Airdrop Historical Research Part Two: Where Will the "Wool Pullers" Be in the Future?

Original Title: "The Second Round of Airdrop Historical Research: Where is the Future of the Wool Gathering Party?"
Original Author: DefiOasis, Geek Web3

Introduction: One of the greatest values of blockchain that we currently discover lies in the ability to observe the generation and distribution of funds/wealth in a highly transparent manner. Although this method is still in an immature early stage with many flaws, the long-term vision of "transparent and as much as possible intermediary-free asset creation and distribution" can indeed bring tremendous positive value to society.

Main Text

Despite 2023 being a bone-chilling bear market, many projects still distributed large-scale airdrop rewards to users. The FreeMoney in the bear market attracted users in droves. For instance, according to Coingecko's data, calculated at the ATH (all-time highest) price of airdrop tokens, projects like Arbitrum, Celestia, and Blur distributed approximately $4.65 billion in airdrops to users over the past year.

Now, it has been half a year since the publication of the airdrop science article by Geek Web3 in September 2023, titled “A Brief History of Airdrops and Anti-Witch Strategies: Discussing the Traditions and Future of Wool Gathering Culture”. During this time, the Web3 industry has undergone changes again, and new characteristics and trends have emerged in airdrop distribution mechanisms. This article will analyze and popularize the changes in airdrop mechanisms that have occurred during this period, further showcasing the potential patterns and evolution of airdrop strategies in the future.

Points System Becomes A Reference Indicator for Most Projects' Airdrops

The popularity of the airdrop points system is largely due to the push from Blur's founder, Tieshun. From Blur to Blast, the way projects measure user loyalty has shifted from initial trading volume to the amount and duration of user deposits.

Today, the points system is favored by various public chain ecosystem projects, such as Magic Eden, Marginfi, and Kamino on Solana, and Bounce Bit and B²Network in the BTC ecosystem. The rise of the re-staking concept has further pushed the popularity of the points system to its peak. Centered around mining Eigenlayer points, re-staking projects like Swell, KelpDao, and Ether.Fi have launched a points nesting battle, with dual or even triple mining of LST and LRT points now appearing.

In fact, the current mainstream points system can be divided into two categories: trading volume-based points and deposit-based points.

Trading volume-based points are commonly found in NFT trading markets and derivatives exchanges, where these projects encourage users to boost trading volume, representing the past gameplay of the airdrop points system. For users, trading volume points can be rotated multiple times with a single fund, which somewhat encourages single users to use multiple addresses, making it relatively troublesome to identify witch attacks;

On the other hand, the deposit points system is another mainstream points model. Projects that adopt this measurement method include lending platforms, public chain projects, and the popular re-staking concept projects. In this model, points are primarily determined by the amount of funds and retention time.

To maximize the attraction of funds/capital, such projects typically do not limit the types of funds they accept but actively welcome the influx of various types of assets. For example, the second phase of Merlin Chain allows users to stake Bitcoin or certain Ethereum assets, as well as BRC-20, Bitamp, and BRC-420 inscription assets.

In today's Web3 world, where TVL data reigns supreme, the deposit points system crudely attracts funds with airdrop expectations but occupies users' funds for a long time, setting withdrawal restrictions for several months, causing users to incur significant opportunity costs. In this era where witch players are everywhere and true identities are hard to distinguish, the deposit points system can significantly increase the cost of witch attacks, much like the effectiveness of Proof of Stake.

The airdrop expectations of the deposit points system have almost an immediate impact on the growth of TVL data, becoming a breakthrough for current Ethereum Layer 2. Since ZK Layer 2 launched on the mainnet during the bear market, ZkSync and Starknet's TVL performance has remained lukewarm. Manta and ZKFair have competed to imitate Blast, quickly surpassing the aforementioned ZK giants in TVL data, maintaining good performance even after the airdrop ended.

Additionally, projects using the deposit points system generally employ some soft anti-witch methods, such as binding users' wallet addresses to social media accounts like Discord and Twitter. However, even so, it is still impossible to completely prevent witch attacks.

Essentially, the deposit points system merely raises the cost for wool gathering hunters to launch witch attacks. Some projects creatively consider whether users have made deposits for other projects as a reference for issuing airdrops: for example, Altlayer used "whether one is a staker of Eigenlayer and Celestia" as a strong limiting condition when distributing airdrops.

Altlayer adopted a tiered system for its airdrop, where the distribution of points was based on the amount of TIA staked by users on the Celestia mainnet, with clear tier divisions. The amount of airdrop you can receive is determined by the amount you staked in networks like Celestia, not by how many accounts you have. However, the airdrop share for a single account is still limited; only after meeting the minimum deposit amount can one receive rewards, with clear specifications for both the lower and upper limits of rewards. This essentially layers the incentives of POS.

Although this method of airdrop distribution resists airdrop hunters, large holders with substantial assets can still split their deposits into multiple parts (similar to how Ethereum Validators often divide their ETH into multiple parts, each with 32 ETH, to meet the minimum staking threshold for each Validator, allowing them to run multiple Validators).

Meanwhile, smaller wool gathering users, in order to meet the expected conditions for airdrops—each address receiving an airdrop must have reached a certain deposit staking threshold in the past—often need to consolidate funds from multiple addresses into a single account to receive the airdrop. However, for project parties, having money is justice; the "bourgeois" witches are valuable.

In fact, "everything can be a points system". Nowadays, in addition to the two mainstream points calculation methods mentioned above, the market has also seen comprehensive points calculation schemes like LineaDeFiVoyageXP, B²Network's B²Buzz and bsquaredOdyssey, and tasks released on Galxe, which use user trading volume and fund retention time as a basis, along with multiple points consideration systems such as check-ins, social media interactions, and inviting others to form teams, to more comprehensively capture users' contributions within their ecosystems.

Points are essentially a promise of airdrops, akin to an option; you incur a certain cost today and can expect to receive XX in returns in the future.

However, unlike the clearly priced APY in DeFi mining, users guided by the points system base all their actions on conditions such as "the project's unreleased token economic model, unreleased airdrop distribution plan, and unpredictable future market conditions," engaging in blind mining. Mining points is essentially a game of information asymmetry between users and project parties, testing users' research and investment capabilities.

At the same time, airdrop points are essentially infinitely inflationary. For users with smaller funds, the participation of large holders dilutes the airdrop shares. Of course, this is similar to the staking of Ethereum Validators, where those holding substantial staked funds receive more rewards (this rule remains unchanged over the years).

Whether it is trading volume or fund retention time, a points system purely measured by funds will undoubtedly direct the bulk of rewards towards large holders; some projects will add lottery-like forms of blind boxes and random points draws to redistribute to smaller fund users, seeking a balance between large holders and ordinary users.

However, the points system has been criticized for becoming increasingly similar to many existing gameplay on Web2 platforms, where obtaining points requires navigating various complex tasks, leading the community to question whether users are experiencing the ecosystem or becoming the projects' laborers.

Airdrop Targets Focus More on Core Players, "Sunshine Inclusiveness" for Multi-Chain Users

However, the widely cast net of airdrops with multiple standards and screenings can cover as many users as possible, pleasing different groups and winning community support for the project parties. But as the competition among wool gathering studios intensifies, project parties can only hope for layers of screening to accurately distribute incentives to real users, leading to the gradual decline of the widely cast net airdrop on EVM chains.

However, non-EVM ecosystem projects like Sei, Celestia, and Dymension have opened up new ideas for widely cast net airdrops, conducting "sunshine inclusiveness" airdrops for multi-chain user bases, with the core distribution targets being high-quality players on the chain.

Generally speaking, airdrop project parties have multiple considerations for these high-quality users, taking into account top-level active users on protocol platforms with whom they have cooperative relationships on multi-chains like EVM and Solana, as well as their ample funds. They analyze user interaction amounts, transaction frequencies, Gas consumption, and other multidimensional factors during specific time periods to assess on-chain user activity and identify truly high-quality active players.

On the other hand, airdrops are often distributed to long-term stakers, especially large stakers, represented by stakers in the Cosmos ecosystem related to ATOM, TIA, and INJ. Strictly speaking, staking airdrops are not a new gameplay; during the last cycle, ATOM stakers received airdrops from multiple quality projects in the Cosmos ecosystem. However, due to the bear market, the airdrop earnings for holders could not cover the losses caused by the decline in ATOM's price, often overshadowing the advantages of this chain reaction airdrop.

Thanks to the popularity of modular blockchain narratives, projects touting "staking for airdrops" have emerged one after another, and the hot re-staking concept has made staking a popular narrative again. Under the narrative of staking airdrops, different communities are experiencing severe FOMO, with people generally searching for the next "golden shovel." For example, PythNetwork has attracted over 100,000 users' staked funds without any actual APY or airdrop earnings being announced. However, as the number of staking addresses and amounts increases, the minimum threshold for airdrops is expected to gradually rise.

The popularity of staking has also led project parties to form a set of staking nesting systems. When project party A distributes airdrops to token stakers on cooperative platform B, A also launches staking functionality for its own token, leading stakers to believe that by staking and locking on platform A, they can again receive airdrops from other project parties like C and D. This expectation of airdrops (essentially a form of PUA) can effectively absorb the funds of airdrop recipients on platform A.

Under these chain conditions, an infinite nesting of A---B---C---D staking can form, ultimately trapping people in the expectation of token staking. What people ultimately pay is the opportunity cost of funds, and what they receive is airdrop returns. Considering that the tokens obtained from airdrops are often different from assets purchased on the secondary market, the holding costs and psychological pressure are much lower than the latter, making people more willing to lock funds long-term on platforms with staking airdrop expectations.

In addition to large holders of staking tokens, some project parties may also provide airdrops to holders of blue-chip NFTs within the community, such as PudgyPenguins, BoredApeYachtClub, CryptoPunks, Comomos' BadKids on the Ethereum mainnet, and MadLads on Solana. These NFT holders are generally OG users of their communities.

In summary, although sunshine inclusiveness airdrops bring joy to everyone, the core distribution targets of airdrops today are high-quality active users and large stakers. On another level, multi-chain "sunshine inclusiveness" airdrops generally serve as a "barren marketing strategy" within non-EVM chain ecosystems or new ecosystems, aiming to gain reputation and capture players from other ecosystems. Project parties still aim to help grow ecosystem data and increase user on-chain activity and fund retention, distributing these airdrops as much as possible to users who contribute.

Future Airdrop Reference Conditions

In addition to the above viewpoints, we have identified some trends that may become reference conditions for airdrops in the future:

1. Official Background NFT Binding Airdrop Shares: Official background NFTs are gradually becoming a new standard for project airdrops. Although these "equity" NFTs do not have actual binding airdrop shares, through frequent mentions by project parties on social media or indirect endorsements, they have unknowingly become the unwritten rules of airdrops today.

After holders of Altlayer's AltlayerOGBadge and OhOttie!NFT series received large airdrop shares, the FOMO sentiment spread within the community, leading people to view the official NFTs of some projects like EigenLayer, zkSync, and Berachain, which have not yet launched airdrops, as important chips that must be grasped.

However, whether these NFTs are souvenirs or airdrop vouchers requires users to possess strong predictive abilities and a long-term assessment of the project parties' attitudes. At the same time, these "equity" NFTs have also become potential monetization channels for project parties before issuing tokens due to PUA hype, with instances of insider trading not being rare.

2. Project Parties Tend to Value Developers in Airdrops: Blast split airdrop shares equally between ordinary users and developers, Celestia allocated one-third of the total airdrop to GitHub developers, and Staknet almost explicitly granted a large share of airdrop rewards to developers. More and more star projects are beginning to tilt airdrop distributions towards developers, making "contributing code to the project" or "disguising as a legitimate developer" a new wool gathering tactic, leading to a surge of low-quality projects on-chain seeking ecosystem rewards. This phenomenon may escalate in the future, and new countermeasures (likely involving AI) are expected to emerge.

3. Collaborating with Professional Witch-Hunting Agencies to Screen Qualified Users: Recently, Celestia and Manta collaborated with TrsutaLabs to screen users who meet the criteria, while Linea provided options for anti-witch projects like Nomis, GitcoinPassport, and Clique during the real-person verification (POH) phase. Collaborating with witch-hunting agencies for user screening seems to be a new trend.

Professional agencies will integrate multi-chain data and the depth of users' participation in airdrop projects to analyze the witch risk of addresses more comprehensively. However, they have also been criticized for being overly strict or not intelligent enough, mistakenly flagging real users, such as the ongoing issue of malicious transfers "poisoning" innocent addresses that have been added to witch lists.

Alternative "Innovation and Diffusion" of Wool Gathering Users

1. Spreading from EVM Chains to Other Chains

With the transparency of information and the maturity of EVM chain ecosystems, airdrop shares on EVM chains, especially on the overcrowded Ethereum Layer 2, have become a common occurrence where there are more monks than meat. Ordinary users cannot compete with the amounts or activity levels, and the low input-output ratio has led wool gathering parties to seek opportunities in other directions, focusing on chains like Sui, Aptos, and Solana, which have good TVL or capital backgrounds.

The spillover effect of EVM chain users is reflected in the recent rise in user activity and TVL data on public chains like Sui and Solana. Within these ecosystems, finding simple interactions like Jupiter can yield airdrop opportunities, which is also quite common in the BTC ecosystem.

(The wealth effect has reactivated many new users on the Solana chain)

2. Shifting Focus from Large Financing Projects to Small and Refined Ones

Large financing projects, due to their ample cash flow, often have long airdrop distribution cycles, which correspondingly extend the battle lines for wool gathering parties, leading to a long-term investment without seeing returns, which has become the norm. Additionally, large financing implies project stability; for users, if certainty increases, it will attract many to rush in, thereby diluting airdrop shares.

In response, some wool gathering parties have shifted their focus to small and refined projects. The disclosed financing amounts of these projects are often not large, but due to fewer participating users, the cost-effectiveness of wool gathering is higher. Projects like Starknet, Layerzero, and ZkSync, which have long been teased as "the three fools" for their long-term PUA community members, have shown varying degrees of decline in active data.

Another wool gathering strategy is to look for projects with large exchange backgrounds. Given that the value of airdrop tokens depends on expectations of being listed on major exchanges, many wool gathering behaviors revolve around projects related to exchanges like Binance, OKX, and Coinbase, such as projects funded by Binance Labs Fund, Coinbase Ventures, or projects within the ecosystems of major exchanges. Another type of bargain-hunting behavior focuses on relatively obscure projects that have received small amounts of financing from top-tier VCs like Paradigm and a16z.

Additionally, some relatively obscure airdrop rules, such as continuous check-ins for NFP or Arkham registration, can lead to satisfying average airdrop shares. However, once a cold rule with wealth effect emerges, it will become a rule fully recognized by the market, making it unlikely to "copy homework" and form a sustained path dependency. This market, and indeed the world, is filled with uncertainties; past historical experiences may not apply to the vast future, and all so-called "rules" and "conventions" could be rewritten in the near future.

Perhaps every leading project in each track is trying to invent new airdrop rules. These rules may introduce different innovations, but the essence remains that the targets of project parties distributing rewards will always revolve around "early + deep participation + large capital contribution" loyal users.

Debate: The Game Between Airdrop Farmers and Project Parties

Recently, Starknet referred to users focused on airdrops as "electronic beggars" on social media and even opened a channel for "electronic beggars" on their official Discord, drawing criticism from the community. Similar conflicts between project parties and airdrop players have occurred with Scroll, which later had personnel from Scroll and Starknet personally engage with the community, even blocking users on social media, inciting community outrage. Although the involved parties later apologized, it did not completely dissipate the community's grievances. This public relations controversy had a reverse marketing effect on the community, warranting analysis as a case study.

This public opinion incident highlights the delicate relationship between airdrop farmers and project parties. The long-standing tacit understanding of unwritten rules for airdrops between wool gathering parties and project parties seems to have led to misunderstandings between the two. Many users believe that airdrops are their rightful "earned income", and during the bear market, users work hard to remain active, contributing transaction fees to provide income and helping projects create the illusion of on-chain prosperity, thus deserving "compensation." However, these users' intentions are quite strong, and project parties may not fully acknowledge this.

In the early airdrop era (possibly before 2021), when wool gathering parties were not yet numerous and real users were predominant, project parties did not reject the participation of low-net-worth users due to good user retention rates. However, as mentioned above, the influx of numerous wool gathering parties has led to a continuous reduction in airdrop methods that can mutually recognize project parties and users.

Moreover, airdrops should not be seen as the endpoint of a project. Some cases indicate that successful airdrop plans can stimulate user activity for projects. Jupiter has an annual airdrop plan, and after the first round of airdrops, Jupiter's DAU once surpassed Uniswap; Arbitrum's STIP funding program and Optimism Op Grants have kept their active data at high levels for a long time.

(Arbitrum and Optimism remain active on-chain after airdrops)

Some project parties also explore alternative paths to lock in funds by supporting ecological projects or developers. For instance, Base, which has openly stated it will not issue tokens, has attracted large holders to deposit funds on its protocol through applications like friend.tech and Bold that generate profit, fostering user stickiness. However, even excellent applications like Uniswap face the issue of stagnant TVL before issuing tokens. It can be said that airdrops are a trump card when the ecosystem experiences a lack of community contribution, weak growth, or even regression, but they should never be the final resort.

(During the prolonged bear market, numerous wool gathering parties contributed income to ZkSync)

Conclusion

Community members generally complain that wool gathering parties support on-chain data, helping projects survive in the bear market, while many project parties remain indifferent to wool gathering parties but attract a large number of wool gathering users through various hints or collaborations with third parties to initiate tasks, PUA users into on-chain interactions, yet fail to announce airdrop plans for a long time. This inconsistency often stirs negative emotions within the community.

The deposit airdrop, which directly attracts funds, is a rental of the liquidity of users' funds, promising future airdrop returns to users, who also need to consider opportunity costs.

The shift in airdrop standards from interactive to deposit-based, with users' retained funds as the main criterion, may become the norm, reflecting the changing dynamics and demands between users and project parties. However, this game between project parties and users may ease as the bull market approaches and the overall environment of the crypto market warms up. The prisoner’s dilemma of airdrop distribution in bear markets may improve with the gradual abundance of market funds. Recently, there have been complaints about "re-staking protocols having more ETH than users have on hand." As the landscape of fewer projects and more users changes, project parties' attitudes may shift from disdain for wool gathering parties to competing for them.

Project parties' original intention is not to combat the community but to treat airdrop distribution more cautiously after the influx of thousands of studios into the wool gathering army. Nowadays, seeking wealth through airdrops is basically unrealistic; it requires strong research and investment capabilities or good luck to discover the future value of niche projects. For wool gathering parties, the golden age of public airdrops and easy money has become history, and the future narrative of airdrops will have to consider the classic notion that "one's success certainly relies on personal effort, but also on the course of history."