Ran Neuner, Crypto Banter, “We Don’t Need Anymore Airdrop Threads!”: Free Lunch With An Expiration Date? ( Cryptomanran )

Brian Lathe
3 min readJan 11, 2024
Ran Neuner of Crypto Banter recently posted about crypto airdrops on Twitter.

Are crypto airdrops subject to the law of diminishing returns?

In the thrilling, hyper-connected world of cryptocurrency, few things ignite excitement like the word “airdrop.” Free tokens raining down from the digital heavens, promising access to revolutionary new projects, early adopter advantage, and potentially life-changing gains. But amidst the hype, a sobering truth whispers: airdrops, like all good things, may be subject to the relentless law of diminishing returns.

History of the airdrop frenzy…

Before we dive into the why, let’s rewind and define: airdrops are free distributions of cryptocurrency tokens sent directly to user wallets, typically to promote awareness and adoption of a new project. They come in various forms — from one-time handouts to ongoing reward programs — and can target specific user groups or be open to all.

Initially, airdrops were a magic bullet. Projects hungry for traction and users thirsting for the next moonshot found a perfect match. Early participants in successful airdrops, like Uniswap’s UNI or Compound’s COMP, enjoyed life-altering windfalls.

But as with any gold rush, the frenzy couldn’t last. An explosion of new projects, each vying for attention with their airdrop, flooded the market. The once-thrilling deluge became a daily drizzle, diluting the excitement and value of each drop.

Let’s unpack the reasons why crypto airdrops might be reaching their peak:

1. Supply glut, demand fatigue: With thousands of tokens airdropped monthly, users can’t keep up. Attention spans wane, wallets overflow, and the thrill of acquiring “free money” diminishes. The sheer volume numbs participants, who start asking, “Is this token even worth claiming?”

2. Dumping and dilution: Many airdropped tokens aren’t meant to be held long-term. They’re seen as quick flips, leading to immediate sell-offs that tank the price. This volatility frustrates genuine users and undermines the project’s value proposition.

3. Diminishing utility: Airdrops were once gateways to groundbreaking protocols. Now, many are generic tokens with unclear use cases. This lack of intrinsic value further weakens the incentive to participate.

4. The rise of scams and rug pulls: As the airdrop field gets crowded, bad actors exploit the hype. Fake projects lure unsuspecting users with promises of riches, only to disappear with their tokens. This erodes trust and creates a negative association with the entire concept.

So, are airdrops dead? Not necessarily. But their golden age is likely over. Here’s what the future might hold:

1. Targeted airdrops: Projects may focus on reaching niche communities and users who genuinely align with their vision, creating more meaningful engagement.

2. Utility-driven drops: Airdrops with clear use cases for their tokens, like access to exclusive features or governance rights, could offer more lasting value.

3. Curation and education: Platforms that carefully vet and recommend airdrops, educating users about potential risks and rewards, could play a crucial role.

4. Focus on sustainability: Projects may move away from one-time handouts and towards airdrops integrated into their long-term token economics, fostering a more sustainable model.

Conclusion on crypto airdrops

Ultimately, the success of airdrops will depend on shifting their focus from fleeting hype to fostering genuine interest and engagement. Instead of a free lunch, they should become stepping stones toward meaningful participation in impactful projects.

As for users, a healthy dose of skepticism and cautious participation are key. Do your research, understand the project’s vision, and avoid chasing quick gains. Remember, even free money comes with strings attached, and the law of diminishing returns applies even in the airdrop universe.

In conclusion, while airdrops have played a significant role in crypto’s evolution, their “get rich quick” allure is fading. Understanding the potential downsides and approaching them with a critical eye is crucial. The future of airdrops lies in crafting meaningful connections between projects and users, where value creation, not fleeting hype, takes center stage.