- About 88% of crypto tokens distributed by airdrops lose value within three months.
- Since 2017, over $20 billion in tokens have been given away through airdrops.
- Effective token distribution targets committed users to reduce quick sell-offs.
- Many airdrops fail because their tokens belong to weak or inactive projects.
- Maintaining liquidity through phased releases and rewarding user participation helps sustain token value.
Since 2017, cryptocurrency projects have distributed more than $20 billion in tokens through a process called airdrops, where tokens are given to users for free or as rewards. However, a study covering seven years found that approximately 88% of these airdropped tokens lose their value within three months.
The data shows a significant gap between initial excitement and long-term success for these tokens. Experts emphasize that how tokens are distributed plays a crucial role in their performance. Projects that focus on giving tokens to committed holders, sometimes using phased or targeted distribution methods, tend to reduce rapid sell-offs. This approach was used by projects like Optimism.
Token value is also influenced by market trends and the extent to which users stay engaged with the project after receiving tokens. The first recorded airdrop took place in 2014 with the Auroracoin project, which aimed to offer an alternative cryptocurrency to Bitcoin for Icelanders.
Over time, the practice of airdrops has become more common during bullish crypto markets and evolved to include measures like tracking on-chain activity (actions recorded on the blockchain), engagement on social media, and liquidity support. However, token distributions remain vulnerable to “airdrop farming,” where users collect tokens without genuine interest in the project’s success. Some projects have begun factoring in users’ reputation and interaction to mitigate this.
Experts point out that many airdropped tokens lose value because the underlying projects lack strong fundamentals, adoption, or revenue generation. One example of a successful airdrop involved excluding venture capitalists and encouraging active community participation.
Another major issue is liquidity, or the ease with which tokens can be bought and sold without causing large price changes. Too much token supply entering the market too quickly leads to falling prices. Some successful airdrops managed liquidity by rewarding ongoing user activity and unlocking tokens gradually over time to prevent sudden price crashes.
Looking ahead, rewarding users for holding tokens and maintaining steady liquidity are expected to be key elements for improving the sustainability of airdrops.
For more details, see the original report.
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