Cryptocurrency airdrops, a popular strategy since 2017 to distribute tokens and generate early excitement, are facing increasing challenges. Despite the initial enthusiasm, a recent study by Kyrok Trading shows that token performance declines shortly after listing.
Furthermore, many airdrop tokens fail to maintain interest or value in the long term.
Airdrop Coins Performance Analysis
A 2024 study by KeyRock of 62 airdrops across six blockchains showed that 88.7% of tokens lost value after 90 days, with only a small percentage showing resistance to declines.
Read more: Crypto Airdrop: Your Way to Invest for Free!
Airdropping is a tool used by new projects to boost participation in protocols and expand the reach of their cryptocurrencies. However, the overuse of this strategy seems to have led to market saturation and a decline in community interest.
The report stated:
âWhen looking at price action over 15, 30 and 90 days, it becomes clear that most of the price action occurs in the first few days after an airdrop. After three months, few tokens are able to bounce back to positive results.â
Airdrop price performance 15, 30 and 90 days after listing. Source: Kiruk
Interestingly, while the overall performance of airdrops paints a bleak picture, not all results were uniformly disappointing. The data revealed that results vary significantly between different networks.
For example, Ethereum and Solana networks stood out, maintaining or increasing 14.8% and 25% of their airdrops respectively after three months. Conversely, other networks such as BNB, Starknet, Arbitrum, Merlin, Blast, Mode, and ZkSync did not see any airdrops with positive results.
The performance differences between networks show the influence of network preference and user base characteristics. Solana, which is gaining popularity as a retail favorite and a serious contender for Ethereumâs dominance, has shown relatively better results, perhaps due to its growing and engaged community.
Large free giveaways tend to be successful.
Furthermore, KeyRockâs report also addressed the role of token and crypto distribution strategies. It categorized airdrops based on their percentage of total token distribution: small (less than 5%), medium (more than 5% but less than or equal to 10%), and large (more than 10%). The results suggest that the size of the airdrop can significantly impact the initial market reaction and long-term viability.
Airdrop revenue by distribution volume. Source: Kiruk
In the short term, small airdrops tended to perform better, perhaps due to low immediate selling pressure. However, these gains were often short-lived, with large price declines occurring within three months. This suggests that initial scarcity can limit immediate selling, but it can also lead to delayed market corrections as conditions change or insiders decide to liquidate.
Furthermore, medium-sized free distributions found a balance, showing slightly better retention and performance. However, it was the large airdrops that really outperformed over longer periods. These large distributions seemed to foster a stronger sense of community ownership, which can be crucial in stabilizing price fluctuations and maintaining user interest.
The Kerouac report concluded that:
âUltimately, this data suggests that being less stingy with your airdrops pays off. Protocols that are generous with airdrops tend to grow a more invested user base, leading to better outcomes over time.â
