Airdrops were once an important tool to promote the development of encryption projects, but over time, they gradually exposed the shortcomings of short-term speculation and found it difficult to maintain the long-term loyalty of users and developers. Many projects rely on airdrops and funding programs, which attract "hot money" that quickly drains away.
In the future, blockchain projects should focus on building a long-term, value-driven model to encourage users and developers to continue to participate and contribute to achieve a more stable ecosystem development. It’s time we focus on building long-term, value-driven models that ensure user and developer loyalty.
Has airdrop come to an end?
After more than a decade of running cryptocurrency startups, I’m ready to announce a paradigm shift: airdrops have come to an end, and developer reward programs are likely to meet the same fate.
Therefore, blockchain projects must change their thinking and no longer rely on short-term incentives, but should focus on building long-term, value-oriented models to ensure the loyalty of users and developers. If such a change is not made, the entire industry will face stagnation or even decline.
Airdrops first went mainstream in 2020, when the Uniswap decentralized exchange distributed 400 UNI tokens to every wallet that interacted with its platform. This strategy was designed to drive broad adoption of the platform by giving users financial stakes in the project, and it was successful. Soon after, other projects followed suit, and airdrops quickly became a common expectation in the DeFi community.
However, airdrops also bring some unexpected negative effects. For example, there is the growing phenomenon of “airdrop farming,” where users create multiple accounts or perform minimal operations just to receive token distributions.
To make matters worse, these opportunists often leave the project quickly after claiming their rewards, leading to a rapid decline in user activity and token value. As a result, airdrops not only failed to cultivate long-term loyal users, but instead became synonymous with short-term speculative gains.
Take the Layer-2 expansion solution Blast as an example. In June this year, Blast issued 17 billion newly issued BLAST tokens to early adopters, hoping to attract users and capital. However, the results were not ideal, with many recipients disappointed with the small rewards they received, and on-chain data also showed that many users left the platform soon after receiving the tokens.
The price of BLAST fell by 20% in a matter of hours as many users quickly sold off their tokens. Even more strikingly, the protocol’s total locked value (the capital the airdrop was designed to attract) had fallen by more than 33% in the month leading up to the airdrop. Deposit users quickly left the platform after receiving profits.
Quickly harvest the airdrops and then leave the field
Airdrops not only failed to attract users and retain them, but instead became the target of "hot money" - these users quickly left after receiving the rewards to look for the next opportunity. According to new research from CoinMetrics, two-thirds of airdropped tokens have lost value since their issuance. The median return on airdropped tokens held to date is -61%.
This is not just a problem faced by developers, but a systemic problem. Networks that rely on short-term incentives tend to attract transient users and developers who come and go as quickly as they come. This frequent churn weakens the stability of the network and erodes trust in the entire DeFi ecosystem.
Blockchain funding programs face similar challenges. While these grants initially help get new platforms off the ground, their effects are as short-lived as airdrops. Developers often jump between multiple blockchains, replicating their services into multiple environments to seek funding, but struggle to establish long-term projects on any single platform. This "builder's dilemma" not only affects developers, but also makes it difficult for major networks to maintain stable and loyal communities.
The instability of these incentive models leads to boom-bust cycles, making it difficult for developers to predict future activity and revenue. Developers often pour significant resources into projects, only to receive only a fraction of what was promised due to the unpredictability and frequent politicization of the funding process. This goes against the original intent of the funding program and goes against the goals of open access and composability promoted by the crypto industry on a technical and ethical level.
CoinMetrics noted in its report that airdrops may boost protocol usage in the short term, but whether it will create real, sustainable long-term growth remains to be seen. Based on the way most airdrop and funding programs work right now, there is no reason to believe that short-term incentives can suddenly start creating long-term adoption, liquidity, or positive token price movement.
Airdrops and funding incentives are really great tools to start projects between 2020 and 2022. However, this period has passed. While they will still play a role in the broader ecosystem, the days of thinking these tools alone can truly drive adoption and growth are over.
In the post-Blast era, potential “airdrop farmers” will be even more skeptical of the value of airdrops. Accordingly, those weaker projects will experience cycles of boom and bust more quickly, further turning “airdrop” from an attractive gimmick into a negative word.
So, what's the solution? Blockchain projects must move beyond these short-term incentives and focus on building long-term, value-driven models that align the interests of all participants. This means developing a system that rewards users and developers not just for coming, but more importantly for staying in the ecosystem long-term and contributing to its growth.
Whether you're a depositor or a developer, you'll quickly be able to make your choice. You can choose to be paid a one-time, indeterminate amount, with the token likely to lose 30% of its value over the next week, or you can be paid continuously for as long as you want, based on the actual performance of the network and the size of your active contribution to it. , you will continue to get rewards.
Nearly five years have passed since Uniswap’s debut. Airdrops and funding are no longer enough. It’s time for us to build a protocol that can truly work in the long term.
