For Web3 projects, when designing a cold start mechanism, they still need to carefully consider the valuable user portraits for their products, and design corresponding mechanisms based on the current environment. The most important thing is to effectively incentivize the above-mentioned valuable users while avoiding witch attacks as much as possible.
Author : Mario looks at Web3
Cover: ZKsync
Abstract: The hottest topic last week was definitely the public airdrop inspection of ZKSync. Originally, the author was studying and writing about some learning experiences in developing TON's DApps, but seeing this controversial event and the extensive discussion it triggered in the community, I had some feelings, so I wrote an article and hope to share it with you. In general, ZKSync's airdrop plan adopts a distribution method based on property proof, focusing more on rewards for developers, core contributors and ZKSync native Degen whale, which has created a situation where the native Degen whale are laughing and the LuMao studio is shouting.
The focus of community debate: Is interaction the key or is the amount of funds the key?
For a long time, the Web3 industry seems to have formed a paradigm of attracting users to use products through Airdrops, thereby achieving a cold start for projects. This is especially true in the Layer2 track. It has become a standard to guide developers and users to expect potential airdrops, stimulate developers to actively build and maintain DApps, and stimulate users to bridge funds to the target Layer2 in the early stages of development and actively participate in the DApps running on the target Layer2, thereby achieving the purpose of activating the ecosystem.
Therefore, in the past, users generally expected ZKSync’s airdrop to be comparable to its two direct competitors, Arbitrum and Optimism. Of course, this conclusion is logical from the perspective of industry influence, VC background, fundraising scale, etc. However, the results are quite different, which has led to many users who reused past experience to participate in ZKSync and did not seem to get the expected amount of rewards, which led to the community falling into widespread debate.
In order to explore the reasons behind this debate and explore some reference significance for the future, it is natural to review the previous airdrop rules of Arbitrum and Optimism. First, let’s review Arbitrum’s airdrop activity, which dates back to March 2023. It allocated Arb airdrops accounting for 11.62% of the total supply to Aribitrum users, and allocated 1.13% of Arb airdrops to DAOs running in the Arbitrum ecosystem. The setting of the airdrop activity is based on the snapshot data of February 6, 2023. The specific rules for users are as follows:
- Cross-chain to Arbitrum: Users need to transfer funds to Arbitrum One or Arbitrum Nova.
- Transactions in different time periods: The user has traded in two different months, six different months, or nine different months.
- Transaction frequency and interactions: The user has made more than 4, 10, 25 or 100 transactions, or interacted with a corresponding number of smart contracts.
- Transaction Value: The total value of transactions conducted by the user exceeds $10,000, $50,000, or $250,000.
- Providing Liquidity: Users have deposited more than $10,000, $50,000, or $250,000 in liquid funds.
- Arbitrum Nova Activity: User has made more than 3, 5, or 10 trades on Arbitrum Nova.
Each rule will have a specific score calculation method, with an upper limit of 15 points. This score is used to determine the number of Arbs that users can receive. The calculation method can be approximated as a linear relationship, but the starting reward starts at 3 points and the upper limit is 10,200 Arbs. For the rewards for DAOs, the specific amount is directly determined by the activity evaluation method. From the results, 137 DAOs received airdrops, of which Treasure and GMX received the most, 8 million Arbs respectively. According to the current reality, this is really a lucrative income.
Next, let’s review Optimism. Unlike Arbitrum, Optimism’s airdrops are divided into multiple rounds, and the total number of rewards distributed accounts for 19% of the total supply. Its earliest first round of airdrops dates back to June 2022, and a total of 5% of the rewards were distributed to 260,000 addresses. So far, four rounds of airdrops have been carried out. The specific rules for each round of airdrops are as follows:
- First round: ordinary users and active users are divided according to the number of transactions, corresponding to addresses with 1 transaction and addresses with more than 4 transactions, as well as Ethereum DAO participants, Ethereum multi-signature wallet users, Gitcoin donors and cross-chain bridge users. Each identity corresponds to a fixed value reward, and the latter three rewards can be superimposed.
- Second round: Users with a total transaction gas fee greater than 6.1 USD or a token age of more than 2000 participating in delegated governance can share 11,742,277 $OPs;
- Round 3: Users who participate in delegated governance and whose coin age exceeds 18,000 can share 19,411,313 $OP;
- Round 4: 10,343,757 $OPs were allocated to NFT creators;
From the above review, we can easily find that the number of interactions is used as an important reference indicator in the specific activity settings. Users with more frequent interactions usually receive more rewards. However, this unspoken rule seems to have been abandoned by ZKSync. In the airdrop design of ZKSync, the qualifications and allocation of ZKsync users are selected and calculated in four consecutive steps. The specific rules are as follows:
- Eligibility screening: Every address that has conducted transactions on ZKsync Era and ZKsync Lite will be checked according to the eligibility criteria. It sets 7 assessment criteria to screen eligible users, such as interacting with non-token contracts more than 10 times and non-token contracts must be active for at least 30 days, sending at least 5 transactions on ZKsync Era, etc.
- Distribution: When calculating the specific amount of rewards for an address that meets the above criteria, it is confirmed based on a value scaling formula, which calculates a time-weighted average based on the amount sent to ZKsync Era and the time these crypto assets remain in the wallet, and adjusts the distribution of each address accordingly. At the same time, funds participating in the DApp protocol will receive a 2x bonus, which means that if you transfer large funds to ZKSync, keep them for a long time, and actively use these funds to participate in some risky products, such as providing liquidity to DEX, you will get more rewards.
- Multipliers: Addresses that meet certain criteria can receive multipliers in the distribution. These criteria are usually holding some high-risk ZKSync native Altcoin or NFT.
- Sybil detection: Finally, ZKSync will also perform Sybil attack detection to ensure that most robots are filtered out. Its detection criteria are based on two aspects: the source of the first ETH after the creation of an EOA address, and the interaction between the EOA address and the CEX deposit address. In fact, this also takes advantage of the characteristics of CEX KYC.
From the specific rules, it is not difficult to find that the calculation of rewards does not involve the number of interactions, but focuses on the amount of funds in a single account and the willingness to allocate risky assets. Therefore, when the results were announced, many people or studios who had interacted a lot on ZKSync based on past experience were surprised, which was also the source of the entire controversy. Because in order to increase the number of addresses that receive potential airdrops, these users usually choose to disperse large funds into address groups as much as possible. These address groups are usually hundreds or even thousands of addresses, and use small funds to participate in a certain agreement. By predicting some possible incentive behaviors, they frequently interact through automated scripts or manual methods to increase potential returns by completing tasks. However, the airdrop setting of ZKSync makes this strategy invalid. The handling fees paid by many frequently interacting addresses are even higher than the rewards they receive, which naturally caused dissatisfaction among this group of people.
Moreover, it is not difficult to find a large number of airdrop hunter KOLs in X. This group of people publish content with the theme of teaching people how to easily obtain airdrops from project parties. They usually have a wide fan base and strong appeal. Therefore, they put pressure on ZKSync officials through social media in the hope of changing this situation. However, judging from the official attitude, it seems to be very tough and did not modify the rules due to pressure, so the current situation has come about. The accusations and defenses of some possible evil behaviors triggered during the debate are the highlights of this public opinion war.
Judging from the results, the demands of both sides seem to be understandable, and the right and wrong can only be determined from what perspective. But I think there are some things worth thinking about, that is, who are the core value users of the cold start phase of the Web3 project today, or what kind of users are the users who should be incentivized in the cold start phase.
Heavy interaction brings about the problem of Sybil attacks, while proof of property brings about the problem of monopoly
Airdrop rewards for early bird participants have been proven to be an effective means of cold starting Web3 projects. A good airdrop mechanism setting can help projects attract seed users efficiently in the early stage, and at the same time complete user education by stimulating users to use key behaviors of the protocol, thereby increasing product stickiness. This is also the fundamental reason why most Web3 projects have focused on incentivizing interactive behaviors in airdrop settings for a long time. However, this has brought a disadvantage, which is to lower the threshold for obtaining rewards and make it easy for activities to be attacked by witches. Because interactive behaviors are easy to be automated and batched, this gives many professional teams room for batch operations. When a large number of robot accounts pour in, although the protocol will have a short-term false prosperity, these "users" usually follow the water and grass and cannot provide power for the future development of the project. After receiving the rewards, most of them will cash out to increase capital turnover and thus increase revenue. This incentive mechanism dilutes the number of rewards for those truly valuable users by the project party, which is really not worth the loss.
So why did this mechanism work well in the early days? This is naturally because there were not so many similar professional teams at that time, and most users had not formed a mindset for this incentive mechanism. The interactive behavior was still relatively pure and belonged to real users, which allowed the incentives to be distributed to these users more efficiently. The resulting wealth effect also helped the project party achieve the above benefits. However, with the influence of the money-making effect, this method is obviously no longer effective in attracting real users. My personal experience is that the effectiveness of airdrop activities with interaction as the main incentive has basically reached its peak when Arbitrum airdropped.
This is also the fundamental reason why ZKSync wants to abandon the use of interaction numbers as the basis for identifying valuable users based on the relative size of assets. However, this method of proving property may not be without problems. Although it can effectively identify and eliminate the risk of witch attacks, the new problem that comes with it is the uneven distribution of wealth caused by monopoly.
We know that one of the core values of the Web3 project is the bottom-up distributed autonomy model. This means that the support of grassroots users (real users with small amounts of funds) is the basic foundation for the development of a project. It is precisely because of grassroots users that some whale users may flock in and form a more sustainable development form. After all, the capital advantage is still available in most scenarios. Only when there are enough grassroots users can the benefits of whale users be large enough. Then the distribution system of property proof will result in that at the beginning of the cold start, the benefits of whale users among its early bird users are already relatively obvious, which makes it difficult to form effective incentives for grassroots users, and naturally it is impossible to form a cohesive community.
In the final analysis, for Web3 projects, when designing a cold start mechanism, it is still necessary to carefully consider the valuable user portraits for their products, and design corresponding mechanisms according to the current environment. Effectively motivating the above valuable users while trying to avoid witch attacks is the top priority. Therefore, how to design your own cold start mechanism is a very valuable topic, and everyone is welcome to leave a message in my X to discuss. Let's brainstorm some interesting solutions together.
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