Bera NFTs and securing an exclusive Discord role is probably the most rewarding. If you don’t like trading NFTs, your best option is to regularly interact with all the major DApps on the testnet (BEX, BEND, BERPS, etc.). A good way to do this is to collect badges through TheHoneyJar's missions, although they are not directly related to Berachain. Having said that, testnet interactions may be pointless (always remember Sui).
Monad is essentially a cult, at least for now, and since there is no testnet, the only way to farm is to gain reputation on social.
in conclusion
The airdropped yuan isn’t quite over yet, but its future is clearly full of challenges. Hopefully, in this reflection, we can find new directions that truly give these projects value, rather than just short-term hype tools.
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
This article is reprinted with permission from: "MarsBit"
Original author: Ali, On Chain Times
