Airdrops have become a staple feature of the cryptocurrency market, and never more so than when the bullish period is upon us. Even so, they are among the most difficult and potentially controversial actions to take, creating as many risks to the project as the opportunities they are intended to create.
In just the first half of this year, some of the biggest controversies seemed to come from airdrops that put their communities in the spotlight – but not necessarily for the right reasons. One of the most prominent is EigenLayers' EIGEN airdrop, which has attracted backlash after imposing unpopular conditions on participation – including a ban on users from the US and several countries different and makes the token non-transferable.
EigenLayer is not the first, however. Back in February, Starknet’s much-anticipated airdrop came under fire after the mechanism was revealed, leaving users who were expecting a higher allocation disappointed. Information about the allocation being provided to the team and investors to be unlocked within two months became another target for critics.
Similar complaints about under-allocations were heard during the recent LayerZero airdrop, while zkSync was also criticized for lacking Sybil controls, making the entire airdrop a mining operation involving a small group of users collecting tokens using multiple accounts.
Of course, these are just the headlines — and avoiding controversy isn’t always a good thing if it means there’s no support for the effort. A report earlier this year suggested that participation was being overwhelmed by short-term speculators looking to exploit low circulating token supplies for easy profits. So why bother launching an airdrop?
Well, a properly executed airdrop can create a significant amount of tangible and intangible value for a project – increasing token liquidity, driving community engagement, and encouraging future participation in the project directly are just some of the benefits. The most successful example is probably Uniswap’s 2020 “fair airdrop,” which exclusively rewarded previous users, but both Apecoin and Arbitrum have achieved similar results.
The fact that there is still a high level of interest and attention in both the press and social media implies that the airdrop concept still has enough appeal for real participants, so how can projects capture some of the magic of airdrops?
Learning from people who have done it before or have spent enough time knowing what works is probably the best advice for founders considering an airdrop. VC fund Node Capital’s research arm recently published its own comprehensive airdrop guide for founders. One of the first steps is knowing why you’re airdropping. This may seem like an obvious statement, but without measurable metrics, it can be easy to get sidetracked. The Node guide advises:
“By articulating these goals, which are realistic yet ambitious benchmarks, every initiative within the airdrop is purposefully implemented to advance your project towards its broader strategic ambitions. This approach ensures that every action taken is impactful and aligned with the growth and prosperity of your community, aiming to inspire and mobilize the entire community to action.”
Andre Cronje is widely considered the godfather of DeFi, so it's only natural for DeFi dApp founders to take advice from him. TapiocaDAO recently used one of his ideas to thwart Sybil attackers by using call options on tokens airdropped during its own launch.
My two cents worth – transparency is also key. If people know what they’re getting into up front, it can help avoid complaints later. For example, everyone knows by now that regulations prohibit US users from participating, so a simple statement that the airdrop will comply with regulatory requirements helps set expectations from the start. A full white paper up front? Even better.
Unfortunately, there are no hard and fast rules for implementing a cryptocurrency airdrop, but “do what you want others to do” and follow the guidance of those in the know are solid starting points.
