Airdrops: Imperfect Yet Irreplaceable, For Now

This year, airdrops have gotten a lot of flak in the crypto community. The disappointment mainly comes from the poor performance of airdropped tokens, the rise of airdrop farmers, and unclear distribution strategies by some projects. As a result, many on crypto Twitter are calling for new ways to distribute tokens, arguing that the airdrop trend may have had its day in the sun.

For instance, Simon Kim, the CEO of Hashed, took to Twitter to criticize the use of airdrops, labeling them a “ridiculous problem facing the crypto.” He pointed out that projects often don't pay much attention when handing out tokens, leading to distributions to individuals who aren't truly aligned with the project's goals.

“Even multi-billion dollar airdrop events are riddled with rudimentary problems that lead to dumping, and there are even hedge funds that specialize in airdrops, not just airdrop hunters.”

Aylo, a user on X, noted that this year, 23 out of 31 airdropped tokens had dropped in value since their launch day—many quite substantially.

“People like to complain that many airdrops have been badly designed, but based on this data it seems very hard to execute an airdrop to the community without it being detrimental to the token in the short and medium term (long term tbc).”

This raises a critical question: If the recipients of airdrops are only in it for quick cash, what’s the point?

Despite the backlash, airdrops remain one of the few viable methods for token distribution, especially after regulatory scrutiny effectively sidelined Initial Coin Offerings (ICOs). Airdrops help projects distribute tokens without having to sell directly to retail investors, thus dodging a host of regulatory issues.

Airdrops are meant to build community, which is key to any crypto project's success. Of course, there is always room for improvement. Projects can work on better targeting to avoid airdrop farmers and malicious players. However, making the distribution too restrictive could accidentally exclude genuine supporters, stirring up dissatisfaction from the broad community. 

It is also important to remember that airdrops aren't just about giving away free tokens—they inject liquidity into the ecosystem, which benefits the project and supports its ecosystem. So, even if some tokens go to the wrong people, the overall impact might still be positive for the thousands who are there for the right reasons.

Lastly, even though many people point fingers at the poor performance of airdrop tokens, this isn't necessarily a failure of the airdrop system itself. More often, it's a result of poor tokenomics and inflated project valuations that settle down after launch.

So, in short, airdrops aren't going anywhere for now and will remain a crucial strategy for projects issuing new tokens.