Are crypto airdrops falling out of fashion?

Launching cryptocurrencies the old fashioned way may soon make a return

article-image

CryptoFX/Shutterstock modified by Blockworks

share

Airdrops have a branding problem.

They were pegged to help distribute token supplies equitably while inspiring a community to build around the issuing protocol, as LayerZero explained in its blog post.

But airdrop farming and automated Sybil campaigns are now so efficient at collecting free tokens that too much supply goes to parties with little interest in the long-term success of the projects.

So, blockchain connector LayerZero really wants you to know its token launch is not an airdrop. Its new token, ZRO, is a reward for donating $0.10 in crypto toward Ethereum layer-1 development. The LayerZero foundation says it will match all contributions up to $10 million.

Read more: Empire Newsletter: What CertiK-Kraken says about crypto exchange security

The team’s intentions may have been pure, but the market doesn’t seem to care for it. The not-airdropped ZRO has taken a beating, down 30% since yesterday’s launch.

Still, despite all their problems, token launches via airdrops are really common. Of the current top 200 or so cryptocurrencies by market cap, around 50 have been launched since January 2022. 

Click the swatches to toggle lines on the chart

Half of those tokens were initially distributed via an airdrop, worth between 1.5% and 20% of the total supply. And if you remove memecoins, Runes and Ordinals, seven out of the remaining 13 airdrop tokens have risen in price since they launched. 

Not a bad strike rate, although their median return to date is minus 30%.

It’s difficult to properly compare token airdrops as they’re usually apples to oranges, with all sorts of tokenomics quirks and utilities. 

But comparing performance of airdropped tokens against other kinds of token generation events — generally launchpads and initial coin offerings — suggests it may just be difficult to launch a token that goes up at all.

Of the 15 tokens to launch in ways other than airdrops over the past two and a half years, seven have maintained value above their initial trade price, with a median return of minus 29%. That’s practically the same as the airdrops.

APE has really underperformed, shedding 90% of its value since the drop 

Perhaps the market will fall back in love with exchange launchpads and launchpools.

Base token AERO for AMM Aerodrome Finance, and real-world asset platform Ondo’s native crypto ONDO were both clear outliers in this very quick analysis. AERO has gone 10x and ONDO 5x since they first hit the market through straightforward token launches, even after recent healthy corrections.

In Aero’s case, its token was issued amid the second big wave of Base fever in April, which included its own madcap memecoin markets. The timing surely didn’t hurt.

Coinbase-backed Ondo meanwhile has benefitted from the real-world asset boom, leading to positive price action for its governance token. One of its tokenized securities offerings, OUSG, began acquiring $95 million of BUIDL, BlackRock’s onchain money market fund, to help smooth redemption times earlier this year.

Bittensor and Echelon Prime are other standouts, with both rising nearly 200% since they launched without airdrops

For what it’s worth, the Worldcoin Orb actually presents a fix for many of the woes plaguing airdrops: Allow only WorldID holders to claim the tokens, relying on biometric-fueled “proof of humanity” to defeat the Sybil bots.

So far there seems to be little uptake. Perhaps next cycle.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

AERODROME TEMPLATE.png

Research

Aerodrome is a "MetaDEX" that combines elements of various DEX primitives such as Uniswap V2 and V3, Curve, Convex, and Votium. Since its launch on Base, it has become the largest protocol by TVL with more than $495M in value locked, doubling Uniswap's Base deployment.

article-image

And a look into the newest name on the Trump ticket: Sen. JD Vance

article-image

Plus, Imran Khan’s intriguing experiment on the speeds of crypto onramps

article-image

The SEC has signaled a timeline to issuers that could lead to a July 23 launch for the ETH funds, people close to the process told Blockworks

article-image

PayPal has unequivocally made a name for itself as a crypto adopter among fintech giants

article-image

Also, a look into how the highly-debated SAB 121 could end up shaking out for crypto custodians

article-image

Vance, an Ohio Republican, is largely seen as crypto-friendly