Stop pretending airdrops are effective anymore
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Stop pretending airdrops are effective anymore
It's time to focus on building long-term, value-driven models that ensure loyalty from both users and developers.
Navigating Web3 tides with focused insightsBy: ANDREW REDDEN
Translated by: zhouzhou, BlockBeats
Editor's note: Airdrops were once a key tool for driving the growth of crypto projects. But over time, they've revealed significant downsides—particularly their tendency to attract short-term speculation rather than foster lasting loyalty among users and developers. Many projects rely on airdrops and grant programs that only draw in "hot money," which quickly disappears. The future lies in building long-term, value-driven models that incentivize sustained participation and contribution from both users and developers, enabling more stable ecosystem development.
It’s time we focus on building long-term, value-driven models that ensure user and developer loyalty.
After more than a decade of operating in the cryptocurrency startup space, I’m ready to declare a paradigm shift: the era of airdrops is over, and developer reward programs are likely headed the same way.
Blockchain projects must therefore change course—from relying on short-term incentives toward building long-term, value-oriented models that secure the loyalty of users and developers. Without this shift, the entire industry risks stagnation, or even decline.
Airdrops entered the mainstream in 2020 when Uniswap’s decentralized exchange distributed 400 UNI tokens to every wallet that had interacted with its platform. The strategy aimed to drive broad adoption by giving users a financial stake in the project—and it worked. Other projects quickly followed suit, and airdrops soon became an expected norm across the DeFi community.
However, airdrops have also brought unintended negative consequences. “Airdrop farming” has become increasingly prevalent, with users creating multiple accounts or performing minimal interactions solely to qualify for token distributions. Worse still, these opportunists typically leave immediately after claiming rewards, causing rapid declines in user engagement and token value. As a result, airdrops have failed to cultivate long-term loyal users and instead have become synonymous with short-term speculation.
Take Blast, a Layer-2 scaling solution, as an example. In June this year, Blast distributed 17 billion newly minted BLAST tokens to early users, hoping to attract capital and users. The outcome, however, was disappointing. Many recipients were underwhelmed by the small size of their rewards, and on-chain data showed that a significant number of users left the platform shortly after claiming their tokens. BLAST’s price dropped 20% within hours as many users quickly sold off their tokens. More strikingly, the protocol’s total value locked (TVL)—the very capital the airdrop aimed to attract—had already declined by over 33% in the month prior to the airdrop. Deposit users took their rewards and exited the platform swiftly.
Rather than retaining users, airdrops have become targets for “hot money”—users who collect rewards and immediately move on to the next opportunity. According to recent research by CoinMetrics, two-thirds of airdropped tokens have depreciated since issuance. The median return for airdropped tokens held to date is -61%.
This isn’t just a problem for individual developers; it’s a systemic issue. Networks reliant on short-term incentives tend to attract transient users and developers who come and go quickly. This constant churn undermines network stability and erodes trust across the DeFi ecosystem.
Grant programs in blockchain face similar challenges. While such funding helped launch new platforms in their early stages, their effects are as fleeting as airdrops. Developers often jump between blockchains, copying their services across multiple environments to capture grants, but struggle to build long-term projects on any single platform. This “builder dilemma” affects not only developers but also makes it difficult for networks to maintain stable and loyal communities.
The instability of these incentive models leads to boom-and-bust cycles, making it hard for developers to predict future activity and revenue. Developers often invest significant resources into projects, only to receive a fraction of what was promised due to unpredictable and frequently politicized funding processes. This contradicts the original intent of grant programs and runs counter to the open access and composability principles that the crypto industry advocates for at both technical and ethical levels.
CoinMetrics notes in its report that while airdrops may temporarily boost protocol usage, whether they can generate genuine, sustainable long-term growth remains unproven. Given how most airdrops and grant programs currently operate, there’s no reason to believe short-term incentives will suddenly begin driving long-term adoption, liquidity, or positive token price trends.
Airdrops and grant-based incentives were excellent tools for launching projects between 2020 and 2022. But that period is over. While they will continue to play some role in the broader ecosystem, the days when these tools alone could meaningfully drive adoption and growth are behind us.
In the post-Blast era, potential “airdrop farmers” will be increasingly skeptical of airdrop value. Consequently, weaker projects will cycle through boom-and-bust phases more rapidly, further turning “airdrops” from an attractive gimmick into a negative term.
So what’s the solution? Blockchain projects must move beyond these transient incentives and focus on establishing long-term, value-driven models that align the interests of all participants. This means creating systems that not only reward users and developers for joining, but—more importantly—reward them for staying in the ecosystem and contributing to its growth over time.
Whether you’re a depositor or a developer, you’ll soon face a choice. You can opt for a one-time payout of uncertain value—likely to lose 30% of its worth by next week—or you can earn ongoing rewards based on the network’s actual performance and the extent of your positive contributions, continuing as long as you remain engaged.
It’s been nearly five years since Uniswap’s debut. Airdrops and grants are no longer enough. It’s time we build protocols that are truly designed to function sustainably over the long term.
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