For the past year, airdrops — tokens launched through a free distribution to users — have dominated the narrative in cryptocurrency markets. Now, beset by underperforming tokens and mercenary user bases, airdrops are falling out of favor. Web3 protocols are beginning to ask if it's time for a new model.
A new analysis has found that the majority of major cryptocurrency airdrops in the past 18 months have failed to generate positive returns for token holders.
Of the 31 tokens distributed in sizable airdrops, 23 have lost value since their first day of listing, often substantially. Excluding memecoins, only two airdrop tokens — or around 6% of the total — outperformed Bitcoin ( BTC ) over a comparable timeframe.
The findings underscore a growing narrative among crypto investors and protocols that the airdrop model — a key tactic in crypto’s user acquisition wars — is unsustainable and may soon give way to alternative strategies.
Airdrops dominated the crypto narrative in 2023
For the past year, airdrops — tokens launched through a free distribution to users — have dominated the narrative in cryptocurrency markets.
Now, beset by underperforming tokens and mercenary user bases, airdrops are falling out of favor. Web3 protocols are beginning to ask if it’s time for a new model.
Since 2023, airdrops have been ubiquitous. Seemingly, every rising protocol in Web3 has done one, from Arbitrum and Optimism to Celestia and EigenLayer. In total, upward of 30 major projects airdropped tokens in the past 18 months.
The onslaught of activity is partly overcompensation for the “crypto winter” of 2022, when a sharp market downturn forced many Web3 projects to postpone planned token listings.
“All of these projects that have been backlogged from 2021, 2022 [are] now finally launching as the cycle picks up in 2024,” according to Tom Dunleavy, managing partner at crypto investment firm MV Global.
Airdrops tantalize crypto-native investors with the promise of what is essentially free money, and high-profile airdrops attract tremendous hype. At the height of this year’s frenzy, even a rumored airdrop was enough to draw billions of dollars into some projects.
But there is one problem: Airdrops are rarely successful. Token prices overwhelmingly tank in the aftermath, and the benefits for protocols are usually short-lived.
Have airdrops reached their peak?
The industry is catching on. For the first time this year, interest in airdrops is starting to wane, and protocols are beginning to consider alternative approaches to launching tokens.
“I absolutely think we have reached peak airdrop,” said Jonathan Joseph, co-founder of SmartFunds, a real-world asset tokenization platform. “We need constructive models that get liquidity into new protocols in a way that adds value to all stakeholders involved.”
According to crypto researcher Aylo, the pseudonymous founder of Alpha Please, 23 of the 31 tokens distributed in sizable airdrops have lost value since their first day of listing, sometimes severely. Excluding memecoins, only two airdrop tokens — or around 6% of the total — outperformed Bitcoin ( BTC ) over a comparable timeframe.
BTC
$65,809
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“Selling airdrops on launch day into USD or BTC will almost always be the right move,” Aylo wrote in an X post.
Adding to holders’ frustration, the opaque offchain points systems used in allocating airdrop tokens can be inherently arbitrary and contentious.
“When the airdrop comes, people feel short-changed because the number of points doesn’t necessarily have any correlation” to how many tokens they receive, Joseph told Cointelegraph.
Airdrops are also astronomically costly for protocols, often expending 10% or more of a protocol’s total token supply. But despite the high cost, airdrops are not always effective in attracting or retaining users.
In fact, the ongoing airdrop mania has given rise to a cottage industry of airdrop farmers, who bounce from one protocol to the next in search of free tokens. Farmers usually dump tokens promptly after the airdrop, setting the price on a self-sustaining downward spiral.
“There is low float on a lot of these tokens, launching with less than 10% of supply, so moves are much more volatile,” Dunleavy told Cointelegraph.
After finishing an airdrop, projects often experience an exodus of users and total value locked (TVL), a measure of onchain liquidity.
根据 L2Beat 的数据，自 2023 年初以来几乎所有空投代币的第 2 层协议都在接下来的几周内出现了 TVL 净流出。第 2 层 Blast 分配了其总代币供应量的约四分之一，但在空投后的前 9 天内损失了约 25% 的 TVL。
“在空投时，特别是如果积分系统停止，您
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