Podcast Notes | Interview with Dragonfly Partner: Controversy Around Celebrity Memes and zk-Related Airdrops
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Podcast Notes | Interview with Dragonfly Partner: Controversy Around Celebrity Memes and zk-Related Airdrops
The popularity of click-to-earn games may be a reaction to increasingly complex games and the proliferation of AI.
Navigating Web3 tides with focused insightsCompiled & Translated by: TechFlow
Guests:
Haseeb Qureshi, Managing Partner at Dragonfly
Tom Schmidt, General Partner at Dragonfly
Robert Leshner, CEO and Co-founder of Superstate
Tarun Chitra, Managing Partner at Robot Ventures
Podcast Source: Unchained
Original Title: $Mother, Hamster Kombat, & zkSync - The Chopping Block
Release Date: June 15, 2024
Highlights from This Episode
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Crypto Market Sentiment: Discussion on the latest market trends and how inflation data impacts the community.
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Memecoins & Celebrities: Analysis of Iggy Azalea's $Mother and the phenomenon of celebrities launching memecoins.
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Emerging Memecoins: Insights into new memecoins, including issues with fake and hacked accounts.
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Tap-to-Earn Games: Overview of the rapid rise of simple click-based games like Hamster Kombat.
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Airdrop Controversies: Exploration of recent controversies, particularly those involving ZK SYNC and LayerZero, and challenges with Sybil attacks.
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Future Airdrop Strategies: Discussion on the evolution and need for clear, ungameable metrics.
Current Market Sentiment
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Robert mentioned that recent market sentiment can be inferred inversely from price movements. He noted that encouraging inflation data released today (Wednesday) led to significant optimism, with the market believing the Federal Reserve might lower interest rates this year, bringing markets back on track.
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However, this optimism lasted only a few hours before a sharp sell-off caused prices to drop again. Ultimately, market sentiment returned to a relatively calm and观望 state.
Celebrities and Their Impact on Memecoin Markets
$Mother
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Tarun pointed out that the biggest news on crypto Twitter today is Iggy Azalea promoting her memecoin.
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Haseeb cited comments made by Iggy Azalea in an interview questioning Vitalik’s views on charities and hospitals, implying that Vitalik profits from gas fees.
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Haseeb introduced background on Iggy Azalea and her memecoin “Mother,” noting she is now more of an internet personality and has clashed with notable figures in the crypto community.
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Displayed a meme showing Iggy Azalea nursing Vitalik as a baby, suggesting she is his “mother.”
Market Impact
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Tarun noted that the memecoin market hasn't been quiet this week, with many celebrities entering the space.
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Haseeb explained that Hulk Hogan's memecoin was the result of a hack, highlighting that hackers now profit by launching fake memecoins.
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He mentioned Andrew Tate launched a memecoin called “Daddy,” competing directly with Iggy Azalea’s “Mother.”
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Haseeb emphasized that celebrity involvement in memecoins has reached a peak, though he believes even higher peaks may come.
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Haseeb discussed the future of celebrities monetizing through memecoins and other means, suggesting celebrity tokens could be positive-sum games under certain conditions.
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He contrasted celebrity tokens with traditional product endorsements, arguing that while celebrity tokens may create initial value, that value erodes as the market saturates.
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Robert believed the most valuable way for celebrities to monetize is through new ventures (e.g., alcohol brands, vitamin water, headphones), which are legitimate businesses capable of creating real value.
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He argued that memecoins might generate positive wealth during breakout successes but are typically zero-sum games otherwise.
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Robert highlighted Doge’s unique value proposition—the first satirical crypto asset designed to parody Bitcoin, Litecoin, and other Bitcoin forks—giving it greater staying power in crypto history, unlike other celebrity coins lacking such uniqueness.
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Robert discussed memecoin market saturation, stating demand is limited and will eventually peak.
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Tom agreed that every market trend eventually saturates, and the current memecoin trend is no exception.
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He reiterated the difference between celebrity tokens and traditional endorsements, noting that while memecoins may create early value, it diminishes as markets saturate.
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Tarun argued the core truth about memecoins is their attempt to simplify revenue-sharing protocols, though they ultimately fail to solve the problem.
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He discussed Pump.fun as the first successful token launchpad project—easy to use and fun. Tom noted it feels closer to a genuinely viral consumer app than most blockchain gaming projects.
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Robert said Pump.fun was the first Launchpad-like project and executed well.
Tap-to-Earn Games: Hamster Kombat vs Notcoin
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Haseeb mentioned two notable blockchain gaming projects worth discussing: Notcoin and Hamster Combat.
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Haseeb introduced Hamster Combat as a Telegram-based tap-to-earn game where players earn feedback and points by tapping images of hamsters on screen.
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Hamster Combat already has over 100 million users, surpassing Ethereum in daily active users.
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Haseeb believes success in blockchain gaming may become a social issue, as these games can be addictive and time-wasting. Haseeb talked about the simplicity and virality of these games, saying they fulfill people’s desire for “digital growth.”
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Robert believes tap-to-earn games succeed because they are simple and easy to start, appealing to those wanting rewards for light effort.
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Robert mentioned their short-term appeal, noting players tend to lose interest after a while.
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Robert continued discussing economic loop issues, suggesting players may lose motivation once airdrops end. He also pointed out these games require almost no technological innovation.
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Tarun suggested tap-to-earn games’ popularity might be a reaction to complex games and AI overload. He linked their success to low computational demands and ease of use.
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Tom believed tap-to-earn games are a response to high-end games—people prefer simpler experiences requiring less commitment.
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Tom noted cultural cycles, observing a return to simplicity. He suggested these games reflect a societal craving for “digital growth,” possibly indicating underlying discontent.
Airdrop Controversies
Airdrop Meta (zkSync & LayerZero)
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Haseeb discussed recent airdrop trends, noting that many major airdrops have come with controversy and drama. He referenced zkSync and LayerZero airdrops.
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zkSync, a zero-knowledge rollup, announced it would airdrop 17.5% of its total supply to users. Despite the large scale, only about 11% qualified, sparking widespread anger—especially among farmers.
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LayerZero’s airdrop strategy allowed users to self-report—if they reported themselves as bots, they’d receive 15% of the original allocation. Successfully reporting others earned whistleblowers 10% of the reported user’s share. This approach drew mixed reactions.
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Haseeb noted that nearly all recent airdrops have failed to gain unanimous approval, indicating a systemic issue.
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Tarun argued that expectations around airdrops keep rising over time, making it increasingly difficult to satisfy everyone. He said expectations were set by the first projects using novel mechanisms, forcing later projects to pay a growing “premium” to meet them.
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Tom agreed that rising airdrop expectations are a widespread problem.
Challenges of Fair Airdrops
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Haseeb mentioned that in the past six months, almost no major airdrop has satisfied everyone.
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Tom believed fairness and transparency in airdrops are critical when dealing with massive user bases and potential bots. He cited GMV’s airdrop as one of the few recent examples that avoided major backlash.
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Tarun mentioned Celestia’s airdrop as an exception—they distributed tokens to developers and researchers, a method since emulated by other projects.
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Tarun referenced a behavioral economics phenomenon: once expectations are set, they only grow higher.
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He explained specific manifestations—for example, individuals who received large rewards in Celestia’s airdrop now expect similar returns from other projects.
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Tarun compared this ever-rising expectation to salary inflation—once set, it's hard to lower.
The Industrialization of Airdrops
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Haseeb raised concerns about airdrop industrialization, suggesting it may contribute to increased controversy.
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Six months ago, the scale of airdrop farming was much smaller. While airdrop hunters existed, their numbers and tools were far less advanced than today.
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He noted that users in emerging markets can now easily participate via guides and tools, making airdrop farming more widespread.
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Haseeb believed for some projects—like decentralized exchanges (DEXs) or liquidity providers—measuring user behavior is relatively straightforward, leading to fewer disputes.
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But for ambiguous projects—such as Layer 1 protocols or Celestia—users don’t know what actions qualify them for airdrops, increasing uncertainty and conflict.
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Tarun agreed with Haseeb, noting Celestia’s airdrop was exploited by industrialized farmers. He referenced memes reflecting user frustration.
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Tom believed airdrops requiring more “skin in the game”—like capital investment or transaction fees—tend to face less controversy.
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He mentioned a meme in ZKSync’s Discord reflecting strong dissatisfaction from Indian users.
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Tarun felt the ecosystem is somewhat out of control, with users manipulating metrics in various ways to claim airdrop rewards.
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He argued current airdrop systems are too complex and vulnerable—an ineffective method for token distribution.
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Tarun predicted future airdrop models may completely shift, as the current system is fundamentally flawed.
Future Airdrop Strategies
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Haseeb pointed out that current airdrop mechanisms lack adversarial robustness, making it hard to distinguish real users from fake accounts (Sybil attacks). As airdrop hunters improve their techniques, anti-Sybil measures become less effective, increasing false positives and misidentification rates.
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He suggested projects tacitly accept airdrop hunters because they boost key metrics.
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There exists a “Faustian bargain” between projects and airdrop hunters—projects allow hunters to inflate short-term metrics, but long-term resentment grows.
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Haseeb noted future trends may shift. Projects might clarify criteria earlier—explicitly telling users what behaviors will be rewarded, choosing hard-to-manipulate metrics like liquidity. This avoids surprises and manipulation. Alternatively, the “cat-and-mouse” game between hunters and projects may continue indefinitely, each side evolving to counter the other’s Sybil tactics.
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Robert believed Proof of Work (PoW) succeeded in Bitcoin because it aligns closely with the project’s core goals. Current airdrop mechanisms resemble “fake work”—providing no real value to the project, serving mostly optics. Future mechanisms must better tie work to token distribution to increase project success.
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Tarun discussed differences between Proof of Work (PoW) and Proof of Stake (PoS), arguing PoS falls short in some aspects. Airdrop mechanisms need more randomness and continuity to reduce expectation management problems. He also noted fraud issues in other domains—like gaming and Spotify—are unresolved; airdrops are no different.
The Role of KYC in Airdrops
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Haseeb suggested we may move toward full KYC for airdrops, especially since certain regions (e.g., Lugansk, Crimea, U.S., India) are already excluded. If restrictions exist, full KYC might be the logical next step.
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Tarun opposed this idea, arguing KYC doesn’t scale and would concentrate assets among those who pass verification, undermining broad distribution. He also noted many airdrop hunters likely couldn’t pass KYC.
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Haseeb further explained that current anti-Sybil measures are essentially a “crude version of KYC,” using various signals to verify real users.
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Tom believed returning to linear airdrops—allocating based on hard-to-manipulate metrics—might be a more practical solution.
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Haseeb mentioned future zero-knowledge (ZK) technologies could enable verification without exposing users’ KYC data.
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Tarun believed such tech may emerge but isn’t mature yet. Even if available, many would still be excluded.
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Tarun worried that adopting KYC could make governments more likely to classify tokens as securities, increasing complexity and compliance costs.
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