Do airdrops really not welcome opportunists?

Original Title: "Reflections: The Evolution of Airdrops"

Author: @0xTodd, Partner at Nothing Research
If you are an operations manager at a company and the company decides to allocate $500,000 for operations, you might need to hold 5 meetings, make 50 phone calls, and spend 500 hours to make everything look nice.

However, in the Crypto world, when a project decides to allocate 1/4 or even 1/5 of its "equity," worth tens of millions or even hundreds of millions of dollars, many of those decisions seem to be made on a whim.

To be honest, many projects do treat such significant decisions somewhat casually and capriciously. However, within these little whims, there are actually some opportunities. The more capricious the project team is, the higher the ceiling for opportunities.

Today, a friend on Twitter, Oar, also mentioned this, which sparked my thoughts. From Uni to today, various projects have conducted airdrops dozens of times, and I feel it’s time for a comprehensive analysis, which led to this reflection.

Before we begin, let’s discuss a premise—what is the purpose of airdrops?

The answer is one word: "Attention."

Anyone who has been immersed in the Crypto industry knows what the most important thing in the Crypto circle is—attention.

Consensus mechanisms are attention; meme culture is attention; why can’t other marketplaces surpass Opensea? Because Opensea currently holds the most attention; why did Musk buy Twitter? Because Twitter is the easiest platform to gain attention.

The purpose of airdrops is the same.

Many people may have had this question before—why would a project give away tens of millions of dollars in free chips? It’s simple, to maximize attention. Only the most extravagant gifts can capture the most eyeballs in the fiercely competitive Crypto world.

Crypto native guys are ruthless in migrating between applications. This has been repeatedly proven, due to the differences in the address-DApp system vs. the account-App system architecture. Therefore, the only way for an application to retain these users is to continuously gain attention. Once you have gained attention, you have gained everything.

Airdrops are for:

1. Gaining the attention of loyal users.

When users provide substantial support at the beginning of a project, doubling the rewards when the project rises is a touching story that spreads easily.

2. Gaining the attention of competitors' users.

This applies not only to DeFi but to almost all human business activities. By giving you some money, I encourage you to use my product, experience its wonders, and thus undermine my competitors.

Now, let’s analyze them one by one.

In this round, the one that undoubtedly opened the era of airdrops is $UNI.

The Uniswap airdrop was straightforward and brutal. One day, they quietly announced that any address that had used Uniswap before a certain date would be rewarded with 400 tokens, and if you had done LP, you would receive more.

At that time, those who had used Uniswap were basically early adopters of DeFi.

When Uni first hit the secondary market, it was only $2-3, and everyone jokingly said it was like giving each person an iPhone. Even if these early DeFi players sold it off at launch, they comfortably received this "iPhone."

Such stories spread widely; it was like the beginning of the Age of Exploration, with countless people moving tokens from CEX to on-chain, kicking off the hottest summer of DeFi.

I also braved the 1000 gwei transaction fee to claim my 400 tokens and kept a small portion until today. I was quite strategic; I stored these Unis in Compound, avoiding withdrawal while increasing account weight.

Of course, this algorithm was indeed simple and brutal, filled with egalitarianism—everyone received 400 tokens. Egalitarianism, even for those who haven’t studied algorithms, can see its flaws. For most things in the world, egalitarianism is the least efficient, much like the system of People x Society.

The second evolution of airdrops belongs to Badger and 1inch. Badger was focused on BTC liquidity pools, and at that time, they airdropped to all potential users of WBTC and RenBTC; while 1inch used an upgraded version of the Uni rules, giving tokens to those who interacted, but the amounts were too small, or those who had only used it once would be banned.

Both airdrops were also iPhone-level, with each project distributing tens of millions to billions of dollars in airdrops, gaining corresponding spreadability. I held onto my Badger tokens until now, but unfortunately, I missed out on 1inch, and I missed it twice.

But did they think it through? Probably not. The Badger plan might have taken the team an hour or two to devise, while I estimate the 1inch plan was thought up in about 10 minutes—quite casual.

But how do we explain that they still achieved great results? Because the attention at that time was explosively abundant. In the mid-bull market, even lying down, thousands of people entered the market daily, eager to understand DeFi.

Although I didn’t claim 1inch, the operation of this second airdrop was indeed commendable.

If there were a business school for airdrops, this case should definitely be included in the classic curriculum. 1inch cleverly designed a series of anti-farming measures.

After the first airdrop, I think the vast majority of farmers had not interacted with 1inch. However, who would have thought that three months later, 1inch airdropped again to traders, and due to the departure of farmers, it accurately targeted many real users.

(If we talk about farming, it’s still the Indian brothers)

The third evolution of airdrops is actually DYDX.

To be honest, after the education from 1inch, and especially after two rounds of education, many people have started to awaken. Especially many friends with maxed-out farming skills have sensed the opportunity.

DYDX, as a popular choice for airdrops, naturally attracted many farmers.

However, DYDX invented a pretty cool concept called retrospective airdrops, meaning that just having eligibility is not enough; you also need to continue trading here to unlock these airdrops through ongoing transactions.

I received quite a few airdrops from DYDX, and I also persisted in mining during the first and second phases afterward. Although my secondary market trading performance was not impressive, the DYDX tokens I mined were quite rewarding.

This opportunity also allowed me, a non-trading user, to move all my positions from CEX to on-chain for the first time, and I became a user of a ZK+ order book DEX because the DYDX experience was truly impressive.

In return, the DYDX team also earned a lot through several rounds of volume trading. Indeed, once a project has this diamond, it can quickly reap a large number of genuine orders through airdrops.

I believe the fourth evolution of airdrops is $Para. Frankly speaking, Paraswap was once considered the number one competitor to 1inch. Those waiting for Para to issue tokens could queue from Shanghai to Suzhou. However, when Para officially announced, there was significant controversy, and the community was filled with complaints. This prevented the strongest competitor to 1inch from seizing the opportunity to issue tokens in the trading center's FOMO.

It is evident that Para's airdrop plan was not devised in 10 minutes, but clearly, its creators did not deeply consider its consequences. It first "played" with everyone for a long time, constantly hinting at an airdrop, implying that everyone should use it. However, the final airdrop rules were too strict—many farmers were kicked out, and even many real users were mistakenly harmed, receiving nothing, which directly triggered huge community complaints.

Seeing the community like this, trading centers did not list it, which is hard to say was a success.

Next is $ENS.

ENS's algorithm is also quite brutal, but the effect seems to be good, thanks to precise targeting.

Users who own ENS domain names have a very good user profile; many are well-off individuals. Just think about it, because ENS domain names, aside from being cool, really have no significant use, and they cost at least $100 in gas (often more expensive than the domain itself).

But where is the brutality? They allocated 25% of the tokens entirely to early contributors. This 25% seems particularly arbitrary—one day, after lunch, the project team thought, how much should we give? 1/4 sounds good. Involving such a large amount, yet unwilling to calculate or simulate a bit more, is somewhat casual.

Of course, the flaws do not overshadow the merits; this wave of airdrops to ENS domain users received a lot of praise from these on-chain degens, which indirectly prompted $ENS to be FOMO-listed by trading centers, riding the wave of Web3, effectively earning "attention," the top scarce resource in the crypto circle.

Finally, let’s talk about OPT.

The OP airdrop algorithm, at least compared to earlier airdrops, is the most precise one, as it balances farmers and real users well.

Do airdrops welcome farmers? It’s subjective.

Farmers put in a lot of effort, which objectively brings some volume to the protocol. Many people try to use OP just to chase an airdrop, thanks to the repeated education from farmers.

To be honest, the fees on OP are quite cheap, especially after the recent upgrade, the experience is still relatively smooth. Many users, even if their initial goal was farming, once they take that first step, may genuinely convert into future OP users.

On the other hand, real users, many veterans and degens, are actually the only helmsmen during this period of thin attention. If there isn’t enough appeal to this group, it’s hard to expand overall volume.

Several small designs in the OP airdrop are commendable, such as this one:

Active users of Optimism: Those who have made at least one transaction with Dapps on Optimism over four different natural weeks; this part will only select the top 20% of qualifying "Optimism users."

Transactions must span 4 weeks, and only the top 20% are chosen, making it difficult for real users to be mistakenly harmed. Meanwhile, a small number of clever farmers can also receive tokens, which is a good balance.

Another example is targeted airdrops for on-chain veterans:

Those who have voted at least 5 times across various protocols, or donated to Gitcoin on ETH, or have been part of a multi-signature. The user profile selection is excellent (of course, if it were me, I would probably also give an extra round to holders of top-ranking NFTs like Punk, Bayc, Azuki, etc., as these people are also potential high-net-worth users).

Another example is operations targeting competitors:

Users who have moved from ETH to other L1 and L2, taking the top 60% also receive airdrops. This protects real users and clever farmers, rejecting those who simply come to farm without any thought.

Moreover, what’s more interesting is why it’s considered thoughtful? It set six conditions, and if certain accounts meet 4/5/6 of those conditions, they will receive additional rewards. These conditions are precisely what real users can easily achieve, while farmers generally can only meet 1-2, but still have consolation prizes.

This is very much like the set effect in games; the more components you gather, the more airdrops you receive.

This matter looks different from different perspectives. From OP's view, farmers with 100 accounts averaged 200-300 tokens; I, as a real user with one account, met 4 conditions, achieving the set effect, and received 6800+, which is equivalent to a dozen accounts. Both sides feel relatively balanced.

This wave has effectively garnered attention, and currently, there are no complaints in the community, so the upcoming listings seem quite stable. Therefore, I also recommend including this in the airdrop textbook for future reference.

Of course, this article rambles on for 3000 words, and the reason for reviewing the past is to look forward to the future.

The competition in the L2 track is very fierce; since OP has issued, Arb will also be pushed by the market and investors to issue.

Since competitors have already airdropped, Arb can only plan for a larger and more complex one. So if you missed OP, don’t miss Arb again.

Of course, I suggest that if you are not an airdrop hunter, it’s better to focus on building one good account. However, I cannot guarantee that Arb's official and OP's official will have the same vision.

What conditions need to be met?

Everyone is also guessing:

Have you met all of OP's requirements (5/6, 6/6)?

Have you used the Arb bridge?

Have you bought one or two NFTs on Arb's treasureDAO?

Have you tried all third-party bridges? (For example, the BoringDAO we previously invested in recently told me they are collaborating with Arb on cross-chain bridge activities, and there’s also Hop protocol, etc.)

Then, have you considered interacting with the DeFi projects that rank high in TVL on Arb? For example, Sushi, Uni, Curve, and AAVE, etc.

Feel free to add your thoughts.

----Divider----

Of course, I still hope everyone can truly experience these L2s, especially friends who haven’t experienced them yet.

I see that the current trend of ETH2.0 is to coexist with L2 in the long term. ETH2.0 provides a low-energy PoS mechanism and a fast confirmation mechanism, using dunksharding to achieve simple sharding, but scaling still relies on roll-ups. However, a series of updates can make roll-ups more usable.

So, familiarize yourself with OP, Arb, Metis, and ZK in advance, as they may truly be the future of ETH.