Can you still make money with airdrops? Are they obsolete?
Airdrops have a branding problem. Airdrops were originally designed to fairly distribute token supply while incentivizing the community to build around the issuing protocol, as LayerZero explains in its blog post. But now, airdrop farming and automated Sybil attacks have become so efficient at collecting free tokens that a large amount of supply goes to groups that have little interest in the long-term success of the project.
As a result, blockchain connector LayerZero would like you to know that its token launch is not an airdrop. Its new token, ZRO, is a reward for users to donate just $0.10 of the cryptocurrency to Ethereum Layer 1 development. The LayerZero Foundation says it will match all donations, up to a total of $10 million.
While the team’s original intentions may have been pure, the market doesn’t seem to buy it. The non-airdropped ZRO price has fallen 30% since its launch yesterday.
Despite all these issues, tokens issued via airdrops are still very common. Among the top 200 cryptocurrencies by current market cap, about 50 have been listed since January 2022.
Half of these tokens were initially distributed via airdrops, ranging between 1.5% and 20% of total supply. If you remove Memecoins, Runes, and Ordinals, seven of the remaining 13 airdropped tokens have increased in price since launch.
That’s not a bad hit rate, though their median return is negative 30% year to date.
It’s difficult to properly compare token airdrops, as they are often different kinds of projects with a variety of token economics and uses.
But comparing the performance of airdropped tokens to other types of token generation events (typically launchpads and ICOs) suggests that launching a token that increases in price may just be difficult.
Over the past two and a half years, seven of the 15 tokens issued via non-airdrop methods have maintained their value above their initial trading price, with a median return of negative 29%. That’s pretty much the same as the airdrops.
