More airdrops are arriving, promising billions of tokens. Here’s why users are complaining – DL News

• Crypto users are demanding better airdrop mechanisms.
• Retail users complain that Sybils have hijacked airdrops.
• No airdrop method is perfect.

Airdrops offer billions of dollars of free money.

Yet they are never far from controversy, with users complaining about the fairness of the token distribution.

The reason?

The presence of sybil recipientsairdrop farmers who create large pools of wallet addresses and use them to generate large transaction footprints on crypto projects.

Now, even in a banner district for airdrops This shows no signs of slowing down – concerns risk creating apathy among users of so-called organic crypto platforms.

Yielding to pressure

Projects like Ethena, the restaker of Ether, have bowed to the pressure and tried to appease ordinary users who felt cheated during the project’s airdrop.

But more recent airdrops of the ZKsync blockchain network and the LayerZero interoperability protocol have not publicly addressed complaints from so-called legitimate users who claim they were left out.

“Farmers received millions of tokens from ZKsync, but people who did this for two years only received 1,200. [tokens]” said Farea, a self-proclaimed parachute hunter who goes by a pseudonym DL News.

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Sybil airdrop farmers spoof a legitimate business and claim above-average shares of airdrops, leaving ordinary users with little to nothing for their efforts.

The attacks come as projects including liquid restaker Swell, DeFi lender Marginfi, and liquid staking protocols Sanctum have hinted at future airdrops.

A huge problem

There is a huge problem with the airdrop mechanic, not only for users but also for the projects that promise these free tokens.

Crypto projects need organic user activity to achieve a “network effect” ― when the value of the project increases with increasing patronage.

Project teams offer airdrops as incentives to attract real users. The promise of a future airdrop may be enough to attracting cryptocurrency deposits from them.

An influx of liquidity means an increase in total value locked – a DeFi metric used to gauge interest in blockchain projects.

Crypto projects need to increase their TVL to secure significant valuations backed by venture capital interest.

“If you are a builder, you need to run point campaigns because VCs require adoption metrics to justify high valuations,” said Ignas, a pseudonymous DeFi researcher. DL News.

But there’s a problem: most of this TVL comes from sybil farmers who are less likely to leave their funds behind once they receive their airdrops.

Sybil Airdrop farmers tend to migrate to other projects that have not yet distributed tokens.

Several projects, including Wormhole and LayerZero, saw a huge drop in user activity after the airdrop.

Meanwhile, real users most likely to display loyalty to these projects reported receiving little reward for their on-chain activity.

“Whales spend a lot of money writing scripts and creating hundreds of wallets. Retail users create one or two wallets, which doesn’t allow them to get the price they should actually get,” Farea said.

A new era

Despite the growing disillusionmentThe consensus among DeFi experts is that project teams need to develop new token distribution strategies.

“Airdrops are the evolution of how we issue new tokens to the market. Every cycle, we find a new way to print tokens,” Ignas said.

The current points meta, popular among DeFi projects, has glaring drawbacks due to sybil capture and poor user retention.

“The golden age of airdrops is over,” pseudonymous crypto analyst Wazz job on X earlier this week.

There is a growing call for project teams to rethink airdrops and design reward systems that do not neglect early adopters and maintain interest after the token distribution event while attracting new entrants.

This is easier said than done, especially since the sibyls have become so ingrained in the system that it might be impossible to eliminate them.

For experts like Ignas, some possible solutions include a vesting period for airdrops to reduce the massive spill that follows them.

Additionally, projects can schedule multiple airdrops, a method already adopted by companies like Etherfi, a liquid restaker.

Regardless, experts say no airdrop strategy is perfect and complaints inevitably arise.

“I recommend using protocols that they find genuinely interesting,” Ignas said. “My best airdrops have come from genuine curiosity and clicking buttons.”

Osato Avan-Nomayo is our DeFi correspondent based in Nigeria. He covers DeFi and technology. To share tips or item information, please contact him at osato@dlnews.com.

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