Introduction

Points, points, points.

Since the inception of Friendtech’s points system in August last year, it has become industry standard to award offchain points (or marks, XP or some other synonym) to reward early users of a protocol. This arguably kicked off the airdrop meta this cycle, prompting a flurry of projects to issue a token over the last year. As with many metas in crypto, the perceived gold rush causes the sector become frothy and eventually fall out of favour.

Is the airdrop meta cooked, or are we just letting off some steam?

Airdrop Performance

Airdrop tokens have been notorious for their “down only” price action. Of the 47 most hyped airdrops (curated from the vibes on my timeline) below, only 11 are up from TGE (as of 25/8/24), averaging a return of 49.56% (excluding BONK). Meanwhile, the 36 that are down from TGE average a loss of -62.15%. Now some did pump, averaging 162.23% from TGE to ATH (excluding literal down-only launches and BONK). However, of these coins, the average drawdown from ATH sits at -70.89%. While drawdown from ATH is also a symptom of market conditions, it is worrying that many of these coins have seen such a sharp drop in the span of a few months.

Airdrop performance from TGE to date, TGE to ATH and ATH to date by sector. Outliers have their %s labelled (BONK’s numbers are too big to display, coming in at 14,022.39% TGE to date and 31,527.44% TGE to ATH). Source: CoinMarketCap & CoinGecko as of 25/8/24.

The trend is clear, barring select sectors that have been in vogue so far this cycle (memes and AI), airdrops since 2023 have mostly been in free fall (even if some have runs in between).

Average airdrop token performance from TGE to date, TGE to ATH and ATH to date by sector. Outliers that have had their bars truncated are highlighted in red. Source: CoinMarketCap & CoinGecko as of 25/8/24.

On average, only AI, meme and modular airdrops are up a meaningful amount since TGE, with the rest all down bad. Memes are by far the strongest performing sector, up a monstrous 2300% on average since TGE, with BONK doing most of the heavy lifting. Indeed, BONK is in my opinion what saved Solana, or as it was known 2 years ago, Soylana, from the jaws of despair post-FTX. Many a Pumpfun rugger should be thankful for the cartoon doggo.

Average airdrop token performance from TGE to date, TGE to ATH and ATH to date by ecosystem. Outliers that have had their bars truncated are highlighted in red. Source: CoinMarketCap & CoinGecko as of 25/8/24.

When categorising average airdrop returns by ecosystem, only Solana airdrops are up TGE to date, again mostly carried by BONK. Ethereum based airdrops have faired the worst, however Cosmos based airdrops have had the most violent price action. With a strong average ATH of 201% from TGE, dragged up by TIA’s 850% run, Cosmos based airdrops were all the rage in Q4 2023. Cosmos staking based airdrops kicked off the short-lived submeta of staking your airdrop for more airdrops, which died as quickly as it was born, as apart from DYM (down 61.1% from TGE), no notable airdrops came to stakers after TIA. The submeta has now long decayed in its grave, sitting 76% down from ATHs, awaiting potential resurrection whenever CT stops jeeting airdrops on TGE.

One might argue that performance to date and draw down from ATH is due to the general altcoin market and non-specific to airdrops, however when comparing airdrop TGE to date performance vs its underlying ecosystem coin’s YTD performance, only 6/47 tokens (half of which are memes or AI) have outperformed their ecosystem coin.

Relative performance of airdrop tokens TGE to date vs their ecosystem coin YTD. Outliers that have had their bars truncated are highlighted in red. Source: CoinMarketCap & CoinGecko as of 25/8/24.

CT’s diagnosis chalks this epidemic up to low-float, high-FDV tokenomics — complaining that these tokens are merely exit-vehicles for VC investments and are therefore almost designed to be down only. While there is weight to this argument, especially considering most of these tokens’ utility hangs on governance rights, which are nebulous in value, there seems to be a more deep seated and more concerning issue at hand. Projects that rely on usage, whether it be measured by TVL, volume or some other metric, paint a disturbing picture post-TGE.

L2s

TVL over time for L2s that airdropped in 2024 as of 16/8/24. Dotted lines indicate TGE dates. Source: DefiLlama.

Hyped new L2s have shown underwhelming growth in TVL or a down-only trajectory. Blast and zkSync Era are the clearest examples of this — two heavily farmed airdrops that the space appears to have lost interest in post-TGE. Manta Pacific initially continued to show strength, but this can be attributed to their “New Paradigm” campaign which only enabled bridging out of Manta Pacific on 26/3/24, after which the chain has suffered dramatic draw downs in TVL — currently sitting at 94% down from ATHs. A similar story might be playing out with Mode, which held back 50% of the top 2000 wallets’ allocation for 3 months, with the condition that they do not bridge out during that time. Aside from this, Mode’s relative strength may be attributed to its season 2 points program, which Manta did not have (although they did hold a “Restaking Paradigm” campaign), and its inclusion in Optimism’s Superfest. Taiko opted for TGE upon mainnet release, giving the appearance of the TGE having a positive effect on TVL however, at a TVL of merely $14M — 0.73% of its token’s TVL — it’s evident that the space has taken little interest.

Addressing the elephant in the room, Starknet’s TVL has obviously not followed this trend and has instead surged post-TGE. While this is certainly an impressive run, the fact that it is so divorced from sentiment raises suspicion.

Did the last 8 users on Starknet really manage to run it back turbo? Before the Starknet cult crucify me, that Dune dashboard is inaccurate; the DAUs on 6/4/24 were actually 21.2k — down 94% from ATHs two months prior (TokenTerminal). The first thing to note is Starknet raised $282.5M at an $8B valuation (CryptoRank), meaning that that TVL is still 18% off of the amount of funds raised. Compare this with Blast, which only raised $20M and whose TVL is 190% greater than that — not that impressive. Moreover, Nostra and Ekubo (both of which had disappointing airdrops) account for 85% of Starknet’s TVL.

Nostra TVL over time. Source: DefiLlama.

While it is unclear what exactly is driving Starknet TVL, there is an argument to be had for being bullish on Nostra. NSTR sits at a marketcap of $6.3M fully diluted, giving it a FDV/TVL ratio of 5%. NFA.

Bridges

Taking a look at LayerZero’s daily transaction count, the picture becomes clearer.

Layerzero daily Transactions. ZRO snapshot #1 date: 1/5/24. Source: Dune by @cryptoded.

Following the announcement of the first snapshot for the ZRO airdrop on 1/5/24, daily transactions plummeted 52% to ~45k and currently sit 92% below 1/5/24 levels at under 7000. The farmers, sybils — whatever you want to call them — have been the drivers of crypto adoption, or at least the illusion of it, so far this cycle. Although LayerZero was part of the “old guard” in the sense that it did not have a points program, a token had always been telegraphed and users acted accordingly, pushing as many transactions as humanly (or inhumanly) possible to maximise their airdrop. These transaction counts are the inflated metrics that would’ve been pitched to VCs in LayerZero’s $120M Series B in April 2023 (CryptoRank).

TVL over time for pre-August 2023 airdrop chains: Optimism, Aptos and Arbitrum. Source: DefiLlama.

Contrast this performance with that of pre-August 2023 airdrops, arguably belonging to last cycle, and a very different picture is painted (of course we are talking about the project’s performance, not its token’s performance here). With the exception of Aptos who had to TGE upon mainnet as APT is a gas token, Optimism and Arbitrum were already well-established before releasing a governance token over a year post mainnet. This is in contrast to the more opportunistic environment this cycle, with projects fast tracking their mainnet and TGEs for a payday. The L2 space was still in its nascency at this point — a far cry from what feels like an L2 a month this cycle.

How Does the Meta Heal?

Looking at the biggest airdrops of all time (ranked by ATH value), at least 7 of them were an unexpected surprise to those that received them and the positive sentiment that this cultivated is likely what led to the tokens’ rallies shortly after TGE.

The 10 Biggest Crypto Airdrops. Source: CoinGecko Research https://www.coingecko.com/research/publications/biggest-crypto-airdrops

Last cycle most airdrops were well received because they were perceived as free money. Yes, towards the end of the cycle intentional airdrop farming became more popular, but it had nowhere near the mindshare it has this cycle. While Friendtech’s points system initially sparked excitement, it only took a few months of every project that was waiting for the bear market to end so that they could TGE creating its own points program for the innovation to turn into a tired trope.

Season after season of points farming, requiring an increasing amount of time and capital, dulled the lustre of an airdrop. Instead of being “free money”, airdrops now have a real cost to farm and when factoring in time, liquidity and fees, the returns are sobering, leading to nearly every recent airdrop being fudded into a death spiral upon TGE.

Its time to sunset the points meta. If projects revert back to not explicitly milking farmers for everything they’re worth with points and leaderboards and the general market flips bullish, farmers may eat once again.

Is the Harvest worth the Farming For?

There are always dozens of projects in the TGE pipeline, so we’ll only discuss a few here. For a full list, see Cape’s tweet.

Linea and Scroll

Linea and Scroll are last two big L2s without a token (assuming Base doesn’t launch a token), with Scroll raising $80M at a $1.8B valuation, while Linea’s parent company Consensys has raised a total of $725M at a $7B valuation (CryptoRank). While Consensys has many other projects, including MetaMask, it’s safe to assume Linea has a hefty war chest backing it. Comparing to zkSync and Starknet, raising $458M and $282.5M at an $8B valuation respectively (CryptoRank), Linea at least has the potential for a decent cook, depending on how hot the overall market is. STRK briefly peaked at a $50B FDV minutes after launch — over 6 times its valuation — and ZK launched at ~$4.7B FDV, very solid airdrops for zkSync farmers and mercenary devs who happened to submit a project at a Starknet hackathon. Despite a launch FDV that would’ve been considered FUD pre-March 2024 for zkSync, most dedicated farmers still got at least a few thousand dollars worth of ZK. For this reason, I think farmers who farmed Linea pre-surge and Scroll pre-marks have an early Q4 Christmas present to look forward to. If you’re a late comer, a large amount of capital is going to be needed to catch up, but it could be worth it if you’re farming multiple protocols at once (eg/ providing WRSETH/ETH liquidity on Ambient to farm Kelp, Scroll and Ambient).

Linea Maths

According to WhalesMarket, LXP and LXP-L are currently valued at $0.11 and $0.003 respectively, which would put the average airdrop associated with LXP-L at a mere $109 and the overall LXP-L airdrop at over $234M.

Linea Surge Dashboard by OpenBlock as of 2/9/24.

According to a Dune dashboard by @nvthao, the majority of users (likely unique due to the voyages Proof of Humanity requirement) have between 1000-1499 LXP, meaning around only $137 pre-market for most users — that’s very little for many months of friction and button clicking. There are also the Linea Voyage testnet NFTs whose Delta Edition currently sits at 0.00187 ETH (~$5) on Element.

Linea Voyage Dune dashboard by @nvthao as of 2/9/24.

If pre-market is to be believed, the average Linea farmer can only expect $251 from the testnet voyage, several mainnet voyages and 6 volts of Surge, which is probably closer to $150 after gas — ouch. I personally believe that pre-market is overly bearish from L2 airdrop trauma and that LXP should be worth at least $0.50 if overall market sentiment flips bullish and CT’s attitude to airdrops goes back in the direction of pre-March. Nevertheless, I still think that most normies will be disappointed with Linea as transaction pushing just doesn’t pay like it used to as projects become more focused on TVL.

Doing the same calculations for a more chad user who has secured most LXP available and has been farming the Surge from volt 1 with over $20k, we get:

• Alpha NFT = 0.05991 ETH (~$151)
• Top 4.3% LXP holder = 4000 LXP ~ $440
• Top 1500 LXP-L holder = 3.5M LXP-L ~ $10.5k
• Total = $11091

I expect the tesnet NFTs and LXP to be worth more at TGE in Q4, moreover I also expect some retroactive LXP to be distributed for general activity prior to TGE. Regardless, this is already a very decent airdrop for the Surge, coming in at ~25% APY for providing liquidity. The meta is definitely linear.

Scroll Maths

Scroll maths is more straightforward. Using a (very low volume) WhalesMarket market, Scroll marks are currently valued at ~$0.27 leaving the majority of wallets who have 0-100 marks with $27, but we are only in session one so expect this to rise. The number of wallets in the top bin of 5000+ marks is quite sizeable at 16.9%, yielding $1350+.

Scroll Marks Dune dashboard by @barsus777 as of 2/9/24.

There is also Scroll Canvas which requires more traditional transaction based farming to collect a growing list of NFT badges. While projects have moved away from giving big token allocations to transaction based campaigns, I would find it hard to believe that badges won’t have anything to do with airdrop allocation. Given that it is separate from the points program, they might act as points multipliers.

Overall, unless you were farming pre marks launch, I think there are better places to park your capital. If you can farm with $10k’s, it might be worth it. That being said, if CT’s attitude to airdrops goes back in the direction of pre-March, the cook could be serious.

LRTs

The 7 biggest liquid ETH restaking protocol’s ETH restaked over time. Source: Artemis.

Of the 7 biggest ETH liquid restaking protocols by TVL, only 2 have airdropped so far: EtherFi and Renzo. While their tokens have been underwhelming to say the least, sitting at -60.4% and 79.7% down from TGE respectively, EtherFi has shown considerable strength, cementing itself as the go to LRT. Meanwhile, Renzo’s TVL stagnated post TGE, only to begin a steep decline some months later. This is most probably due to withdrawals only being opened in June, meaning many farmers were stuck holding their ezETH bags while it was depegged on the open market. It is also no surprise that after the chart crime perpetrated on their Twitter, no new ETH came in post-TGE.

The other major LRTs haven’t shown much growth since airdrop hype died down so I doubt there will be a cook among them, although I am still farming Kelp while farming Linea and Scroll.

We are still waiting on EIGEN TGE, however at a premarket price of $3.62 (WhalesMarket), most farmers won’t take out more than $400, even with the extra 100 EIGEN. We could see Karak and Symbiotic frontrun EIGEN to TGE, but farming these is capital intensive.

Berachain and Monad

Lastly, two of the most esoteric and hyped up launches we’ve ever seen: Berachain and Monad. While mindshare on CT for both of these has been very high over the past 6 months, it is really unclear how to farm these airdrops and there is no mainnet date in sight. Given that they raised $142M at a $420.69M valuation (lmao) and $244M respectively, these are a sure cook for those who get an allocation.

Starting off with the less enigmatic of the two — Berachain — collecting the myriad of (expensive) Bera NFTs and securing exclusive Discord roles is probably what will be rewarded most. If you’re not into trading NFTs, your best bet here is regularly interacting with all the main dapps on testnet (BEX, BEND, BERPS etc). A good way to do this is through quests from TheHoneyJar to collect badges, although they are not directly affiliated with Berachain. That being said, testnet interaction could amount to nothing (always remember Sui).

Monad is essentially a cult and for now at least, the only farming method is to garner reputation in their socials as there is no testnet.

Conclusion

Yeah, the meta is dead, but one day it won’t be. Keep pressing buttons until it isn’t, anon.

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