Despite preliminary worth spikes, a major variety of tokens noticed steep declines quickly after launch.
This article analyzes essentially the most notable successes and failures of 2024’s airdrops and explores the important elements that influenced their efficiency, together with neighborhood retention, token distribution measurement, and the impact of Fully Diluted Valuations (FDV) on worth.
The Challenges of Airdrop Sustainability
The majority of 2024’s airdrops skilled fast declines in worth inside simply 15 days post-launch. Our evaluation of 62 airdrops throughout six completely different blockchains confirmed that 88% of those tokens confronted vital drops inside months, regardless of preliminary hype, in response to Keyrock’s analysis.
This development highlights a recurring concern: whereas airdrops successfully appeal to customers at launch, they usually fail to retain them, resulting in protocol abandonment. This sample is exacerbated by many customers farming airdrops for fast rewards moderately than partaking with the tasks long-term.
Winners and Losers in 2024 Airdrops
Among the 62 airdrops studied, Ethereum and Solana had one of the best retention charges, with 25% and 14.8% of tokens from these chains yielding constructive returns after 90 days.
Solana, specifically, carried out effectively, reflecting its robust retail following. In distinction, chains like BNB, Arbitrum, and Starknet noticed none of their airdropped tokens maintain constructive returns.
A standout winner was $DRIFT, a decentralized futures platform on Solana. It allotted 12% of its token provide within the airdrop and designed a intelligent distribution system to encourage long-term neighborhood engagement. As a consequence, it noticed a virtually 3x enhance in market worth post-launch. On the flip facet, $ZEND from ZkLend confronted a steep 95% drop in worth after attracting primarily short-term speculators moderately than dedicated customers.
Impact of Airdrop Size on Token Price
The measurement of an airdrop—how a lot of a mission’s token provide is distributed—performs a important position in its post-launch efficiency. Our information reveals that bigger airdrops (over 10% of the full provide) are inclined to carry out higher over the long run, fostering a stronger sense of neighborhood possession and loyalty. In distinction, smaller airdrops (lower than 5%) usually see sharp sell-offs quickly after distribution.
While massive airdrops create early worth volatility as a consequence of promoting strain, additionally they assist set up a extra steady person base. Medium-sized airdrops (5-10%) strike a steadiness between preliminary provide management and person retention, usually performing higher than smaller airdrops however not in addition to the biggest distributions.
Fully Diluted Valuation (FDV) and Liquidity
Another vital issue affecting the success of airdrops is FDV. Tokens with inflated FDVs—particularly with out sufficient liquidity to assist them—are susceptible to steep declines. Our analysis reveals that tasks launching with a modest FDV fared higher than these with excessively excessive valuations, which regularly lacked enough liquidity to stop drastic worth drops when early holders cashed out.
For instance, $W, which launched with an FDV of $13 billion however lacked satisfactory liquidity, noticed an 83% decline in worth. In distinction, $DRIFT’s decrease FDV and higher liquidity administration allowed it to take care of stability and foster longer-term worth assist.