Table of contents

1. Why are they giving away free money
1. Uniswap — First big airdrop in Web3
2. Sei — Bad marketing or outright fraud
3. Connext — The Inquisitor's Fatal Witch Hunt
2. Features of the most profitable airdrops in history
1. dYdX
2. Ribbon Finance
3. Arbitrum
3. Airdrops are getting more difficult, but...
4. Sybil Attack Problem
5. Why smart Sybils are beneficial for projects
6. Next 3 Airdrop Unicorns
1. LayerZero
2. zkSync
3. Starknet
7. How to find hidden gems

Each content item is interactive, you can click on it to move to the desired section of the article.

Why are they giving away free money

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Uniswap — First big airdrop in Web3

The concept of airdrops sounds absurd in the world of capitalism. Sane Web3 teams, with a great reputation and huge support from the biggest VC funds, one after another, begin to distribute an incredible amount of money to ordinary users. For almost nothing.

It all started with the Uniswap airdrop in September 2020, when more than 250,000 wallets were eligible for $UNI token airdrop.

The criterion for receiving an airdrop was at least 1 interaction with Uniswap contracts, even if the transaction failed.

For this, the user could receive at least 400 $UNI, which at the time of the start of token trading was estimated at $1,400, and a year later at the peak of the bull cycle the drop was worth ~$16,000.

This, at first glance, an absurd idea gave birth to a whole industry inside the crypto — Airdrop Farming.

Initially, Uniswap devs justified the airdrop with the intention of creating a Decentralized Autonomous Organization [DAO].

That's why the tokens were distributed in almost equal proportions among all users of the protocol. This allowed everyone to have a relatively equal and significant power in voting on the future of the project.

However, I consider Decentralization and Governance as the main utility for the token of an average project not to be the main priority. Every Web3 project is first and foremost a business with investments from crowdfunding / venture capital.

The essence of every business is constant growth, progression and profit generation.

Airdrop helps realize these aspirations. It gives the business:

• Attention of the whole Web3 community. Thousands of new users will rush to use the platform in the hope that history will repeat itself and the project will distribute tokens once again.
• Increasing the loyalty of early adopters. If the user has previously interacted with the platform without hints of any reward, then in the future he will return to it more often due to the positive experience associated with the dApp.
• Marketing. For several days / weeks / months, the token ticker and FOMO headlines about the past airdrop will flash on social media. This is practically a free advertising campaign.

All this is achieved by the costs of creating a smart contract for the token, several audits, fees for listing the token on CEXs and adding liquidity on DEXs.

As a result, the project team and VC investors receive additional audience loyalty with a successful airdrop and liquid tokens that will be unlocked and available for trading several years after the TGE.

But the desire to become part of the trend and make money on it can turn into a disastrous mistake that will kill the community’s trust in the team and the project and will only lead to an outflow of liquidity.

This is exactly what happened with the recent Sei and Connext airdrops. Their mistakes are radically different, but in the end led to the same results — hatred from the community.

Airdrops in 2023 are an All-In bet on zero for the project.

A loss will undoubtedly lead to the slow fading of an early ambitious and innovative decentralized application.

Sei — Bad marketing or outright fraud

The Sei case clearly showed how greedy human nature is in the current Web3 realities.

In 2010, Bitcoin validators performed their tasks properly and prevented 51% attack from occurring simply because they were enthusiastic and had faith in the future of decentralization technology.

In 2020s, those who are only interested in money came to Web3.

I don't want to judge anyone.

Most Web3 users came here for money, for a better life and future.

I'm one of those. You're probably too.

In this example, I want to show the difference between the desire to earn money and the greed of the human soul.

By wanting immediate income, a person can forever cut off the opportunity to earn really big money at the same time making world better.

Sei is a first-level blockchain that appeared in the wake of the trend of sharply emerging L1 solutions, such as Solana, Near, Aptos, Sui etc.

Like all the others, Sei was an "Ethereum killer" with breakthrough technologies, a great team of professionals and large investments from VCs.

The team even launched one of the largest ambassador programs, with various titles for participants, with a promised pool of rewards in the form of a project token and constant tasks.

Enthusiasts created content for the project, promoted references to Sei in the media and organized various events, online conferences and collaborations.

For this, loyal ambassadors received from $10 to $150 at the time of the $SEI token airdrop. For more than a year of constant assistance to the project.

This happened a month after the modest, but very ambitious project called Arkham with $12M of investment distributed $200 to each user who simply registered on their platform and another $150 for each invited referral.

Let me remind you that more than $30M was invested in Sei for a valuation of $800 million.

As it turned out later, it was no coincidence that the ambassadors received such a small piece of the airdrop pie. In total, only 0.11% or 11M $SEI tokens were allocated for them and the testnet participants.

https://www.seiscan.app/pacific-1/contracts/sei1mm640rda0zmkfwyprmchk2gg54wj7mn8maqzycgzpul0pml448yswjxvy2

And the remaining 289M $SEI or 2.89% of the total token supply was allocated to active users of other blockchains.

https://www.seiscan.app/pacific-1/contracts/sei1agd6xc09ydnrucxpjy9c47thunrzzhe5sc75gphjnh4nqkdup8wsexh044

More than 96% of the initial airdrop was distributed among those wallets that DID NOT USE Sei Network.

It’s hard to say exactly what motivated this decision from the team.

But we can say with confidence that L1 Sei blockchain has no future, just as initially there was no infrastructure to attract developers, ordinary users and liquidity to the network.

Connext — The Inquisitor's Fatal Witch Hunt

After Arbitrum, the airdrop farming industry became more open to the masses. Hundreds of thousands of people began to become interested in this type of earnings in crypto.

The catalyst for the general madness was that absolutely nothing was happening in the market: the NFT industry collapsed, altcoins were constantly losing their value, and Bitcoin has been floating around the same price range for several months.

Everyone suddenly started trying to get the next airdrops. And the most prominent contender was LayerZero, which unites blockchain networks into one large Omnichain ecosystem through the Stargate bridge.

While everyone was intoxicated with hopes of getting the coveted $ZRO, Connext Network announced the airdrop of its $NEXT token.

This project is a direct competitor to LayerZero, as it creates an infrastructure in Web3 for moving funds between chains.

Connext is notable in that its airdrop criteria may be comparable to future $ZRO criteria and the witch hunt that effectively destroyed the project's reputation in the community.

Pay attention to the key criteria:

• Number of interactions with the Connext bridge
• Volume of funds transferred
• The amount of liquidity you have staked in the pools
• The period from your first transaction with the Connext bridge.

Approximately the same criteria can be assumed for the future LayerZero airdrop.

But the key event in the $NEXT airdrop was the desire of the devs to fairly distribute tokens.

For this purpose, they announced a Sybil hunt.

In the context of airdrop farming, the term "Sybil" refers to a potential "security threat" where an attacker creates multiple fake wallets / accounts / nodes in order to obtain more free tokens from an airdrop than a single user is entitled to.

The devs gave the community members the opportunity to find Sybils and receive 25% of the reward returned to the project treasury.

This caused a stir in the community, because not everyone supports such a witch hunt, especially if the inquisitor is exactly the same community member who is interested in falsifying data.

This approach can only be explained by the simplest laziness of the team to create algorithms for filtering out Sybils.

I will go straight to the spoilers. At the time of the start of the token claiming, there were problems on the web page and only one wallet was able to get its $NEXT reward. He actually swapped his $NEXT airdrop to almost $40,000, because he was able to claim the airdrop from 250 different eligible wallets.

And ordinary users could only wait until the site adjusted its work and the cost of the token dropped to a critically low level.

As a result, at the time of writing this article, the token’s capitalization is $7M, even despite the fact that VCs invested $23M in the project.

Disclaimer: This is the end of the sad part, in the next sections the positive intensity will increase exponentially. If you have diabetes, read the following text with caution, because it will be very sweet :)

Features of the most profitable airdrops in history

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dYdX

dYdX is the first DEX [Decentralized Exchange] with the ability to trade futures contracts directly on the chain, built as an L2 solution for Ethereum.

The project was built with great ambitions from the very beginning: $87M of investment from the largest players in crypto ventures – a16z, Paradigm, Polychain Capital and participation from StarkWare Industries in the Series C Round.

The $DYDX token airdrop was distributed on September 8, 2021, with users receiving at least 310 $DYDX simply for depositing any amount of funds into the platform.

At the start of trading, the price was just over $14 and the airdrop was estimated at $4,400.

Considering how alive the market was in the summer of 2021, many platform users received an airdrop of over $100,000 for active trading on the platform.

And someone...

This airdrop turned out to be one of the largest in the history of the crypto industry. Tokens with a total value of $1 billion hit the market.

Ribbon Finance

I'll start with the main thesis.

Ribbon Finance is one of the first protocols that allowed crypto options trading on the Ethereum Network.

The uniqueness of this airdrop lay not so much in its locality, but in the competent approach of the team to the distribution of tokens.

The Ribbon Finance airdrop was divided between 3 types of users:

• Users of similar dApps.
• Ribbon protocol users.
• Active community members.

Users of similar dApps:

Here, the Ribbon airdrop openly showed his marketing intentions.

The project has distributed up to 13% of the airdrop to active users of other options protocols, such as HegicOptions, opyn_, CharmFinance, and PrimitiveFi.

The team explained this by saying that the airdrop may be of interest to those users who know how to trade, are familiar with the theoretical part and will be more loyal to interacting with the new protocol.

As a result, each eligible address received project tokens worth $20,000.

Never interacted with the project.

Ribbon protocol users:

1/3 of the airdrop was divided between wallets that interacted with Ribbon Finance smart contracts at least once.

And another 1/3 was divided between those who continued to interact with the contracts and did not simply withdraw their funds immediately after the deposit.

The team rewarded enthusiasts who were truly interested in the project, and not in a potential airdrop.

Active community members:

Before reading the text below, try to remember for a moment what Sei and Connext did to their communities.

Ribbon Finance decided to reward everyone who helped grow the project community, create a pleasant, friendly atmosphere and communicated on Discord.

But the team used a trick, giving each community member the opportunity to choose: Small Airdrop or Ribbon Hat (a running meme in the community).

The most loyal users chose the meme, and the too greedy and not far-sighted guys chose the airdrop.

As a result, those who voted for the “Small Airdrop” received a fixed number of tokens, and loyal community members splited the rest of the pie among themselves.

Thus, the blue team members received about $90,000.

The other remembered the Ribbon Hat meme for a long time, which was valued at $250,000.

Arbitrum

You most likely became interested in the airdrop farming right after Arbitrum airdrop.

~625,000 wallets shared just under $2,000,000,000 in $ARB tokens, receiving an average of 1,859 tokens.

This airdrop became the most significant for the industry in 3 ways:

• The biggest airdrop in history.
• The largest number of eligible wallets.
• The height of a bear market and the absence of any activity around.

These 3 events blew up the community. Users who just learned about the existence of airdrops rushed to carry out transactions on LayerZero / zkSync / Starknet in the hope of repeating such a stunning success.

This airdrop happened despite the fact that in the project’s discord the moderators directly stated that there would be no token.

Sui team said the same thing a few days after the announcement of the Arbitrum airdrop.

Let me remind you that the Sui token sale happened ~45 days after this message.

Airdrops are getting more difficult, but...

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It’s no secret that after the announcement of the Arbitrum airdrop, almost everyone associated with crypto ran to make transactions in other projects in hopes of a future drop.

At first glance, it may seem that this is a quick death for the popular area of ​​​​earning money, because the more hunters, the less the reward for everyone.

But I want to dispel such doubts.

Airdrop Farming requires a lot of time, consistency and a high-quality strategy that will not ruin you in a few months of burning funds on fees.

Yes, in the first days after a large airdrop, the metrics of other projects skyrocket, but fortunately this effect quickly disappears.

People love to act on FOMO, but such motivation quickly fades and is replaced by doubts due to the irrationality of such behavior.

“That was the last good drop” - This is the thought that flashes in the head of every airdrop farmer. Everyone has it.

The difference between a successful hunter is that he continues to farm airdrops despite doubts and the absurdity of this whole idea.

Reading this article will most likely give you FOMO and you will go farming airdrops with great zeal. But most do not have the patience and confidence in the idea to see it through to completion.

Therefore, of those millions of wallets that appeared in the LayerZero Omnichain, in reality there may be no more than 500,000 eligible for the airdrop. Exactly as much as was the case with Arbitrum.

The average airdrop has actually become more difficult to obtain. This is a fact. If there's a extremely profitable area, those who can scale their strategies will quickly appear.

Luckily, the current airdrop conditions are far from unfavorable and the game is definitely still worth the candle.

As a result, those who quickly adapt will continue to earn money, and those who do not keep up with the trend will continue to experience FOMO for other people’s successes.

Arkham

The example of the Arkham Intelligence clearly shows that the criteria for making insane profits have become more complicated, but are still critically simple.

As I wrote above in the Sei example, on July 18, 2023, there was an airdrop from a platform dedicated to blockchain data analytics.

Tier-2 project with small investments, but obvious hints of airdrop.

The counter of invited users, special points and a direct statement about the future reward right in the project documentation. The team was literally screaming about what needed to be done.

As a result, more than 150,000 wallets received $ARKM tokens worth $150 or more for a simple registration on the platform.

The most active users invited hundreds of people and received a 6-digit airdrop.

This example most clearly shows that airdrops, despite the insane wave of hype, remain an underground activity for the majority.

People cannot believe that history will repeat itself, but it continues to repeat itself with enviable frequency.

And those who are willing to risk their time, money and nerves will most likely be fully rewarded.

Sybil Attack Problem

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The situation is complicated by "hackers" who create more than 1 wallet / account to abuse airdrops.

In simple words, they take more than what is prescribed in the airdrop rules.

Sybil attacks can cause serious harm to both the project itself and its community.

Unfair token distribution:

• Some users may be outraged because they think that Sybil has taken part of their honestly earned rewards.

Economic losses:

• The project rewards those who are not interested in further interaction with the protocol.

All this leads to a logical struggle between projects against such attackers and individual projects that “solve” the problem of Sybil attacks.

For example, eligible for Arbitrum airdrop wallets that were directly connected to 20 or more other wallets that also farmed this airdrop were removed from the recipients list.

The trend shows that smaller projects tend to take a more thorough approach to Sybil detection, since such attackers can significantly affect the overall reputation of the project.

Hop Protocol showed an example when the team created its own wallet clustering algorithm, with which it tracked the behavior patterns of individual addresses and excluded the most obvious matches.

Almost 15,000 of the 60,000 eligible wallets were marked as Sybils for this airdrop and all future airdrops from other projects.

The best part of this event was that they, like Connext, decided to hold a Witch Hunt and involved the community in the search for Sybils.

This user helped exclude more than 200 addresses, for which, according to rumors, he received only a $200 reward:

https://github.com/hop-protocol/hop-airdrop/issues/192

Take a moment and think about the meaning of these two theses:

• Sybil is useful for fundamental projects such as LayerZero, zkSync, Starknet, Linea, Polygon zkEVM, Base, Scroll.
• Projects other than the best ones are not worth your time.

Why smart Sybils are beneficial for projects

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Let's slightly change the definition from the beginning of the article.

Sybil is a user who is willing to take a risk and invest in more than one account and burn several thousands on fees. He is a madman who repeats this on hundreds of wallets and turns his hopes into a full-time job.

If MEV bots, which take advantage of the imperfections of decentralized exchanges, burn millions of dollars in fees after calculating all the risks in advance and receiving benefits every time, then Sybil is an enthusiast / group of enthusiasts who can lose everything in one moment.

Anyone who is willing to take a risk, burn tens of thousands of dollars on fees and wait months / years in the hope that his investment will at least pay off is not so simple.

Markets are inefficient. There is always someone who makes money from these vulnerabilities in the system. As a result, the system eliminates these problems and becomes more and more advanced.

This is the essence of the Sybil attack. The system allows enthusiasts to earn more by creating a large number of accounts.

As long as airdrops are profitable and creating a large number of accounts is more profitable than developing a single account, there will be enthusiasts who will take advantage of this opportunity.

And the truth is that the projects benefit from Sybils:

• Activity metrics increase.
• Creates the appearance of an interested audience, which leads to new rounds of investments.
• The project earns more money from fees.

Let's take LayerZero as an example. The most striking metric that developers like to brag about in their Twitter [X] account is the number of transactions in the Omnichain.

As can be roughly calculated from the graphs, the number of transactions after the Arbitrum airdrop increased by 2,500 times, and the number of active users at its peak reached a multiplier of x37.

Crazy numbers, considering that such an advertising campaign did not cost the project itself anything.

As a result, Stargate generated $4,000,000 in net revenue on bridge fees in July, a ATH for the protocol.

For comparison, in February 2023, the bridge's net income was only $200,000.

In a few months of hype of airdrops and the constant addition of new projects and networks to Omnichain, LayerZero has become one of the fundamental Web3 projects.

It’s difficult to say for sure what percentage of this activity came from Sybils and what percentage from new users.

But with a high probability, it is Sybil who will continue to maintain activity in the project, and newcomers who came because of FOMO will quickly forget about airdrops until Arbitrum 2.0.

With a high probability, the conditions for the LayerZero airdrop will be more strict than those established by Arbitrum.

And it is not professional Sybils who will suffer from this, but ordinary users who will not have enough funds to perform 30+ transactions, add liquidity worth thousands of dollars and constantly interact with the project.

As long as creating multiple wallets with fewer transactions is beneficial for Sybils, this problem will continue to exist and affect the distribution of airdrops.

Should we embrace evil or remain with a clear conscience? It's up to you to decide.

Next 3 Airdrop Unicorns

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LayerZero

It was the most exemplar in the article and the most hopes are placed on that one.

LayerZero is an intermediary infrastructure that allows us to conveniently interact between dozens of different blockchains through transactions or messages.

The main goal of LayerZero is to simplify and make bridges more user-friendly by reaching more chains and projects as partners to bring them to Omnichain.

The LayerZero Labs team has made several rounds of investments totaling $293M, which is a huge number for a bridge between blockchains.

Moreover, the main VC figures behind the project are the best funds: a16z, Sequoia Capital, Binance Labs and even Alameda Research managed to invest part of the funds in the project in 2022, but fortunately the LayerZero team bought back the percentage of $ZRO that FTX owned.

The project is actually important for Web3, as it creates a strong foundation for communication between disparate blockchains and creates some semblance of shared liquidity.

If earlier it was possible to doubt that $ZRO would be distributed through an airdrop, then after March 2023 there is no doubt.

The project is under enormous pressure from the community, eager to get their share of the $ZRO pie.

Otherwise, the project will be destroyed by criticism and boycotts on Twitter [X], which will lead to the project slowly disappearing into oblivion. Therefore, the project team is in no hurry to distribute tokens.

They need to carefully consider every mechanic, every point of tokenomics, in order to please the majority. And the majority are really large and varied: from beginners who know nothing about cryptocurrencies, to seasoned Sybils who farm using automated scripts.

The recent lawsuit from FTX that the LayerZero team used insider info to save their own funds and withdraw them to their own storage facilities before the massive collapse of the exchange only confirms my guesses about the project’s management.

The guys from LayerZero Labs primarily consider the project as a business that can lose investments, users and reputation at any time, so they carefully ignore the noise around the $ZRO drop.

With a high probability, the team will delay the release of the token until 2024 with the hope of launching an airdrop in a more favorable market so that the pressure of airdrop hunters on the capitalization of $ZRO is balanced by FOMO purchases from newcomers.

zkSync

zkSync is a layer 2 blockchain that builds on top of Ethereum to offload the main network and create a stronger foundation for mass adoption with fast transactions and cheap fees.

zkSync is built on Zero Knowledge Proofs technology. For a beginner, it is only worth knowing that Vitalik sees the future behind this technology, and we believe him.

See for yourself how you can not believe in the words of this young genius.

The guys from venture are also placing a big bet on zkSync, proving this with a crazy $458M of investment over several rounds.

The team of backers here is no less stellar: a16z, Consensys, Coinbase Ventures, Dragonfly Capital, Blockchain Capital.

The project is notable for the fact that it has been in development for many years. Back in late 2021, experienced airdrop farmers began making transactions on the first iterations of the zkSync testnet and the subsequent zkSync Lite Mainnet.

As you can see, the project team is in no hurry to release $ZKS, just like Arbitrum was.

Before distributing $ARB to users, this network became the most popular among all existing L2 solutions with a wide base of popular and most importantly unique dApps.

At the same time, the zkSync Era Network is currently in 18th place, behind Pulse Chain, Kava, Cronos, which is ridiculous for a blockchain of this level.

Despite the fact that the network boasts cheap and lightning-fast transactions, it is not really used by real DeFi Degens. The vast majority of applications on the network are forks of analogues on other networks.

In addition, such little-known forks sometimes turn out to be rugpulls, when the project team pulls all user funds from smart contracts and disappears.

This happened recently with the SwirlLend on the Linea and Base networks.

The total loss was ~$500,000. Therefore, it is worthwhile to be careful when interacting with new protocols with zero reputation, especially in the case of adding liquidity to smart contracts.

All this leads to the fact that the drop of $ZKS is still far away and you can easily manage to make more than 50 transactions with minimal costs, splitting these transactions evenly over several months.

The team has repeatedly confirmed plans to issue a token and in some interviews gave hints that the community can count on 1/3 of all $ZKS.

Unlike other Tier-1 projects, such as Linea or Base, the zkSync team has repeatedly confirmed that the token will exist, so the project is included in the list of the highest priority.

Starknet

Starknet is one of the most ambitious, but at the same time, irrelevant projects in the innovative blockchain trend.

The project is built on technologies similar to zkSync, but written in a programming language different from Solidity, on which Ethetreum smart contracts run. Starknet is a chain with slow and expensive transactions.

For several years of existence, TVL in the network has reached only 37th place in the comparative list of all networks, giving way to the long-forgotten Near, Moonbeam, Algorand.

At the same time, the subsidiary StarkWare Industries has collected no less investments than LayerZero with, perhaps, the most famous VCs: Paradigm, Sequoia Capital, Coinbase Ventures, Pantera Capital and even Vitalik Buterin is on the list of angels.

Sybils are vital to this project, because now only they use this network.

Without their transactions, there would be no point in carrying out hard forks and updates of the network, because there would be no transactions.

The project team, as well as the funds behind it, understand this very well, which is why the $STRK token has been deployed on the Ethereum network to hint to airdrop hunters about the future airdrop.

It is still very early to talk about the timing of the distribution of $STRK tokens among early users. According to my assumptions, you should not wait for the airdrop before Q2-Q3 of 2024.

There is still more than enough time to make several bridges through StarkGate at low gas [8-15 GWEI] and slowly maintain activity within the network itself.

How to find hidden gems

Airdrops are becoming more difficult to farm, competition is increasing, therefore, you must improve your professionalism when farming.

If you have been in crypto for a long time, then it may be useful for you to take the time to independently search for hidden gems that can reward you with no less airdrop than Tier-1 projects with hundreds of dollars of investment.

For example, Ribbon Finance has given away hundreds of thousands of dollars to its community backed by just $8.8M of investments.

However, there is a catch to this figure.

The correlation between the VCs who invested in the project and the chances of carrying out an airdrop of the token began to appear more and more clearly.

Just recently I came across such a comparative table, which calculated the probability of an airdrop in the presence of specific funds among the investors of the project.

For example, as I covered in my recent threads, Paradigm and Coinbase Ventures are responsible for the best airdrops in the industry.

By the way, Paradigm is listed as an investor in the 3 most significant airdrops for the industry before the Arbitrum airdrop: Uniswap, dYdX, Ribbon Finance.

The next factor that you should pay attention to when searching for potential gems outside of Tier-1 projects list is the number of active users.

You can agree with me, there is a smaller chance that the project will give each user a good reward if there are several million such users than if there are only 150k.

Exactly this situation happened with the Arkham, when the total number of wallets eligible for the airdrop was around 150,000.

Provided that there were no criteria other than registration on the platform and linking the wallet after the announcement of the airdrop. This is what led to the overwhelming success of the $ARKM airdrop for every single user.

There are many more factors that can tell that a project is a hidden gem, but everyone determines them for themselves.

Let this be your homework after reading this article.

Still, we live and make money in competition with other market participants, so it’s not enough to simply follow other people’s advice to reach the peak.

I hope this article was interesting and informative for you <3

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