Iron Fish mainnet is coming: Over half of the addresses have been flagged as anti-witch, are its airdrop rules reasonable?

Author: Biscuit, ChainCatcher

Iron Fish, a privacy project named after the WWII encryption transmission term "submarine," has reached a valuation of $190 million after completing a $27.7 million Series A funding round led by a16z. The project will launch its mainnet at 24:00 Beijing time and will officially airdrop tokens to early users tomorrow.

Iron Fish was originally scheduled to launch its mainnet last month, but the official explanation for the delay was the discovery of a bug that needed fixing, as well as allowing early users more time to complete the KYC process. Currently, whitelist users who have successfully completed KYC can view their rewards. To celebrate the mainnet launch, Iron Fish will also host a commemorative event on Discord at 23:30 on April 20.

Due to the implementation of a strict KYC process, the Iron Fish airdrop has reignited the debate on how project teams should incentivize early users while limiting bots. Iron Fish announced the audit results last night: A total of 171,891 users earned points during the testnet period, 82,871 users are eligible, and 89,019 accounts (52%) have been disabled.

Additionally, whether the value of the airdrop can cover the costs incurred by early testers is a key discussion point among Iron Fish users. Based on funding data, the estimated cost for participating institutions like a16z and Sequoia Capital is around $4.5, while the current over-the-counter trading price is approximately $20. This article will revisit the development history of Iron Fish, its tokenomics, and discuss its airdrop plan.

Development History

Iron Fish founder Elena Nadolinski is an outstanding woman from Russia, and her upbringing instilled in her a vision of combating government surveillance, ultimately leading her to find solutions in blockchain technology. In 2018, Elena Nadolinski developed the original version of Iron Fish using the Sapling protocol developed by Zcash. This public chain employs a PoW consensus mechanism and zero-knowledge proofs, keeping transaction information, mining information, and wallet information hidden from any second party except for the private key owner.

The Iron Fish incentivized testnet ran in three phases from December 2021 to February 2023. The goal of Phase 1 was to invite miners, build the community, and test the basic building blocks of Iron Fish. The goal of Phase 2 was to stress-test the system by encouraging transactions and node uptime. The goal of Phase 3 will be to stress-test multi-asset functionality.

Data source: Iron Fish Official Blog

Data shows that the enthusiasm of Iron Fish testnet participants has been steadily increasing. By the time Phase 3 of the testnet was reached, the community size had doubled, while the number of participants earning points increased 15-fold, and the number of hosted nodes grew 20-fold.

In the future, the Iron Fish network layer will support WebRTC and WebSockets, meaning users can run a full Iron Fish node directly through their browser. However, Iron Fish has removed the Roadmap section from its official website, with Discord community administrator Jason stating that this is due to U.S. regulations prohibiting them from creating a public roadmap. Jason added, "Currently, Iron Fish's roadmap focuses on launching the mainnet, and our project planning approach for projects publicly launched on the mainnet will change."

Tokenomics

The genesis block of Iron Fish contains 42 million tokens, and after the mainnet launch, 20 tokens will be mined per block. Assuming a block time of 60 seconds, Iron Fish will have 525,600 blocks per year, and the total supply needs to be calculated based on a decay factor and the formula for the number of years.

After the first year, the total amount of new coins generated from mining rewards will reach 10.5 million, which is 1/4 of the Genesis supply. Subsequently, the number of coins created each year will gradually decrease until it reaches a final supply of 256,970,400 (approximately 150 years after genesis).

Iron Fish's block rewards and total supply over the next 3 years

Unlike most proof-of-stake Layer 1s, Iron Fish has experienced aggressive inflation in its initial years, meaning that a large portion of the token supply will be transferred to miners and other community members more quickly. Over time, most tokens will ultimately end up in the hands of miners and other community members.

For the 42 million tokens from the initial issuance, the shares for investors, team members, and advisors will be locked for 12 months, followed by a 12-month unlocking period. The specific allocation is as follows:

• Iron Fish Foundation ------ 18% (7,560,000 tokens)
• Testnet Airdrop --- 2.25% (945,000 tokens)
• Future Airdrop --- 2.25% (945,000 tokens)
• Pre-seed Round --- 5.1% (2,142,000 tokens)
• Seed Round --- 9.9% (4,158,000 tokens)
• Series A --- 14.5% (6,090,000 tokens)
• Advisors --- 0.6% (252,000 tokens)
• Core Team --- 37.4% (15,708,000 tokens)
• IF Labs --- 5% (2,100,000 tokens)
• Future Contributions --- 5% (2,100,000 tokens)

Airdrop Plan

At the time of Iron Fish's mainnet launch, 945,000 tokens will be airdropped to early testnet users, with the airdrop amounts for each test phase shown in the figure below:

Identifying genuine early users versus bots has become a short-term challenge for Iron Fish. Iron Fish will send emails to eligible users and launch a query website. After receiving notifications, users will also need to complete the KYC process, with each user limited to redeeming the testnet reward tokens once.

In addition to the KYC process, Iron Fish will also conduct internal bot screening and approval processes. On March 9, the official team announced on Discord that 97,281 (57%) accounts had been banned, with 171,891 users earning points, and more accounts are expected to fail KYC and be further filtered. Additionally, some users encountered issues during the KYC process, but Iron Fish allows multiple submissions of KYC materials and provides assistance through a Discord-exclusive KYC channel. Ultimately, Iron Fish announced the KYC audit results on April 20:

These airdrop regulations have sparked widespread discussion in the community. In the decentralized crypto space, KYC has always been a somewhat unpopular solution among users. Iron Fish explained in its blog post “Why KYC?” that due to regulatory uncertainties under U.S. securities laws, Iron Fish cannot send tokens to U.S. citizens and is therefore obligated to implement KYC procedures for its airdrop activities.

More intense opposition comes from the stringent screening criteria, as some genuine early users seem to have been "collateral damage" due to the disruption caused by bots. In Iron Fish's Discord community, some users expressed dissatisfaction with the screening of participants from Phase 1 and Phase 2 of the testnet. They pointed out that the users participating in the tests were investing real money, and even repeating "graffiti" consumed time and money. Some users even accused the official team of being able to ban these bot behaviors in the early stages instead of "secretly" enjoying the early computing power and then pulling the rug out.

According to the tokenomics, Iron Fish will also airdrop 945,000 tokens in the future for community incentives and development. Currently, these tokens are held by the Iron Fish Foundation, and there are no specific details regarding such airdrops.

Conclusion

Airdrops are a native Web3 marketing strategy, but at this stage, it seems that a "hidden rule" has formed: investors need "robust" operational data, while project teams use airdrops to PUA bots to inflate numbers. After the project goes live, multiple participants profit significantly, while the final risk is passed on to uninformed retail investors. Multiple airdrop cases like Uniswap, Blur, and Optimism have sufficiently demonstrated that effective airdrops remain an area worth exploring in the crypto industry.

As regulations are exerting stronger compliance pressure on the crypto space, Iron Fish will still face significant challenges after the mainnet launch. Privacy coins are essential tools for hackers, and some "notorious" examples include Monero being frequently used for browser hijacking mining and extortion payments, while North Korean hackers utilize Tornado Cash for money laundering, etc. Therefore, cryptocurrencies in the privacy track have undergone multiple rounds of "delisting waves," and how Elena Nadolinski faces the chilling effect of strict regulations is increasingly worthy of the crypto community's attention.

References:

Iron Fish Blog
The History of Airdrop Competition: A "Cat and Mouse Game" Between Project Teams and Bots
Iron Fish Raises $27 Million To Build A Cryptocurrency Beyond The Reach Of Surveillance States