Ever since John was a little boy he’d wanted to open a coffee shop.

A place to call his own, a business he can grow by selling a great product.

Customers rave about John’s coffee. For only $5 - they can get one of the best cups of coffee they’ve ever had.

Sometimes, customers love John’s coffee so much, they will leave a 5-star review on his business and talk about his coffee on social media. Organic content!

As a result, John gets more business and the customers are grateful because the business can continue growing and providing great coffee.

The flow of value is clear:

This is how businesses operate in the real world. Without revenue there is no business, and obsession from customers stems from great products and services.

In crypto, things operate a wildly differently.

Revenue does not exist for most projects, and success tends to be measured by green candles.

In 2023, a crypto project airdropped nearly $2 billion dollars in tokens to people that had been interacting with their product. The product in question is a popular Ethereum scaling L2 called Arbitrum.

According to Bitdegree, the airdrop criteria were as follows:

If you were a power user of their chain, you most likely qualified even if you didn’t have a high net worth.

The Arbitrum airdrop is largely seen as a “good” airdrop, if you ask anybody that was involved in DeFi at the time, chances are, they qualified for it.

However, the kicker about the Arbitrum airdrop is the fact that the team repeatedly denied any existence of any airdrop whatsoever.

I took a quick peek at their Discord and found that the words “no airdrop” were mentioned 1,404 times before March 1st, 2023.

To be clear: Arbitrum was not maliciously lying here.

During that time, the main purpose of an airdrop was to decentralize a protocol through governance tokens. The regulatory landscape was incredibly bearish on crypto and giving any hint of an airdrop could’ve spelled trouble from a legal perspective for projects.

Nowadays, the US government actively commits egregious insider crimes against retail thus making all crime legal. Decentralizing a protocol is no longer a priority for most projects.

So projects can now be upfront about their airdrops now, right? That doesn’t seem to be the case.

Most Pre-TGE projects today still deny any existence of a future airdrop and/or token.

It’s usually only a month, week, or even day before their airdrop that they officially announce that one has been planned all along.

There’s a variety of reasons as to why a project might follow in the footsteps of Arbitrum here, whether it’s to create speculation, avoid legal scrutiny, attract “real” contributors, etc.

The downside of this is that no matter what you say, do, or drill into people’s heads, airdrop farmers will ALWAYS assume there’s going to be an airdrop.

After years of projects saying “no airdrop” then doing one anyways, what is an airdrop farmer supposed to expect?

Combine this expectation with lazy point systems, engagement farming campaigns, and tools like Galxe, and you now get an angry mob of airdrop farmers expecting something for clicking buttons (assuming you don’t airdrop to these people).

With all of this risk and expectation misalignment, what purpose does an airdrop serve today?

How do you distribute your token to people that will not sell the token?

A couple of days ago, a prominent crypto twitter influencer denounced airdrop farmers vehemently:

Naturally, all of the airdrop farmers linked arms and digitally flogged IcoBeast for calling out airdrop farmers for being extractive while having extensive, public history of being an airdrop farmer himself.

The thing is, I agree with IcoBeast here. Let me explain:

The definition of an airdrop farmer has changed drastically over the years. The same airdrop farmer that was farming Arbitrum is not the same one that was farming Boundless.

Most airdrop farmers nowadays do not use the actual product they are farming, they tend to either make content on X or manipulate Discord mods to give them a role.

I believe this is the airdrop farmer archetype that IcoBeast was referring to when he said they are the “worst possible foundation for a community”, which I believe to be true.

If you saw people talking about John’s coffee shop on social media, you would be suspicious if the people creating content about his coffee had never tried it. How does someone that has never tried the product have the authority to say good things about it?

I wrote about this a bit in another blog post - the general idea is that if a user is not giving you money (revenue, trading fees, NFT sales, ICOs, purchasing a product) then they should not qualify for an airdrop.

Just like John’s coffee shop, his customers give him money and in exchange they get great coffee. Customers would not buy his coffee if they felt the value of the great coffee did not exceed the $5 they spent.

Why should you expect someone that has never used your product before to be aligned long-term with you just because you gave them free money?

I believe this is the core issue with airdrops nowadays - the airdrop farmers receiving the airdrops are typically not actual users of the product.

Arbitrum’s airdrop was successful because they airdropped most tokens to people that were transacting, bridging, providing actual value to the protocol in some way (Regardless of $ARB’s current price, I’m talking purely from a sentiment perspective).

Nowadays, you can earn an airdrop for making a tweet that gets a decent amount of impressions without EVER touching said project. This is not alignment.

An example of a very aligned/well executed airdrop was Hyperliquid’s. They only gave $HYPE tokens to users that deposited and spent real money on their perps product. No KOLs, no insiders, no social media farming campaigns, $$$ spent = airdrop.

I understand there are a lot of nuances here - crypto is inherently a global movement. This means we need to consider developing countries and the fact that they don’t have the same amount of capital as people from western countries do.

But, on the other hand, airdrops offer a unique opportunity for people in developing countries to disproportionally grow their net worths using airdrops. This is why we see most self-proclaimed airdrop farmers originating from these countries.

Regardless of $$$ spent, we now have 7+ years of onchain history to analyze when deciding on airdrop criteria. If a wallet has received many airdrops in the past and has had a tendency to hold them, they are likely to be someone who COULD be aligned with your project.

All of this to say - I don’t blame airdrop farmers for operating the way they do today. The situation we find ourselves in is because projects have allowed AND encouraged this slop to happen.

The way that airdrop farmers farm a project largely depends on the tools you give to your community. If your product isn’t live yet and the only way for people to “get involved” is to do some lame game on your website for points, that’s what they’re going to put their full weight behind.

The alternative is to give early members of your community a chance to put their money where their mouth is. Do the community sale, sell the genesis NFTs, run the ICO.

Make your community rich and you will win.