2024 Airdrop Year in Review

2024 has yielded us ups and downs in airdrop-land. Let´s take this chance to reflect on what went well and what didn´t, and what we can learn for airdrop design in 2025 and beyond.

Airdrops vs. ICOs

Overall, we are confident that airdrops will continue as a relevant part of TGEs and community and liquidity bootstrapping. While “ICO” platforms like Legion or Cobie´s Echo are on the rise, we do not consider them direct competition to launching via airdrops. Yet, it occasionally seems as if people are more willing to pay for tokens through an ICO than receive them for free through an airdrop - why is that?

• (1) ICOs require participants to make much less assumptions. You pay amount X at Y FDV and receive Z amount of tokens. Vesting and lockup schedules are communicated before the purchase.
• (2) Getting into an “early” private sale gives participants the feeling of being amongst the “insiders.” On the contrary, receiving an airdrop at TGE months after insiders have bought their allocations commonly makes participants perceive an adversarial insider vs. community relationship.
• (3) Paying with money vs. paying with time pre-filters the type of community members willing to participate. You only buy into something you believe in. The incentive alignment is more straightforward than in many airdrop campaigns which have an implied conflict around who´s farming who.

While there are clear advantages of ICO-type allocations, it becomes obvious that they only solve for financial commitment and project funding. Airdrops, on the other hand, focus more on community, liquidity, and activity bootstrapping.

2024 - The Year of the Points Programs

Before airdrops became mainstream, the aforementioned functions of bootstrapping community, liquidity, and activity were mainly carried through liquidity incentives. Examples would be chain-wide programs like 2021´s Polygon incentives and Avalanche Rush, or the plenty proprietary DEX token emissions for LPing that we have seen in the last cycle.

This year, points programs have emerged to fill the gap between one-off airdrops and regularly emitted liquidity incentives. Points aimed to bring forward two key value propositions - one for the users/farmers, and one for the projects.

• Projects: Points programs over X timespan allowed projects to buy time for product testing and tweaking incentive schemes without incurring direct economic costs. Previously, liquidity incentives were set a priori to the completion of an action by users. Thus, if misallocated, projects faced a higher opportunity cost. With points, projects could monitor, analyze, and adjust user behavior on their chains and applications depending on how they set point distributions. No immediate payout post-action had to be made anymore.
• Users: Before points, airdrop eligibility criteria were obscure and a game of best guesses or insider knowledge. Points (tracking) systems allowed users to reduce the uncertainty around (I) what gets rewarded, and (II) how it gets rewarded. Depending on the transparency of points programs, users had more or less assumptions to model out the projected ROI of farming a given project.

While point programs provide clear advantages, they have come with new risks of opacity and expectation misalignments.

• (1) Delayed TGEs and expanded “seasons” increased “who´s farming who” dynamics
• (2) Too frequent adaptations and rule changes of point distributions led to frustration of earlier participants
• (3) One-off airdrop returns were previously based on implicit entitlements, ICO terms (and to an extent, liquidity incentives) were based on explicit entitlements. Points programs are the weird middle child that does not fully fit either bucket, causing unmet expectations on both the user and project side.

Despite these issues, points programs will prevail and offer advantages if a more granular and complex airdrop distribution is in projects´ best interests.

What types of airdrops are there?

Before we discuss what makes good and bad airdrop designs, we should better understand the types of airdrops we´re assessing. For now, we will focus on the stage of the project. One can also differentiate airdrops along other dimensions, e.g., niche-dApp to general purpose L1/L2.

Pre-Product Airdrops

• What? New L1s, L2s, and dApps launching their chain along their token and airdrop fall into this category, e.g., Celestia or Dymension. In this category, it is hard to design the airdrop exceptionally well, but your risk of a “bad” airdrop is also low since there is typically little to no prior community investment (time or capital).
• Purpose of the airdrop: You typically want to bootstrap liquidity, community, and activity (governance & staking included) on your chain/application. Many projects in this category need to throw stuff at the wall and just see what sticks.
• Criteria and Distribution: Criteria tend to center around retroactively rewarding interactions with aligned projects or underlying ecosystems. Depending on how “unexpected” the airdrop and the criteria are, it can make sense to implement flat, stepped, or other non-linear distributions.
• Risks: If there is “nothing to do” on your chain or in your ecosystem, and if new launches and developments are not imminent, you run the risk of losing traction after a few weeks or months. The modular sector was a prime example for this dynamic in 2024.

Product, but pre-PMF Airdrops

• What? You have a clear product vision, but your project is not yet known for a distinct purpose or usage. Often, you are trying to crystallize differentiators to competing ecosystems, chains, or dApps. Prominent examples of 2024 are Eigenlayer and the LRT ecosystem and new Eth L2s like zkSync or Scroll. Most projects of which you can farm their testnets also fall into this category.
• Purpose of the airdrop: Given that you have an emerging ecosystem, you want to experiment around with which applications and use cases to incentivize. You have come far enough to direct incentives (through true/false criteria or points), but you are still too early to know if your incentives lead to the desired outcomes and should plan with lots of flexibility.
• Criteria and Distribution: Integrating points programs often makes more sense than solely rewarding individual retroactive interactions. Depending on the extent of involving capital in farming the airdrop, metrics like median vs. average, and min. vs. max allocations become more relevant.
• Risks: Be careful about implicit expectations from the community. Since there is ambiguity about what to farm, but there is a strong implicit expectation of reward, community members can feel

Post-PMF Airdrops

• What? You have a live product (dApp or mainnet), you have a clear idea what distinguishes you from competing projects, and you have a solid user base. The most prominent example in 2024 was Hyperliquid with its $HYPE airdrop. Ethena´s $ENA was arguably right on the edge. There was a chance that users would abandon it post-TGE, but they have successfully proven sceptics otherwise.
• Purpose of the airdrop: You want to reward your early and loyal users for past engagement and actions. Additionally, the airdrop can aide you to attract additional user inflow by gathering attention and gives you the chance to set the stage for future incentives.
• Criteria and Distribution: You have a large dataset of past actions and behaviors, enabling you to carefully determine which of these you want to reward and how. You want to set criteria and distribution in a way that early users feel disproportionately and surprisingly rewarded for using a product that they would have ideally embraced without a token anyway.
• Risks: In many cases, e.g., Aevo, you think you have PMF, but your community abandons you as soon as you launched your token. Pre-TGE, it is ambiguous whether you only have a great product, or if your project´s perception is distorted through implicit airdrop expectations.

What made good an bad airdrops in 2024?

Given the wide variety of projects that TGE´ed in 2024, we can extract a handful of observations and lessons.

• (1) PMF matters. If your product is either bad or fails to distinguish itself from competitors in the long-run, you won´t be able to compensate for lacking PMF post-TGE. Hyperliquid is the best example. Since they are the first perp DEX that can actually match the UX of a CEX, their community has grown and flourished more than ever post-TGE. Ethena is a similar example. They used their season 1 to hyperscale and proved they had PMF right after. The product works and has provided users yields ever since.
• (2) A good airdrop is like a tasteful skirt: Short enough to provoke excitement, long enough to leave enough room for imagination and speculation. If your airdrop is very predictable, you are running the risk of being farmed by the spreadsheet DeFi power users who will dump your token minutes post-TGE. On the other hand, if nobody knows about or anticipates your airdrop, you will leave lots of community growth and attention capture potential on the table. Great examples of the right mix between anticipation and surprise were $TIA in late 2023, and $JTO in early 2024. Both airdrops managed to kick off the modularity and Solana DeFi seasons, respectively.
• (3) Communication matters. Disappointment is the result of unmet expectations. 2024 airdrop campaigns have shown repeatedly how mismanaged communication and project perceptions can hurt communities and token valuations. The most impactful example is EigenLayer's $EIGEN. While the project has one of the industry´s smartest teams and most ambitious visions, they did not succeed in overcoming the perceptions as an overly technical, nerdy, and ivory-tower project. The $EIGEN airdrop was not badly designed, but its perceptions were mixed and partly negative. Another example is the liquidity management platform Aperture ($APTR). They had a useful product and an engaged community. However, constantly changing airdrop criteria and poorly managed communications led to lots of frustration of their users.
• (4) Market conditions matter - a lot. You can only speculate how many projects delayed their airdrops and TGEs in Q3 and Q4 due to uncertain market conditions and the US Presidential Election. No matter how good your PMF, no matter how loyal your community, you do not want to swim against the stream when overall sentiment is in the gutter. EigenLayer and some LRTs were negatively affected by this dynamic, similar for Scroll and zkSync. Again, Hyperliquid managed to launch in almost perfect conditions.

Some Systemic Issues and Questions

If you are planning to TGE and airdrop in 2025, here are some initial hints and questions you shoudl ask yourself. We will expand on many of these themes in our upcoming 2025 Airdrops Outlook article.

• How far am I from PMF? As Ethena has shown successfully, you do not need a confirmed PMF pre-TGE. However, if there is a clear discrepancy between people using your product out of conviction vs. only trying to farm you, the chances are high that you will lose traction soon after TGE.
• Should airdropped tokens trade freely, or should I implement lockups and vesting? While there is no one-fits-all answer, it appears to be favorable to let yeets yeet right at TGE. If you are optimizing for the long run, it may be preferable to launch at a lower FDV and allow free transactions rather than trying to artificially suppress sell pressure through vesting. For some projects, a no vesting tax may be warranted.
• Should I conduct my airdrop as a one-off event, or should I distribute it over several seasons? The answer to this question depends on what project you are, which users you want to attract, and how far you are away from reaching PMF. If you are an LRT desperately waiting to secure other projects, it makes sense to not blow all your firepower at once, e.g., EtherFi. On the other hand, if you have had a long ongoing airdrop campaign, you want to create a wealth event that users notice and appreciate, e.g., Hyperliquid.
• How does the “low float, high FDV” meta impact my airdrop? Again, there is no cookie-cutter answer. What float and FDV you should target depends on prior rounds, token allocations, airdrop size, and market conditions. Regardless, if you are perceived as a “VC coin” with a strong insider vs. community conflict of interest, the latter may abandon you faster than you imagine.

Conclusion

2024 has blessed and cursed us with more airdrops than any year before. We strongly believe that airdrops will continue to play a major role in TGEs, token distributions, and community bootstrapping.

There will be enough room to experiment with new and established airdrop mechanics if overall market conditions allow it - which we are confident that they will. We are at the verge of finally onboarding a large number of users into our industry. Projects like pump. fun, Polymarket, Base, and Solana have proven that we are (almost) ready for adoption. Welcome to the greatest playground of wealth creation in this decade next to AI. Let´s play.