The Essence of Airdrops: Scam, Gift or Contribution?

Original | Odaily Planet Daily

Author | Wenser

The ZK (ZKsync) and ZRO (LayerZero) token airdrops have come to an end amidst a wave of criticism and dissatisfaction. The Blast airdrop, known as the ‘number one L2 network high-yield storage’, is also on its way. The question of ‘what is an airdrop’ has once again sparked widespread market discussion. In this article, Odaily will summarize and analyze industry viewpoints and recent key figures’ opinions for readers’ reference.

Jupiter Creation: Airdrop is a gift rather than a reward, loyalty program, and means of growth

In the midst of the discussion about whether ZK and ZRO are the ‘Endgame’ in the airdrop field, Jupiter co-founder Meow recently posted on social media, stating: 'Airdrop is a gift. It is not a reward, not a loyalty program, and not a means of rise. It is simply a gift. That’s just how it is. If you ask what you can get from it, it ceases to be a gift, losing its original meaning and betraying the initial sincerity. Goodbye. (Spanish)’

Interestingly, Meow removed the word ‘Adios’ (which means goodbye in Spanish) in the later versions, perhaps because they felt that the wording was inappropriate or that the attitude of saying goodbye to the users conveyed by this word was too decisive.

However, it is evident that he sees airdrops as an intermediary means for friendly interaction between the project party and the user—just like the “gift” brought by a friend who comes to visit, it’s nice to have, but one should not blame the project party if it’s not there.

Screenshot of the tweet

LayerZero CEO: Pioneering the precedent of donating before claiming the airdrop

As the head project of the cross-chain interoperability protocol, LayerZero was previously highly anticipated by the market. Its token airdrop was once comparable to one of the ‘L2 Four Kings,’ ZK (ZKsync). However, the attitude of the project’s CEO, Bryan Pellegrino (hereinafter referred to as Bryan), towards token airdrops is obviously different from the direct statement of the ZKsync official account, which stated that they ‘will not conduct large-scale witch hunts.’ Previously, perhaps in order to ‘ensure that real users receive their rightful airdrops,’ LayerZero launched a vigorous ‘witch hunt’ campaign on Platform X for nearly 2 months. At that time, many scalpers were worried, but the final airdrop results for single-digit and double-digit accounts disappointed many people—‘We thought something big was coming, but it turned out to be a ‘pump and dump.’ Truly worthy of the name ‘stinky penguin’ (referring to Bryan’s username suffix on Platform X).’

Not only that, as the CEO of LayerZero, Bryan obviously has his own views on Token Airdrops.

On June 20th, regarding the requirement to donate 0.1 USD worth of tokens per ZRO token for the LayerZero airdrop application, Bryan responded, ‘There is no mandatory donation. If you don’t want to donate, then don’t claim the tokens. This is not something you own, but something provided by others.’ Based on his previous actions and statements, Bryan sees token airdrops more as a ‘gift’ or even a ‘bribe’ from the project team to users. Therefore, to some extent, users have both the obligation and the necessity to contribute to the project’s future development through donations.

It has to be said that now that the airdrop of tokens has entered the “mature development period”, the unspoken rules of collusion between the project party and the users regarding airdrops have become ineffective here in LayerZero and Bryan. The two sides are no longer “comrades-in-arms” jointly supporting the valuation and market capitalization of the project, but have become “enemies” who are hostile to each other.

Regarding the mandatory donation of LayerZero, Yearn’s core developer banteg commented that this mandatory donation is more like a beautified ICO. At the same time, he also called for a halt to the bulk funding of Protocol Guild, as it has already successfully attracted funds and should look for other smaller initiatives to support.

Uniswap Founder: “Don’t be stingy with token distribution”

As an industry pioneer and crypto giant who opened the ‘token airdrop’ track in September 2020, Uniswap founder Hayden Adams (referred to as Hayden) may have a view on token airdrops that is more in line with the expectations of most people in the cryptocurrency market, and more importantly, this guy does walk the talk.

• The previous Uniswap airdrop received unanimous praise from almost everyone in the market;
• UNI Token was actively participated by 13,000 users within three hours of its launch, with gas costs reaching as high as 650,000 USD;
• The threshold is clear and relatively low, mainly 'distributed to ‘historical liquidity providers, interacting users, SOCKS redeemers/holders’, etc. based on the snapshot on September 1, 2020;
• A single user address can receive 400 UNI tokens, which were worth $1344 at the time, but just a few months later, the value of this airdrop reached nearly $12,000, truly a “simple yet grand” moment.

UNI Token Distribution Chart

It is worth noting that the complex internal and external reasons for Uniswap’s token airdrop at that time: the internal reason was the continuous urging of community members for token issuance, and the external reason was the fierce competition faced - the most direct factor was the competitor SushiSwap’s “vampire attack” through token issuance. According to media reports at the time, from September 7th to 9th, 2020, Uniswap TVL fell from $1.72 billion to $518 million within 48 hours. Although it briefly rose to more than $1 billion on September 10th and quickly recovered its market-leading position, the competition was still intense.

At that time, Ethereum co-founder Vitalik Buterin also commented on the SushiSwap incident in a tweet by FTX CEO to express his opinion. He believes that Uniswap founder Hayden Adams is an excellent industry participant and the team has put in years of effort to make honest decisions – while others were rushing to ICO as quickly as possible, Uniswap was not in a hurry to launch its token, but it has been attacked in the past two weeks as a result. I have seen Uniswap develop since its launch, so it is not true to say that Uniswap is irresponsible to the community. It can be said that he is speaking out and expressing support.

And in May of this year, when it comes to ‘the rule of points in many encryption projects’, Hayden also expressed his views on the issue of token distribution. In addition to clearly stating that ‘tokens, not points, should be used’, the most important point is that he believes ‘do not be stingy with token distribution’. His exact words were: ‘Do not be stingy - generously give away a large amount. If the project founder believes that the community is not worthy of receiving a large amount, please do not release the tokens.’

In addition, he also mentioned: Do not blindly pursue the number of Farmers; ensure real liquidity from day 1; do not provide biased Farmers with excessive token supply; do not promote token prices; keep it simple; invest real thought and care in token decisions.

As early as 2023-07, Hayden said that he hopes to see more long projects use Crypto’s “superpowers” to subvert mainstream Web2 apps and discover new use cases, rather than making marginal improvements around the few existing Web3 use cases (AMM, lending, etc.), and to launch Vampire Attack to Web2, don’t keep forking Uniswap.

In Hayden’s eyes, the airdrop should be a means to cope with market competition, a bond that can generate more connections with the community, a medium that can be devoted to real thinking and care, a “superpower” that can launch a “vampire attack” on Web2, instead of a variant of “points” that is stingy and stingy.

Conclusion: The Essence of Airdrops - Alternative Marketing Expenses Investment

For users who have interacted countless times but have not received airdrops or returns, airdrops often seem to be a scam - “I value their token airdrop, they value my principal and fees”;

In the eyes of VC, funds, and investors who have invested in numerous encryption projects, airdrops are a natural “investment return” - “I have invested so much money, time, and energy in the early stage, it’s reasonable to get back some tokens now, isn’t it?”

And for some founders and team members who believe that the success of the project is mainly attributed to the project team, the airdrop is a gift to the “users who actively cooperate with the work,” a gift that “you should cherish,” and should be grateful, if not tearfully, at least grateful, right?

But in my opinion, just as the main product in the Web3 field or the cryptocurrency industry is Token, airdrop is actually an alternative investment used for “accumulating seed users, promoting external publicity, and marketing product brands”.

The project party should not be too generous, distributing the majority of the token chips to the hands of ‘scratching party,’ ‘big brush,’ and ‘cluster witches’; nor should they be extremely stingy, making loyal users who have accompanied the project from 0 to 1 or even 100 feel cold-hearted, even to the point of ‘turning enemies’.

A qualified token airdrop is like a marketing campaign, based on clear goals and serving the overall development of the project. Through careful thinking and detailed planning, and step-by-step execution, it ultimately achieves a certain degree of decentralized distribution of token chips and successfully shapes the project’s market reputation and brand image.

So, in the future, project parties should reach a consensus: Token airdrops are a subtopic of marketing, and airdrops with negative effects are better off not being distributed.