Project teams must read: Say goodbye to airdrop traps and let the "羊毛出 in pig" model drive long-term growth
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Project teams must read: Say goodbye to airdrop traps and let the "羊毛出 in pig" model drive long-term growth
Users benefit for free, projects expand their influence, and payers gain users, data, or brand exposure.
Navigating Web3 tides with focused insightsAuthor: JiaYi
In recent years, it has become standard practice for crypto projects to distribute large airdrops shortly before their token generation event (TGE). By offering free tokens, projects aim to generate sufficient buzz and user attention prior to launch. However, reality often follows the pattern of "launch at peak," where both popularity and price rapidly decline. After claiming airdrops, users typically dump tokens immediately, putting downward pressure on the market, cooling community enthusiasm, and ultimately collapsing the user base the project just built.
While airdrop-driven traffic may look impressive in the short term, it rarely translates into lasting community assets or genuine product users. Most projects lack real-world use cases, so after airdrops, they often rely solely on continuous token emissions to maintain user activity—an incentive model that essentially borrows from future value. In the end, both tokens and user traffic are funneled into arbitrage loops dominated by "freeloaders," wasting resources that could have supported actual project development. A mechanism originally designed to bootstrap ecosystems instead becomes a burden that weakens a project’s long-term viability.
To break this cycle, the conclusion is clear: projects must become “projects where the wool comes from pigs.” That is, the benefits given to users should truly be funded by third parties willing to pay. The saying “the wool comes from pigs” refers to platforms offering free products or services to users while charging other market participants. In the Web3 context, this means projects do not profit directly from users; instead, they first provide benefits to users, with other stakeholders covering the cost—creating a win-win-win scenario: users gain value for free, projects expand their influence, and paying parties receive users, data, or brand exposure in return.
Three-Step Implementation: Building an Ecological Closed Loop
If you’re a project founder, you might be thinking: “I’d love for someone else to pay for my users—but how?” I recommend approaching it in three steps:
1. Define your core user group: Clearly identify who your most important users are at this stage. Are they experienced traders active on your platform? Daily users of your product? Or perhaps token holders? Put differently, define what user behavior constitutes success. Only by locking onto the users who truly drive results can subsequent strategies stay on target.
2. Identify unique competitive advantages: Analyze your project’s moat and pinpoint strengths others cannot easily replicate. This could include cutting-edge technical capabilities (e.g., robust infrastructure), a large and active user community, or unique data assets. Ask yourself: “What exclusive capability do I have that others lack but desperately need?” Only by clarifying your core value can you confidently ask others to pay.
3. Find the paying “pig”: Locate partners who most need your resources and are willing to pay for them. For example, if an exchange or blockchain project boasts strong liquidity, you could collaborate with new projects that pay in tokens or cash for access to your platform. If you operate a DApp with a large active user base, other projects seeking users might pay to run airdrops or promotions through your channels. In short, whoever lacks your advantage and is willing to pay for it—is the “pig.”
Through these three steps, you’ll find that having others fund benefits for your users isn’t fantasy—it’s a designable business model. Essentially, you leverage your core resources to help partners achieve their goals, and in return, they fund rewards for your users, forming an ecological closed loop. This keeps users consistently enjoying benefits while strengthening your ecosystem’s stickiness.
Case Study: Binance’s Liquidity Strategy
Take Binance, the world’s largest exchange, whose core strengths lie in massive liquidity and a vast user base. Binance’s primary users include traders and BNB token holders. It offers new projects the opportunity to pay in tokens or cash to gain liquidity and visibility. Through initiatives like Alpha Airdrops, Binance distributes new project tokens for free to users who hold BNB or participate in mining. This helps new projects quickly gain attention and liquidity, while rewarding Binance’s loyal users and increasing retention among BNB holders. Alpha Airdrops target active users who stake, trade, or provide liquidity, achieving a win-win: users gain rewards, and new projects gain exposure.
One common question: “Why doesn’t Binance airdrop to regular spot traders?” The answer lies in trading volume being primarily driven by market makers (MMs), who profit from liquidity. To retain these key MMs, Binance prefers to allocate airdrop benefits to smaller retail users, broadening its user base to promote new projects. This embodies the “wool from pigs” principle: scratching the sheep (retail users) for free, while the real cost is borne by project teams needing liquidity and market makers maintaining order books.
Another notable case is Kaito, a social incentives platform. Its mechanism treats user behavioral data and content engagement on social media (mainly Twitter) as an “asset” to attract traffic, then partners with crypto projects to distribute their tokens as rewards to content creators. Here, users earn points or airdrops by contributing attention and influence, while the actual cost is covered by new projects seeking social traction ahead of TGE.
On the surface, this is a classic “wool from pigs” model: users gain for free, Kaito facilitates demand, and project teams pay for visibility. However, this model carries inherent structural risks. Its sustainability hinges on whether Kaito can maintain long-term control over social attention channels. If project teams later find more efficient or cost-effective user acquisition methods, Kaito’s role as a “middleman” will sharply diminish.
Win-Win Collaboration: Core Value Determines Ecological Lifeline
Whether a technical or community-driven project, the prerequisite is safeguarding your core competitiveness. Once you lose the unique value that makes others willing to pay, the model collapses. Ultimately, “wool” only exists because “pigs” see value and are willing to pay. If you struggle to identify your strengths, consider pivoting or doubling down on your deepest expertise.
For project teams, rather than endlessly spending money to prop up prices, think harder about which of your resources can be exchanged. Find the right partners and bring external forces into your ecosystem. For instance, your strong user community could drive traffic for other new projects, or your unique data assets could aid decision-making. These are exactly the kinds of value others will pay for in tokens or cash. When executed successfully, your users enjoy tangible benefits, your ecosystem grows stronger, and your partners achieve their goals—everyone wins.
Investor Perspective: Sustainability Through Empowerment
Today’s crypto market sees less hype and more rational investors—an indicator of industry maturity. As an industry observer, I believe projects that survive long-term will either achieve breakthroughs in technology or product (delivering lasting value) or pioneer innovative business models (enabling virtuous cycles). Projects combining both naturally hold greater advantage.
For investors, when encountering another overhyped project, first ask: does it have the ability to generate revenue from third-party payers? Can the project truly keep “the pig flying”? After all, only those collaboration models where “pigs keep ordering and sheep never starve” will ultimately succeed in this market.
The “wool from pigs” mindset is not just a slogan—it’s a viable strategy guiding project operations. It demands that project teams clarify their value, design ecosystem subsidy mechanisms, and co-build growth with partners.
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