Are Crypto Airdrops Losing Popularity?

Are Crypto Airdrops Losing Popularity?

FinanceEconomy

By Jakub Lazurek

24 Jun 2024 (26 days ago)

2 min read

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Crypto airdrops, once popular for fair token distribution, face criticism as bots exploit free tokens, prompting debates over their future in the market.

Traditional cryptocurrency airdrops might be losing their appeal. Airdrops aimed to distribute tokens fairly and build communities around new projects. However, efficient airdrop farming and automated bots now claim a large portion of tokens, leading to less long-term project interest. LayerZero emphasized this issue, clarifying that their new token launch is not an airdrop.

LayerZero’s ZRO token was introduced as a reward for donating $0.10 in crypto to Ethereum layer-1 development, with the foundation matching up to $10 million. Despite these good intentions, the market’s response has been poor, with ZRO dropping 30% since its launch.

Despite these challenges, airdrops remain common. Of the top 200 cryptocurrencies by market cap, around 50 have launched since January 2022, half of which started with airdrops. These airdrops accounted for 1.5% to 20% of the total token supply. Excluding memecoins, Runes, and Ordinals, seven out of the remaining 13 airdropped tokens have increased in price, although their median return is minus 30%.

Comparing airdrops to other token launches like launchpads and ICOs, reveals similar difficulties in maintaining value. Of the 15 tokens launched through other methods in the past two and a half years, seven have stayed above their initial trade price, with a median return of minus 29%. This is almost the same as airdrops.

Notable exceptions include Base token AERO for AMM Aerodrome Finance and ONDO for real-world asset platform Ondo. AERO has increased tenfold, and ONDO fivefold, despite recent corrections. AERO's success was timed with a surge in Base fever and memecoin markets, while Ondo benefited from the real-world asset boom and its tokenized securities offerings.

The market might shift back to launchpads and launchpools over airdrops. However, the varied tokenomics and utilities of different tokens make comparisons difficult. Some suggest using biometric verification, like WorldID holders, to restrict token claims and prevent bot exploitation.

In conclusion, while airdrops have been significant in cryptocurrency distribution, their effectiveness is now questioned due to bot farming. Despite the challenges, airdrops remain prevalent. Comparisons with other launch methods show similar success rates, indicating that launching a valuable token is inherently challenging. The market may shift back to other methods, but innovative solutions like biometric verification could address some current issues with airdrops.

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