Is there still a chance for airdrops? Let's briefly discuss the Bitcoin ecosystem again

It has been a while since we talked about the topic of airdrops. A few days ago, I saw some friends discussing the airdrop of Grass, but it seems that the Grass airdrop did not bring any new excitement to the market; instead, most people were complaining that the number of airdrop tokens they found was too small.

From the information released by Grass, the total supply of GRASS tokens is 1 billion, of which 10% is allocated for the first airdrop, including 1.5% for the Alpha testing season, 7% for seasons 1-7, 0.5% for the reward season (currently ongoing), and 1% for an undisclosed allocation. Currently, based on the off-market trading price of Grass points listed on Whales Market, the floor price for each point is about $0.00015. As shown in the figure below.

It is likely that the negative feedback had some impact, as the Grass Foundation stated a few days after announcing the airdrop information that they are fine-tuning the airdrop query system to reduce false reports, which means that the number of tokens displayed on the airdrop check page is not the final result. As shown in the figure below.

However, this does not seem to stop people from continuing to complain. According to some analysts' estimates, the price of GRASS tokens after listing may be between $0.2 and $0.5. Feedback from the internet shows that most users' airdrop token query results are concentrated between 10 and 100 tokens. Even at $0.5, this would amount to an airdrop reward of $5 to $50, which is a decent meal.

In addition to the Grass airdrop mentioned above, I also saw some friends in the group sharing information about airdrops related to the Fractal Bitcoin (FB) protocol in the past few days. This is a new protocol that just launched its mainnet a couple of days ago (on September 9). Fractal Bitcoin, also known as fractal Bitcoin, is an expansion solution based on Bitcoin. The total supply of FB tokens is 210 million, of which 50% is allocated to PoW (ordinary users can participate, mainly through machine computing power mining or purchasing BitTera's NFTs), while the rest is allocated to core contributors, ecosystem treasury, community, advisors, and presale. As shown in the figure below.

Supplementary Knowledge: What is a Fractal, and how does it differ from Layer 2?

A fractal refers to the gradual expansion of the Bitcoin blockchain by adding a fractal layer on top of the Bitcoin main chain, transforming it into a scalable computing system while maintaining complete consistency with the Bitcoin main chain. The Fractal Bitcoin protocol mentioned above expands the network by adding a fractal layer to the Bitcoin main chain, allowing the Bitcoin network to process more transactions without altering the original code, while maintaining compatibility and security with the main chain.

To give a simple analogy, if we compare Bitcoin to a large tree, the trunk represents the Bitcoin main chain, while the branches and leaves represent the fractal layers. Fractal Bitcoin adds these "branches" to the Bitcoin main chain, allowing them to independently process transactions while remaining closely connected to the trunk, enabling the entire system to scale faster and more efficiently.

In contrast, traditional Layer 2 is an independent network built on the Bitcoin main chain, like an additional channel. While this can also speed up transactions, it is usually more complex and may require cross-chain interactions.

In other words, fractals do not compete with the Bitcoin mainnet for liquidity.

Although Fractal Bitcoin has only been live for less than three days, it has already attracted some attention. In addition to the FB token airdrop, some new projects based on the Fractal Bitcoin protocol have also announced related airdrops. For instance, on the same day Fractal Bitcoin launched, the FLUX protocol went live, with a minting cost of 0.05 FB and a total of 21,000 minted, all of which were completed in half an hour. Then, today, Cat Protocol has started its relay…

Of course, we are only briefly mentioning the airdrop situations of Grass and Fractal Bitcoin. Today's sharing will not delve too much into specific projects; we mainly want to reflect on the concept of airdrops from a new perspective!

Whenever airdrops are mentioned, many seasoned investors may reminisce about the early airdrop projects, as participating in airdrops seemed to be a relatively simple and effective thing back then. However, since last August when Friendtech started using points as a gameplay, point-based airdrops seem to have become a main theme of airdrops, and more and more projects have launched point systems (such as using XP or other synonyms). It seems that overnight, everyone began to grind points for various projects, and indeed, many hotspots and points of interest have emerged over the past year.

However, the development pattern of any phenomenon is essentially the same. When people flock to a field, a bubble is bound to form, and when the bubble reaches a certain level, it will burst. Therefore, we can also observe that the airdrop field has indeed appeared quite stagnant for some time.

But if we think from another angle, this current stagnation may not be a bad thing. Because, in my view, whether it is airdrops or trading, the key to many things lies primarily in the choice of timing.

How do we understand this?

The trading aspect should be relatively easy to understand; this is also our consistent core idea. In simple terms, the best trades are certainly made when no one is paying attention, and sold when there is a lot of noise. In comparison, our execution strategy is to persist in dollar-cost averaging during bear markets and gradually sell during bull markets.

The same applies to airdrops. If an airdrop is in an extremely hot state, and everyone is trying to grab airdrops, then the opportunities are relatively scarce and competitive. However, if we can prepare in advance when others are still paying little attention, then the corresponding opportunities will certainly be greater.

So, how can we seize such opportunities?

We believe there are two core points to consider: first, pay attention to changes in TVL; second, think about the issue of friction costs.

1. Pay attention to changes in TVL

Here, let’s give a simple example. Before December last year, Solana had not yet attracted everyone's attention. As its TVL grew from around $200 million at the beginning of the year to $1 billion, projects like JTO (December 2023 airdrop) and JUP (January 2024 airdrop) also conducted airdrops during that period, generating sustained interest. Those who participated relatively early should have reaped good rewards.

Subsequently, Solana's TVL experienced further rapid growth, with both token prices and ecosystem projects soaring. However, as its TVL reached a high of $49 billion, later airdrop projects, such as KMNO (April 2024 airdrop), PRCL (April 2024 airdrop), CLOUD (July 2024 airdrop), etc., did not seem to generate much wealth effect, and the momentum quickly faded.

Therefore, those who can truly obtain good airdrop returns are often those who can participate early (in the early stages with low TVL and early airdrop projects). As TVL continues to rise (and inevitably leads to outflows at a certain stage), the opportunities for later airdrop projects to gain returns will become increasingly smaller, as the profit effect of the ecosystem (chain) has already been exhausted.

So, is the airdrop field really dead now? Are there no more opportunities?

Not necessarily.

We may just need to look for some new alternatives or opportunities. For example, the current Bitcoin ecosystem, if viewed from the perspective of development history, is quite similar to the early low TVL Solana chain, right? Although the Bitcoin ecosystem may not necessarily usher in its own airdrop season 100%, it at least seems to have some opportunities.

2. Consider the issue of friction costs

Here, the friction costs refer not only to the time or money costs you incur on airdrop projects but more importantly to the thinking or learning costs, which are the threshold costs for many new users.

For those who have participated in airdrop interactions on Ethereum or Solana chains, this should be easy to understand. Participating in airdrop interactions on these chains is relatively simple, such as directly bridging assets through Orbiter, Debridge, etc., and then using wallets like MetaMask or Phantom to interact, trade, stake, and earn airdrop points.

However, when it comes to the Bitcoin ecosystem (network), for many new users, the friction costs seem to have increased. For example, you may first need to understand which wallet address you need to use: is it a P2PKH address starting with "1", a P2WPKH address starting with "bc1" or "tb1" (native SegWit address), or a Taproot address or Lightning… Then you need to link different wallets and understand UTXO transfers (for instance, once you understand the UTXO model, you will understand why there is still BTC in your wallet but it shows insufficient balance).

This is also one of the reasons why when the BRC-20 inscriptions first appeared last year, relatively few people participated, as there were friction costs involved. When some BRC-20 tokens were listed on exchanges like Binance or could be directly purchased through wallets like OKX, the number of participants increased when the friction costs became sufficiently low, but the wealth opportunities decreased.

Similarly, with airdrops, more friction costs mean fewer participants, which means that the opportunities to make money have not yet been fully diluted.

3. Briefly discuss the opportunities in the Bitcoin ecosystem

Understanding the above two points, we should not find it difficult to grasp the potential opportunities in the Bitcoin ecosystem (and this can also be applied to understand other ecosystems).

After concepts like inscriptions ignited interest in the Bitcoin ecosystem last year, many early participants in this ecosystem indeed seized good opportunities. Although currently, like the airdrop concept, the enthusiasm for the Bitcoin ecosystem seems to have cooled down compared to before, and many seasoned investors even believe that Bitcoin does not need an ecosystem at all.

However, if we look at it purely from the perspective of project development, there are indeed many projects in the Bitcoin ecosystem that are undergoing construction, and this is one of the biggest narratives of the current bull market. At least in the past two bull markets (2017 and 2021), I have not seen the Bitcoin ecosystem have so many supporting projects and relatively complete infrastructure as it does now. As shown in the figure below.

Therefore, from the perspective of airdrops, the current TVL of the Bitcoin ecosystem is not high, and there are still friction costs, which may contain some potential new opportunities.

For instance, due to the price issues of BTC itself (including gas issues), you might find that some LSD protocols, bridge protocols, and unreleased token protocols that have received VC funding on the Bitcoin chain seem to have relatively few participants compared to Ethereum/Solana, which is actually a form of friction cost. Once the market experiences a new turning point, such as a high-profile airdrop event or a market trend improving, some projects should quickly see a reversal and attract more newcomers, at which point the corresponding friction costs will continue to decrease.

The same script may continue to play out on a different stage; it depends on how the director and lead actors perform together. Just like the Solana craze primarily started with airdrops (such as JTO, JUP, and other DeFi-based airdrop events), and then gradually shifted to the speculation of MemeCoins as TVL grew. Such stories may continue to unfold on other chains, and the Bitcoin ecosystem seems to be a very good potential stage.

When most people are not paying attention, it is actually the best time for you to seek opportunities. Regardless, if you still hope to gain something from trading or airdrops, then, without affecting your main job and focus, taking a little time to explore opportunities in the Bitcoin ecosystem is likely to be worthwhile. Even if you are just now deciding to start researching the Bitcoin ecosystem, it is not too late.

Of course, one of the prerequisites for all these things is that you must first have BTC. If you have heard others say in recent days that BTC will drop below $40,000 next, and you want to wait and see, then you can continue to wait; that is your personal freedom. Otherwise, you can make necessary plans according to your position, such as taking out a portion of your position to gradually buy some BTC for potential activities in the Bitcoin ecosystem (like participating in liquidity mining or airdrops). Or, if you are not very interested in airdrops and are only interested in trading, you can also allocate some of your position to purchase fundamentally strong projects and conduct some DCA buying operations.

However, whether engaging in airdrop activities or trading activities, the security issues involved are also a form of friction cost. When participating in liquidity mining/staking and other interactive activities, try to avoid engaging with low-security protocols to prevent issues like project teams running away or wallets being hacked.

We will conclude this issue here. More articles can be viewed on the Huahua homepage.

Disclaimer: The above content is just personal opinions and analyses, intended for learning records and communication purposes only, and does not constitute any investment advice. The crypto field is a highly risky market; in addition to various forms of phishing attacks and scams, many projects also carry the risk of going to zero at any time. Please view it rationally, do not engage if you do not understand, and take responsibility for yourself.