New cryptocurrency projects generally adopt airdrops, but data from the past seven years shows that up to 88% of airdropped tokens depreciate within three months.
According to a report released by DappRadar analyst Sara Gherghelas on September 18, over $20 billion has been distributed through airdrops since 2017, but 88% of those tokens have depreciated within months, highlighting the gap between short-term hype and long-term sustainability.
DappRadar's content director Robert Hoogendoorn stated in an interview with Cointelegraph that the method of token distribution is key to the success of airdrops, as projects aim to hand tokens over to committed holders.
He said, "Some of the more successful airdrops have used phased distribution, like Optimism, or highly targeted distribution, effectively limiting community sell-offs. However, there is no unified formula for success; it all comes down to the distribution method, product-market fit, and the actual utility of the token."
The first recorded cryptocurrency airdrop occurred in 2014 when the Auroracoin project airdropped its native token AUR as the Icelandic version of Bitcoin (BTC).
Hoogendoorn pointed out that airdrops are more common during bull markets, and the methods of airdrops have evolved with on-chain interactions, social media activity, and liquidity provision.
However, Hoogendoorn noted that project teams should analyze users' on-chain behavior, trading habits, and even social media reputation more cautiously to avoid phenomena like airdrop hunting and airdrop farming.
He stated, "We have already seen airdrop distributions start to incorporate reputation systems, such as integrating social media activity. At the same time, different projects are distributing portions of airdrop shares through interaction and reward platforms."
According to Azura CEO Jackson Denka in an interview with Cointelegraph, many airdropped tokens depreciate because the underlying protocols are fundamentally flawed, "with no real users adopting them and no revenue being generated."
He said, "No matter what financial engineering, incentives, or subsidies are used, it cannot change the fact that some assets are more worthy of investment than others."
For example, Hyperliquid was praised as the best airdrop launch in history for excluding venture capital firms and strongly encouraging community participation when it launched its airdrop in November 2024.
In the long run, Denka stated that airdrops will gradually take a backseat, as more initial coin offerings (ICOs) emerge, and investors will pay to acquire tokens before they go public, which is essentially equivalent to an initial public offering (IPO) but in the form of cryptocurrency tokens.
He said, "Other financial markets around the world do not give away equity for free to users. Uber didn't do it, Robinhood didn't do it, and Facebook didn't do it."
According to SecondSwap CEO Kanny Lee in an interview with Cointelegraph, the depreciation of airdrops is due to project teams releasing too much liquidity at once, flooding the market with tokens.
Lee pointed out that the last two successful airdrop cases rewarded users for sustained active behavior, which helped maintain liquidity after initial volatility, and adopted a gradual unlocking mechanism to phase the supply into the market.
He elaborated, "Both methods emphasize sustained user activity and gradual accumulation of liquidity; only in this way can the token's value be maintained in the long term. Sustainable liquidity should be the core goal of any airdrop design, with the key being the duration the token remains active in the market, rather than just the quantity distributed."
Additionally, Lee believes that the trend of encouraging users to hold tokens will become standard practice in the future.
He said, "By rewarding continuous participation or gradually releasing supply, it helps prevent severe market corrections after large-scale distributions."
Related: Coinbase: 67% of institutions are optimistic about Bitcoin (BTC) in the next six months
Original article: “88% of cryptocurrency airdrops perform poorly, how to break this curse?”
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