As cryptocurrency evolved into a multi-trillion dollar industry in 2021, it highlighted just how much potential there was in smaller facets or for projects that could identify a niche in the market.
It is not just blockchain and cryptocurrency projects that have constructed the idea of rewarding early or consistent users. Businesses have implemented ideas that reward new users or existing customers for decades.
However, given the unique construct of the blockchain and the fact that wallets and users were quickly identifiable, as were their transactions, volumes, and general contributions to a project, the idea of airdropping tokens to these users became a viable business strategy to boost usage and to organically advertise the product to new users while simultaneously rewarding those who had stayed loyal to the product early on.
Airdrops As A Marketing Strategy
Although many companies employ the strategy of rewarding consistent users of their product, the casino industry really started to shine a light on how effective the concept of providing a small free amount of betting credits or bonuses could be when it came to expanding their platform.
The online casino world pioneered many advertising strategies that were adopted by other online businesses, with the end goal, of course, getting people to check out their online gambling platform. Those who seek out platforms where they can play online casino games that implement innovative advertising strategies will be aware of just how effective this approach is.
Online casino games are one of the most heavily visible products in the digital world, whether you’re receiving marketing information via e-mail or the algorithm has picked up on it on social media. However, the fact they aim to reward consistent usage, an advertising strategy they’ve had for over a decade, shows how impactful it is – and by the same token, this is the angle that airdrops are also aiming for.
Successful Airdrops
Airdrops rely on their simplicity, and although there are nuances to specific types of airdrops, the general idea is that those users who interact with the project and their ecosystem early or have contributed to the success will be able to receive airdropped tokens. Some of the most successful airdrops include projects such as
- Uniswap – a leading open-source decentralized marketplace. While users received their UNI tokens during the 2020 bear market, those who held onto them for the bull run that followed the next year would’ve watched the price go from $4 to $30 per token.
- DYDX – another decentralized exchange that airdropped over $2 billion to its users – although not all simultaneously. The tokens are unlocked over five years.
- Arbitrum – perhaps the most high profile of the airdrops and the beginning of the end in terms of airdrop saturation, ARB rewarded users who swapped tokens on their L2, with over 600,000 wallets receiving the airdrop back in March 2023. Some users were airdropped thousands of dollars for simply swapping ETH and USD back and forth.
Market Saturation
Once the market became wise to how much potential lay in airdrops, social media influencers soon started to sink their teeth into upcoming projects that had potential. Many airdrop farmers highlighted ZKSync, Starknet, and Layerzero as the three big potential airdrops to watch out for.
The ambiguity surrounding airdrops stems from the fact that projects do not implicity state they will actually reward users. Some may hint on social media; others might not even mention anything about a token until they announce the airdrop months later. However, 2023 saw a massive surge in the number of people looking to replicate what some early adopters of Uniswap, DYDX, and Arbitrum had managed.
ZKSync, for instance, ended up having 2.3 million farming the airdrop, which coincided conveniently with a brief BTC all-time high. While only the top 600,000 wallets were eligible for tokens, it highlighted the issues in airdrop farming, including greedy users trying to cheat the system by having hundreds of wallets or using bot transactions to pump up their volume numbers artificially.
Final Thoughts
As with most things in crypto, the idea started as a great advertising tool and a way to reward organic users, and it turned into a saturated free for thousands of people who were suddenly expecting five-figure airdrops for clicking a few buttons.
Some crypto traders and enthusiasts believe all hope is not lost, though, with projects like Hyperliquid showing a promising potential airdrop formula, which is much more challenging to farm and rewards profitable traders via their points system, which is likely to generate tokens for their DEX between now and the end of 2024.
Cryptocurrency provides opportunities, but as with so many other industries, the idea of getting rich quickly is often too good to be true. Many people who farmed the likes of Starknet and Layerzero with millions of dollars of volume were rewarded, and rightly so, but those who thought that swapping $0.10 over and over again would somehow yield a life-changing return were left empty-handed.
In any event, it signaled the oversaturation of the market and brought the curtain down on the golden age of airdrops in the eyes of many.
