Airdrops are Web3’s go-to development hack, flooding wallets with billions of {dollars} in tokens to onboard new customers, however the knowledge exhibits most of that hype fades in simply 90 days.
In keeping with a report from DappRadar, initiatives throughout DeFi, NFTs, and blockchain gaming have handed out greater than $20 billion in tokens since 2017, together with $4.5 billion in 2023 alone.
The impact was fast as Layer-2 chain Arbitrum, as an illustration, processed 2.5 million every day transactions at launch, whereas NFT market Blur grabbed over 70% of NFT buying and selling quantity in a single day.
However the hype doesn’t appear to stay. On common, exercise drops again to 20-40% above pre-airdrop ranges inside weeks, and about 88% of airdropped tokens lose worth inside three months, displaying that whereas airdrops succeed as advertising and marketing occasions, they “not often safe long-term token power,” DappRadar’s analyst Sara Gherghelas wrote in a Sept. 18 analysis report.
“Airdrops are unmatched of their capability to speed up consumer acquisition, however long-term retention will depend on product-market match,” Gherghelas added.
‘Holder Scores’
Haseeb Qureshi, managing accomplice of crypto VC agency Dragonfly Capital, calls airdrops “dumb,” arguing in a Sept. 15 publish on X that initiatives “spend months attracting farmers who generate synthetic exercise, solely to observe those self same farmers dump tokens instantly after TGE.”
As an alternative of handing out free tokens, Qureshi says initiatives ought to undertake “meta-incentives,” considerably like a conventional credit score rating, the place airdrops “incorporate how customers behaved in earlier airdrops.”
“If customers know future protocols will see this Holder Rating and incorporate it into their very own airdrops, these customers will regulate their conduct right now,” Qureshi explains.
However large initiatives nonetheless favor airdrops to reward long-term supporters. For instance, Jesse Pollak, founding father of Coinbase’s Base community, lately hinted at a possible native token launch, sparking hypothesis about an airdrop for the community’s lively customers.
Consensys-backed Layer 1 Linea additionally launched its token by way of airdrop, regardless that lots of recipients offered instantly, partly as a result of the token didn’t have a lot use at launch, which pushed the worth down greater than 50%.
In response, Consensys CEO Joseph Lubin promised further rewards for customers who maintain their tokens, seemingly hoping to encourage long-term participation and assist stabilize the token’s worth.
