- The way DeFi projects conduct airdrops is changing.
- Initial coin offerings provide a compelling alternative.
The airdrops they are a’changin.’
The days of experimenting with new protocols and receiving lumps of valuable tokens are fading away.
Those kinds of airdrops, it turns out, were prime targets for so-called Sybil attackers to game.
Now, more and more crypto projects are tying airdrops directly to metrics like trading volume or deposits to keep Sybil attackers from raiding their airdrops. To put it simply, projects have moved to a system where the more you use a protocol — and pay it in fees — the bigger airdrop you could potentially receive.
Hyperliquid, the biggest decentralised perpetual futures exchange, showed how successful this strategy can be with its November 2024 airdrop. Unsurprisingly, more than half a dozen competitors have copied Hyperliquid’s “play-for-points” approach over the past year, something I predicted could happen at the end of 2024.
Even prediction market Polymarket is looking to Hyperliquid for inspiration as it prepares to launch and airdrop its token.
While that trend is set to continue well into 2026, there’s another big factor that stands to impact airdrops: initial coin offerings, or ICOs.
Selling tokens directly to investors faced a harsh crackdown back in 2018, but has made a roaring comeback this year under US President Donald Trump’s more crypto-lenient administration.
Top US-based crypto exchanges like Coinbase and Kraken have invested in ICO infrastructure this year, and are set to make token sales a prominent part of their offerings.
The return of ICOs doesn’t mean airdrops will go away, but it will significantly change what they look like. Here’s why.
ICO impact
With token sales back on the table, more crypto projects could opt to run ICOs instead of airdrops.
There are some good strategic reasons to do so. Airdrops can be very tricky to get right. Many projects are fearful of giving away too many tokens — or too few — and drawing the wrath of their users. Some may feel it’s better not to try and go the ICO route instead.
Then there’s the financial factor. ICOs generate cold, hard cash, while the financial rewards of incentivising users through an airdrop aren’t as direct. Some projects may feel that only conducting an airdrop when ICOs are also a possibility leaves money on the table.
Matt O’Connor, co-founder of token offering platform Legion, summed the situation up nicely.
“An airdrop attracts people who want to sell your token, while an ICO attracts people who want to buy your token,” he told DL News.
So, what is the impact for investors?
Projects that don’t rely on generating liquidity like perpetual futures exchanges — and especially those investors are excited about — could opt to skip airdrops entirely and launch tokens solely through ICOs, meaning fewer airdrops overall.
Recent ICOs from Plasma and MegaETH show that demand for these early-stage token sales can be incredibly high.
Projects that choose to conduct both an airdrop and ICO will have to find a balance between the amounts of tokens allocated to each. This could result in fewer tokens being distributed through airdrops, upsetting investors who had hoped for more.
One recent example of this is Monad, the blockchain project, which conducted an airdrop ahead of a $188 million token sale. It faced backlash from users after some complained the amount of tokens allocated in the airdrop was too small.
Losing trust
It’s not just competition from ICOs that is weighing on airdrops. Users are also losing trust in them.
Last month, Apriori, a trading infrastructure startup, came under fire after onchain records showed suspicious activity surrounding its token airdrop.
Approximately 80% of the project’s tokens on BNB Chain were claimed by a single clustered group of more than 5,800 wallets in what appeared to be a large-scale Sybil attack that relied on insider knowledge.
Elsewhere, projects like Aster, backed by Binance co-founder Changpeng Zhao, have faced scrutiny as it attempts to draw in users with the promise of multiple token airdrops.
Aster trading data isn’t public, leading some to allege that the exchange has inflated its user metrics.
To be sure, the issues impacting airdrops also apply to ICOs.
Take Edel Finance, for example. Onchain sleuths found that wallets tied to the project had bought up over 30% of its token using bots during its ICO last month.
The good news for investors is that many future ICOs will take place on high-profile platforms with reputations to uphold.
The likes of Coinbase and Kraken should be selective about which projects they pick for ICOs. They likely won’t suffer the kinds of shenanigans that plagued launches like Apriori and Edel Finance, which will hopefully create a more even playing field for investors.
Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.
