DeFi
More airdrops are coming, promising billions of tokens. Here’s why users are complaining – DL News
- Crypto users are calling for better airdrop mechanisms.
- Retail users complain that sybils have hijacked airdrops.
- No airdrop method is perfect.
Air drops offering billions of dollars in free money.
Yet they are never far from controversy, with users complaining about the fairness of the token distribution.
The reason?
The presence of sybil recipientsairdrop farmers who create large pools of wallet addresses and use them to generate large transaction footprints on crypto projects.
Now, even in a banner district for airdrops This shows no signs of slowing down – concerns risk creating apathy among users of so-called organic crypto platforms.
Giving in to pressure
Projects like Ether restaker Ethena gave in to pressure and tried to appease ordinary users who felt cheated when the project was jettisoned.
But more recent airdrops of blockchain network ZKsync and interoperability protocol LayerZero have not publicly responded to complaints from so-called legitimate users who claim they were left out.
“Farmers got millions of tokens from ZKsync, but people who did this for two years only got 1,200 [tokens]” said Farea, a pseudonymous so-called airdrop hunter. DL News.
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Sybil airdrop farmers spoof a legitimate business and claim above-average shares of airdrops, leaving ordinary users with little to nothing for their efforts.
These attacks come as projects such as liquid restaker Swell, DeFi lender Marginfi, and liquid staking protocols Sanctum have hinted at future airdrops.
A huge problem
There is a huge problem with the airdrop mechanics, not only for users but also for the projects that promise these free tokens.
Crypto projects require organic user activity to achieve a “network effect” – when the value of the project increases with increased patronage.
Project teams offer airdrops as incentives to attract real users. The promise of a future airdrop may be enough to attract crypto deposits from them.
An influx of liquidity means an increase in total value locked – a DeFi metric used to gauge interest in blockchain projects.
Crypto projects need to increase their TVL to secure significant valuations backed by venture capital interest.
“If you’re a builder, you need to run points campaigns because VCs demand adoption metrics to justify high valuations,” said Ignas, a pseudonymous DeFi researcher. DL News.
But there’s a problem: most of this TVL comes from Sybil farmers who are less likely to leave their funds behind once they receive their airdrops.
Sybil Airdrop farmers tend to migrate to other projects that have not yet distributed tokens.
Several projects, including Wormhole and LayerZero, saw a huge drop in user activity after the airdrop.
Meanwhile, real users most likely to be loyal to these projects reported receiving little reward for their on-chain activity.
“Whales spend a lot of money writing scripts and creating hundreds of wallets. Retail users create one or two wallets, which doesn’t allow them to get the price they should actually get,” Farea said.
A new era
Despite the growing disillusionmentThe consensus among DeFi experts is that project teams need to develop new strategies for token distribution.
“Airdrops are the evolution of how we issue new tokens to the market. Every cycle we find a new way to print tokens,” said Ignas.
Current meta points, which are very popular among DeFi projects, have glaring drawbacks due to Sybil capture and low user retention.
“The golden age of airdrops is over,” says crypto analyst Wazz, who goes by the pseudonym published on X earlier this week.
There is a growing call for project teams to rethink airdrops and design reward systems that do not neglect early adopters and maintain interest after the token distribution event while attracting new entrants.
This is easier said than done, especially since the sybils are so ingrained in the system that it might be impossible to remove them.
For experts like Ignas, some possible solutions include a vesting period for airdrops to reduce the massive spill that follows them.
Additionally, projects can schedule multiple airdrops, a method already adopted by companies like Etherfi, a liquid restaker.
Regardless, experts say no airdrop strategy is perfect and complaints inevitably arise.
“I recommend using protocols that they find really interesting,” Ignas said. “My best airdrops have come from genuine curiosity and clicking buttons. »
Osato Avan-Nomayo is our DeFi correspondent based in Nigeria. He covers DeFi and technology. To share tips or story information, please contact him at osato@dlnews.com.