Introduction
Crypto airdrops have become a popular way to distribute tokens and incentivize participation in new blockchain ecosystems.
By comparing recent major airdrops, in no particular order, we can identify potential issues and best practices. This article will analyze these airdrops and compare them to the unique approach of the AO token fair launch within the Arweave ecosystem.
Starknet
Starknet has faced certain issues with STRK token due to changes in airdrop eligibility for the first round of STRK token provisions. The STRK airdrop faced criticism from users who claimed they were ineligible despite making significant transactions, due to the eligibility criteria requiring a minimum of 0.005 ETH held at the time of a snapshot on Nov. 15, 2023.
Following the original airdrop which took place on Feb. 20, 2024, large STRK token holders sold tokens worth millions causing the price to fall by 60% from its peak. This has resulted in the struggle of token price recovery since then.
Jito
Jito airdropped 100M JTO tokens to early users, stakers, validators, and searchers using a tiered allocation favoring smaller participants. The airdrop's allocation, favoring smaller users, was seen as a fair approach to decentralized governance and foster community engagement. However, some larger investors felt under rewarded for their risk. There were concerns about Sybil attacks, but this wasn't a significant issue.
Airdrop distribution choices significantly impact decentralization, governance, and engagement. It is important to note that eligibility criteria requiring economic activity can mitigate Sybil attacks. Tiered allocations favoring smaller users can promote equality but may frustrate larger investors.
Arbitrum
Arbitrum airdropped 1.162B ARB tokens to 625K+ eligible addresses and protocol DAOs on March 23, 2023, as it transitioned to a DAO. However, severe technical issues plagued the launch, with high gas fees preventing many users from claiming tokens.
The botched airdrop launch eroded community trust in Arbitrum. Users criticized the project for being unprepared and some accused it of intentionally keeping gas fees high. The Arbitrum airdrop shows us the importance of thorough preparation, load testing, and clear communication during high-demand events.
Celestia
Celestia airdropped its native token, TIA, to over 600,000 eligible users. However, only around 190,000 users (less than one-third) claimed their tokens, leaving nearly $1 million worth of TIA tokens unclaimed. In its first week, Celestia has struggled to gain significant traction with less than 350,000 transactions recorded in the four days following the mainnet launch.
The low claim rate and modest transaction volume suggest a lack of interest or awareness among potential users. Offering attractive staking rewards and ensuring token stability through lockups can help incentivize participation and growth. Focusing on building community, attracting developers, and showcasing its unique value proposition is key to drive adoption and network activity.
EigenLayer
EigenLayer allocated 15% of its EIGEN token supply to the airdrop, rewarding users who staked ETH or Liquid Staking Tokens (LSTs) on the platform. The airdrop sparked controversy within the crypto community, many questioned the fairness of token distribution, the exclusion of certain user groups, and the initial non-transferability of tokens.
The majority of the tokens (55%) were allocated to investors and the EigenLayer team, while a relatively small portion was reserved for stakers. This uneven distribution led to accusations of unfairness and centralization. It is important to ensure equitable token allocation, striving for inclusive participation, considering flexible token transferability, and prioritizing transparency.
zkSync
On March 24, 2024, zkSync distributed 3.675 billion ZK tokens to 695,232 eligible wallets. Eligibility for the airdrop was based on activity thresholds and ecosystem contributions. 89% of the tokens were allocated to eligible users, with the remaining 11% distributed to contributors. There are no vesting or lockup periods for the airdropped tokens, which can be claimed until January 3, 2025.
There were concerns that the airdropped tokens may end up in the hands of a few exploitative wallets instead of being distributed fairly. The zkSync airdrop underscores the need for robust Sybil resistance measures to ensure fair token distribution. Potential enhancements include social verification, on-chain behavior analysis, per-wallet caps, favoring organic activity, etc.
AO’s Fair Launch within the Arweave Ecosystem
The AO’s fair launch is a unique distribution event designed to reward Arweave (AR) token holders and incentivize liquidity bridging to the AO network. The fair launch will distribute 100% of the 21 million AO token supply to the community, with 36% allocated to AR token holders and 64% to users who bridge assets from other networks to AO.
1. Distribution method
Unlike most token airdrops that allocate a portion of tokens to private sales, team members, or early investors, the fair launch distributes all tokens to the community. AR token holders will receive AO tokens proportionally to their AR holdings, while users bridging assets like staked ETH (stETH) from Ethereum or Solana to AO will earn the remaining AO tokens. This approach ensures a fair and transparent distribution process.
2. Tokenomics
The AO token follows a Bitcoin-like halving cycle, with a gradually decreasing distribution rate every five minutes. This results in a smoother emission curve compared to Bitcoin's abrupt halving events every four years. The AO token's scarcity with a max supply of 21 million and unique distribution mechanism create a strong foundation for its long-term value proposition.
3. Community engagement
AO’s fair launch actively encourages community participation by rewarding AR token holders and incentivizing liquidity bridging. By allocating a significant portion of tokens to users who bridge assets, the fair launch promotes the growth and adoption of the AO ecosystem. Additionally, developers can build apps that require asset deposits, creating opportunities for users to support their favorite projects while earning AO rewards.
4. Long-term impact on the Arweave ecosystem
The fair launch has the potential to drive significant value and growth within the Arweave ecosystem. By rewarding AR token holders, the fair launch strengthens the synergy between Arweave and AO, encouraging mutual growth and adoption. The influx of bridged assets from other networks can fuel the development of innovative dApps on AO, leveraging Arweave's permanent storage capabilities.
Moreover, the AO token's role in providing economic security to the AO network through its flexible Proof of Stake (PoS) mechanism which further enhances the overall robustness of the Arweave ecosystem. As AO grows and attracts more developers and users, the demand for Arweave's storage services is likely to increase, driving value for both AR and AO tokens.
Conclusion
Clear eligibility criteria, technical preparation, and fair token distribution are important in crypto airdrops. The AO token fair launch within the Arweave ecosystem stands out for its unique approach, distributing 100% of tokens to the community, rewarding AR token holders, and incentivizing liquidity bridging. The AO fair launch’s emphasis on community engagement, transparent distribution, and ecosystem synergy may serve as a model for future token distribution events. In the evolving crypto space, prioritizing fairness, decentralization, and long-term sustainability leads to greater success. Future airdrop success depends on aligning incentives, fostering community participation, and driving sustainable growth in ecosystems.
Want to learn more about AO?
Checkout this quick guide on AO.
If you're looking to deposit assets on the AO network, try out apps like Operation Liquidity and Astro.
Have an idea? Reach out to us via the form on CommunityLabs.com.
