Compiled by: MarsBit
introduce
Points, points, and more points.
Since the launch of Friendtech’s points system last August, rewarding early users of the protocol by awarding off-chain points (or tokens, XP, or other synonyms) has become an industry standard. This was arguably the start of the airdrop meta in this cycle, prompting a series of projects to issue tokens over the past year. As with many metas in crypto, the perceived gold rush caused the industry to become frothy and ultimately fall out of favor.
Is the airdrop ripe for something, or do we just want to let off some steam?
Airdrop Performance
Airdrop tokens are notorious for their “all down, no up” price action. Of the 47 most watched airdrops listed below (based on popularity on my timeline), only 11 have seen price gains from their first token generation event (TGE) as of August 25, 2024, with an average return of 49.56% (excluding BONK). Meanwhile, the 36 tokens that have seen price losses have an average loss of -62.15%. Of course, some tokens did see gains, with an average gain of 162.23% from their TGE to their all-time high (ATH) (excluding all down tokens and BONK). However, the average retracement from their ATH for these tokens was -70.89%. While a retracement from the ATH is also a symptom of market conditions, it is concerning that many of these tokens have seen such large declines in a matter of months.
Airdrop performance from TGE to now, from TGE to ATH, and from ATH to now by sector. Outliers are labeled with their %s (BONK's numbers are too large to show, 14,022.39% from TGE to now, 31,527.44% from TGE to ATH). Source: CoinMarketCap and Coingecko as of 25/8/24.
The trend is clear, and except for some popular industries in this cycle (such as memes and AI), most airdrops since 2023 have been in free fall (even though some of them have risen during this period).
Average performance of airdropped tokens from TGE to present, from TGE to ATH, and from ATH to present by sector. Truncated outliers are highlighted in red. Source: CoinMarketCap and Coingecko as of August 25, 2024.
On average, only AI, meme, and modular airdrops have seen significant gains since the TGE, while the rest have all fallen significantly. Meme is easily the strongest performing sector, up an astonishing 2,300% on average since the TGE, driven primarily by BONK. In fact, in my opinion, BONK saved Solana, or “Soylana” two years ago, from the brink of post-FTX despair. Many Pumpfun ruggers should thank this cartoon dog.
Average performance of airdropped tokens from TGE to present, from TGE to ATH, and from ATH to present by ecosystem. Truncated outliers are highlighted in red. Source: CoinMarketCap and Coingecko as of August 25, 2024.
When breaking down average airdrop returns by ecosystem, only the Solana airdrop has so far gained on the TGE, again primarily conducted by BONK. Ethereum-based airdrops have performed the worst, but Cosmos-based airdrops have seen the most dramatic price action. With an average ATH of 201% on the TGE, Cosmos-based airdrops were all the rage in Q4 2023, dragged down by TIA’s 850% gain. Cosmos-staking airdrops kicked off a short-lived sub-metaspace of staking airdrops to get more airdrops, but this metaspace was born and died quickly, as there have been no notable airdrops since TIA, aside from DYM (down 61.1% from TGE). This metaspace is now long decayed, down 76% from its ATH, awaiting a potential resurrection when CT stops airdropping on the TGE.
One could argue that the performance to date and the drop from ATH is due to the performance of the entire Altcoin market and not the airdrops, however, when comparing the performance of the airdrop TGEs to date to the YTD performance of their underlying ecosystem tokens, only 6/47 tokens (half of which are memes or AI) have outperformed their ecosystem tokens.
Relative performance of TGE airdrop tokens to date relative to their ecosystem tokens. Truncated outliers are highlighted in red. Source: CoinMarketCap and Coingecko as of August 25, 2024.
CT’s diagnosis places the blame for the epidemic on low-float, high-FDV token economics — the complaint that these tokens are merely exit vehicles for venture capital and are therefore almost destined to only go down. While there is some truth to this argument, especially given that most of the utility of these tokens rests on governance rights of nebulous value, there seems to be a deeper, more concerning problem. Projects that rely on usage, whether measured by TVL, transaction volume, or other metrics, paint a troubling post-TGE picture.
Layer 2 (L2)
TVL of 2024 airdropped L2 over time as of August 16, 2024. The dashed line represents the TGE date. Source: DefiLlama.
The new L2s that were hyped up have shown lackluster TVL growth or only a declining trajectory. Blast and zkSync Era are the most obvious examples - two heavily farmed airdrops that the space seemed to lose interest in after their TGEs. Manta Pacific initially continued to show strength, but this can be attributed to their "New Paradigm" event, which only enabled the Manta Pacific bridge on March 26, 2024, after which the chain's TVL has dropped significantly - currently down 94% from its ATH. A similar story may be playing out with Mode, which withheld 50% of its allocation from the first 2,000 wallets for 3 months on the condition that they would not bridge during this period. Beyond this, Mode's relative strength may be attributed to its Season 2 points program, which Manta does not have (although they did hold a "Re-collateralize Paradigm" event) and its inclusion in Optimism's Superfest. Taiko chose to hold a TGE at the time of mainnet launch, and it looks like the TGE had a positive impact on TVL, however, the TVL was only $14 million (0.73% of its token TVL) - clearly there was not much interest in the space.
Starknet’s TVL obviously did not follow this trend, but surged after the TGE. While this is undoubtedly an impressive performance, its disconnect with market sentiment also raises doubts.
Did the last 8 users on Starknet actually manage to revive it? Before the Starknet cult crucifies me, the Dune dashboard is inaccurate; DAU on 6/4/24 was actually 21.2k — down 94% from its all-time high two months prior (TokenTerminal). The first thing to note is that Starknet raised $282.5M at an $8B valuation (CryptoRank), meaning the TVL is still 18% less than funds raised. In comparison, Blast only raised $20M and its TVL is 190% higher than this — not impressive. Additionally, Nostra and Ekubo (both of which had disappointing airdrops) account for 85% of Starknet’s TVL.
Nostra TVL over time. Source: DefiLlama.
While it's unclear what exactly drives Starknet TVL, some think Nostra is worth looking at. NSTR has a market cap of $6.3 million (fully diluted) and a FDV/TVL ratio of 5%. NFA.
Cross-chain bridge
Looking at LayerZero’s daily transaction count, the picture becomes clearer.
Layerzero daily transactions. ZRO snapshot #1 date: 1/5/24. Source: Dune by @cryptoded.
After the first snapshot of the ZRO airdrop was announced on January 5, 2024, daily transactions plummeted 52% to ~45,000 and are currently 92% below January 5, 2024 levels at less than 7,000. Farmers, witches (whatever you want to call them) have been the driving force behind cryptocurrency adoption to date, or at least the illusion of it. While LayerZero is “old school” in the sense that there is no points program, tokens have been telegraphed all the time and users have acted accordingly, pushing as many transactions as humanly (or impersonally) possible to maximize their airdrop. These transaction counts were the inflated metric (CryptoRank) that was pitched to VCs during LayerZero’s $120M Series B in April 2023.
TVL of airdrop chains over time before August 2023: Optimism, Aptos, and Arbitrum. Source: DefiLlama.
Comparing this performance to airdrops prior to August 2023 (which likely belonged to the previous cycle) paints a very different picture (of course, we’re talking about the performance of the projects here, not the performance of their tokens). With the exception of Aptos, which had to conduct a TGE on mainnet (since APT is a gas token), Optimism and Arbitrum were well established before launching governance tokens more than a year after mainnet launch. This is in stark contrast to the more opportunistic environment of this cycle, with projects fast-tracking their mainnet and TGEs to reap the rewards. The L2 space is still in its infancy at this point — a far cry from the monthly L2 feel of this cycle.
How Does the Meta Heal?
Looking back at the largest airdrops of all time (ranked by ATH value), at least 7 of them were unexpected surprises for those who received them, and this positive sentiment is likely what caused the token to rise shortly after the TGE.
The top 10 largest cryptocurrency airdrops. Source: Coingecko Research https://www.coingecko.com/research/publications/biggest-crypto-airdrops
Last cycle, most airdrops were welcomed because they were seen as free money. Yes, intentional airdrop farming became more popular at the end of the cycle, but it was nowhere near the popularity it has this cycle. While Friendtech’s points system initially sparked excitement, it only took a few months for each project waiting for the bear market to end so they could create their own points program, turning the innovation into a tired cliché.
Farming points season after season requires more and more time and money, dimming the lustre of airdrops. Airdrops are no longer “free money” but have real farming costs, and the returns are shocking given the time, liquidity and fees, causing almost every recent airdrop to fall into a TGE death spiral.
It’s time to phase out the points mechanism. If the project is restored to the point where it no longer explicitly extracts all value from farmers through points and leaderboards, and the entire market turns bullish, farmers may be able to profit again.
Is the harvest worth our labor?
There are always dozens of projects in the TGE pipeline, so we'll only discuss a few here. For the full list, see Cape's tweet.
Linea and Scroll
Linea and Scroll are the last two large L2s without tokens (assuming Base does not issue a token), with Scroll raising $80 million at a $1.8 billion valuation, while Linea’s parent company Consensys has raised a total of $725 million at a $7 billion valuation (CryptoRank). While Consensys has many other projects, including MetaMask, it’s safe to assume that Linea has significant funding backing. Compared to zkSync and Starknet, which raised $458 million and $282.5 million at an $8 billion valuation, respectively (CryptoRank), Linea has at least the potential to be a decent startup, depending on the overall market heat. STRK briefly peaked at $50 billion in FDV minutes after launch — more than 6 times its valuation — while ZK launched with about $4.7 billion in FDV, a very solid airdrop for zkSync farmers and hired gun developers who happened to submit projects at the Starknet hackathon. Even though the launch of FDV will be seen as FUD for zkSync before March 2024, most dedicated farmers still received at least a few thousand dollars worth of ZK. For this reason, I think farmers who farmed before the Linea surge and before the Scroll pre-token will be looking forward to Christmas gifts in Q4. If you come late, it will take a lot of capital to catch up, but it may be worth it if you are farming multiple protocols at the same time (e.g. providing WRSETH/ETH liquidity on Ambient to farm Kelp, Scroll, and Ambient).
Linear Math
According to data from WhalesMarket, LXP and LXP-L are currently valued at $0.11 and $0.003 respectively, which means that the average airdrop associated with LXP-L is only $109, while the overall LXP-L airdrop is over $234 million.
As of February 9, 2024, Linea Surge dashboard by OpenBlock.
According to @nvthao’s Dune dashboard, most users (likely unique due to the Proof of Humanity requirement for Voyages) own 1000-1499 LXP, which means that for most users the pre-launch price is only around $137 — a pittance for months of friction and button clicks. There’s also the Linea Voyage testnet NFT, the Delta version of which is currently priced at 0.00187 ETH (~$5) on Element.
As of 2/9/24, the Linea Voyage Dune dashboard was made by @nvthao.
If the pre-market is to be believed, the average Linea farmer could only get $251 from a testnet voyage, a few mainnet voyages, and 6 Volt Surges, which is probably closer to $150 after gas fees - ouch. I personally think that the pre-market is overly bearish due to the L2 airdrop trauma, and if overall market sentiment turns bullish and CT's attitude towards airdrops returns to the direction it was in before March, LXP should be worth at least $0.50. Despite this, I still think most average people will be disappointed with Linea because as the project focuses more and more on TVL, trading push is no longer as rewarding as it once was.
Doing the same calculation for more Chad users who have already acquired most LXPs and have spent over $20,000 on Surge starting from volt 1, we get:
Alpha NFT = 0.05991 ETH (about $151)
Top 4.3% LXP holders = 4000 LXP ~ $440
Top 1,500 LXP-L holders = 3.5 million LXP-L, approximately $105,000
Total = $11091
I expect testnet NFTs and LXP to be worth more at the Q4 TGE, and I also expect some retroactive LXP to be distributed before the TGE for general activities. Regardless, this is already a very nice airdrop for Surge, providing liquidity at an annualized return of about 25%. Metadata is absolutely linear.
Scroll Maths
Scroll math is simpler. Using the (very low volume) WhalesMarket market, a Scroll token is currently worth about $0.27, and most wallets with 0-100 tokens are worth $27, but we are only in phase 1 so expect this to rise. The top wallets with 5000+ tokens are a respectable 16.9% with earnings of $1350+.
@barsus777's Scroll Marks Dune dashboard as of 2/9/24.
There is also Scroll Canvas, which requires more traditional transaction-based farming to collect more and more NFT badges. While the project has moved away from providing large token allocations to transaction-based activities, I find it hard to believe that the badges are not related to the airdrop allocation. Given that it is separate from the points program, they may act as a points multiplier.
Overall, unless you start farming before Marks is released, I think there are better places to keep your funds. If you can farm with $10,000, it might be worth it. That being said, if CT's attitude towards airdrops goes back to the direction it was in before March, then Chef might be serious.
LRTs
ETH re-staked over time for the 7 largest liquid ETH re-staking protocols. Source: Artemis.
Of the 7 largest ETH liquidity re-staking protocols by TVL, only 2 have airdropped so far: EtherFi and Renzo. While their tokens haven’t performed quite as well, down -60.4% and 79.7% from the TGE respectively, EtherFi has shown considerable strength, solidifying its place as the top choice for LRT. Meanwhile, Renzo’s TVL stagnated after the TGE, only to begin its significant decline a few months later. This is likely due to withdrawals only being opened in June, meaning many farmers were left holding onto their ezETH bags while ezETH de-pegged on the open market. It’s no surprise that there was no new ETH inflow post-TGE, following the chart crimes committed on their Twitter.
The other major LRTs haven't shown much growth since the airdrop craze died down, so I doubt there will be any chefs among them, although I'm still farming Kelp while farming Linea and Scroll.
We are still waiting for the EIGEN TGE, however, at a pre-market price of $3.62 (WhalesMarket), most farmers will not take out more than $400, even with an extra 100 EIGEN. We could see Karak and Symbiotic leading EIGEN into the TGE, but farming these is capital intensive.
Berachain and Monad
Finally, we have two of the most esoteric and high-profile projects we’ve seen: Berachain and Monad. While there has been a lot of interest in both projects on CT over the past 6 months, it’s unclear how these airdrops will be conducted, and there’s no mainnet date yet. Given that they raised $142M at a $420.69M valuation (haha) and $244M valuation respectively, they must have been a good deal for those who got their allocations.
Starting with Berachain, the less mysterious of the two, collecting lots of (expensive) Bera NFTs and securing an exclusive Discord role may be the most rewarding. If you don’t like trading NFTs, your best bet is to regularly interact with all the major dapps on the testnet (BEX, BEND, BERPS, etc.). A good way to do this is to collect badges through TheHoneyJar’s missions, although they are not directly related to Berachain. That being said, testnet interactions may be pointless (always remember Sui).
Monad is essentially a cult, and at least for now, since there is no testnet, the only way to farm is to gain reputation on social.
Conclusion
Airdrops are not over yet, but their future is clearly full of challenges. Hopefully, in this reflection, we can find new directions to truly give these projects value, rather than just being short-term hype tools.
