After the LayerZero and ZkSync Airdrops: Time to Pause, Reflect, and Rethink the Future of Airdrops

Authors: Noah Ho, YuppieZombie, Lumos Ngok

Abstract

In recent times, the blockchain community has witnessed significant controversy surrounding the airdrops of ZkSync and LayerZero. These events have sparked debates and led many to pause and reflect on the current state and future of airdrops in the crypto ecosystem. This article discuss the historical evolution of airdrops, highlights several milestone projects that have shaped the landscape, and provides a detailed analysis of the contentious airdrops of ZkSync and LayerZero. Finally, we offer some critical reflections and considerations for the future of airdrops.

Airdrops in Blockchain

An airdrop in the blockchain field refers to the practice of sending free tokens or cryptocurrencies to specific digital wallet addresses. In simple terms, an airdrop is that a project team gives away crypto assets to users. But why would a project team give away valuable cryptocurrency? Here are some reasons we have summarized:

1. Promotion: The project team aims to raise awareness about the project among potential investors and users by distributing free tokens.

2. Community Reward: The project team wants to reward community users and hope they will continue to support and promote the project.

3. User Data Acquisition: To attract VC, the project team needs to showcase good user data. Sometimes, they hint that using their product might result in receiving airdrop rewards. It has become a consensus in the industry that early product users might receive airdrops.

When you receive airdrop tokens, you can:

1. Participate in Governance: Take part in the project’s governance and vote on the future direction of the project.

2. Hold and Wait for Appreciation: Since the cost of early airdrop tokens is very low, it is worth waiting for the price to rise if the project is of high quality.

3. Cash Out: Sell the tokens directly on exchanges to accumulate your initial capital.

The Evolution of Airdrops

Origin of Airdrops

2014: The first crypto airdrop was initiated by a project called "Auroracoin," which distributed free tokens to all citizens of Iceland to promote the adoption of the new cryptocurrency. However, the project and its token ultimately failed. At that time, the airdrop required no interaction or other conditions, just confirming community membership was enough.

Development of Airdrops

In the early days of blockchain crowdfunding, Initial Coin Offerings (ICOs) were at the center stage. With the ICO boom, airdrops became increasingly popular, and many new web3 projects began using airdrops as a way to attract potential investors and users.

2017: Electroneum successfully used an airdrop strategy, distributing over 5000 tokens to users for free. This activity attracted over 120,000 users to download the app and create accounts within the first two weeks. During this gold rush, many startups emerged, the market became over-saturated, and investors grew tired. Additionally, countries and regions such as Japan, the United States, Canada, and Hong Kong introduced regulations on ICOs. In the same year, China's central bank and six other departments jointly announced that token issuance financing was suspected of being illegal and should be stopped immediately. The exit of ICOs accelerated the development of airdrops.

2018: Ontology airdropped its native cryptocurrency ONT to NEO investors and to users who subscribed to its newsletter, distributing 1000 ONT tokens to each. In the same year, the Enumivo (ENU) project announced it would imitate EOS by airdropping a large amount of ENU, further promoting airdrops as a means to increase community user numbers and engagement.

Prosperity of Airdrops

The rise of DeFi brought a new form of airdrop, where web3 projects distributed tokens to liquidity providers or users participating in liquidity mining activities.

September 2020: Uniswap launched its UNI token and conducted an airdrop, distributing 400 UNI tokens (worth about \$1400 at the closing price on the first day of trading) to anyone who had used Uniswap before September 1, 2020, regardless of the transaction’s success. This airdrop ignited the entire DeFi airdrop scene, becoming one of the most influential events in DeFi history. Similarly, projects like 1inch, DYDX, and Paraswap also conducted airdrops between 2020 and 2021. Projects in different sectors, such as Gitcoin (funding platform), Immutable X (NFT layer2), Ethereum Name Service (ENS) (domain sector), Terra Name Service (TNS) (domain sector), Dappradar (statistics website), etc., also conducted airdrops during the same period, with ordinary airdrop hunters earning from a few hundred to several thousand dollars.

Today, airdrops have become an important part of the crypto market, with the number of projects and airdrops experiencing significant growth. For example, Arbitrum's airdrop saw over 42 million ARB claimed in the first hour, making it the most sensational airdrop of 2023. In the early days of airdrops, using a large number of addresses for batch interactions by airdrop hunters was seen as speculative and disruptive, providing no long-term value to project teams. However, the demise of ICOs and the monopolization of early project tokens by VCs have given airdrop hunters a sense of "justice". Early user airdrops have become a moral and politically correct expectation for many projects.

Essentially, airdrop hunters are investing in the initial shares of blockchain star startups, making airdrop hunting akin to a quasi-primary market investment. From an ecosystem perspective, airdrop hunters have become an important part of the web3 ecosystem development. Novice users enter the web3 field through airdrop expectations and achieve significant gains, while project teams educate users through testnet interaction tasks. Moreover, project teams need a large number of airdrop hunters during the testnet stage for stress testing to improve network performance. Additionally, project teams can ensure decentralized token distribution through airdrops, avoiding high concentration among teams and VCs, thus being better positioned to handle regulations and listings. Today, the airdrop ecosystem has become a "collusion" between project teams, users, and VC institutions, with each party extracting benefits from the secondary token market.

Evolution of Airdrop Rules

As crypto airdrops continuously evolve, the rules have become increasingly complex, with the development process roughly as follows:

1. Confirming Community Membership: For example, Ripple (XRP) in 2013 and Stellar (XLM) in 2014 required binding Facebook or verifying phone numbers to confirm community membership, engaging fans and attracting public attention.

2. Simple Registration or Zero Transfer: In 2017, avocado (ENU) required only sending 0 ETH to the contract address to receive an airdrop. The same year, Ontology airdropped to NEO holders at a 5:1 ratio.

3. Simple Interaction and Universal Distribution: Projects like Uni, 1inch, dYdX, and ENS in 2020-2021 airdropped tokens to users who had used their platforms or held relevant tokens.

4. Anti-Sybil and Multi-Dimensional Screening: In 2022, Optimism (OP) used active users, DAO governance participation, multi-signature participation, Gitcoin donations, and cross-chain bridge users as multi-dimensional factors to evaluate airdrop quantities and excluded 17,000 Sybil addresses. Similarly, Arbitrum (ARB) in 2023 had complex rules involving cross-chain bridges, transaction frequency and interaction, transaction value screening, and liquidity proof.

From the several historical stages and classic cases of airdrops, it is evident that the barbaric growth period of airdrops has ended. The existence of airdrop studios means that the promotional effectiveness of airdrops for project teams is limited. From 2020 to 2021, the stories of getting rich through airdrops attracted a large number of outsiders to experience new products and many dedicated airdrop studios. However, while these studios are heavy users within the circle, they cause some loss to the promotional goals of the project teams. Therefore, the evolution of airdrops is almost synonymous with anti-Sybil history.

Airdrop Project Overview: Milestones in the Cryptocurrency Field

In this section, we present some airdrops that are representative of key strategies and innovations in the blockchain space. Uniswap set the precedent as the first widespread airdrop, ensuring all users received tokens. ApeCoin tailored its distribution based on NFT ownership. Arbitrum, ENS, and Blur employed tiered distributions based on loyalty and contribution. IO rewarded hardware support for its platform, while Blast and Merlin distributed tokens through staking. These varied approaches illustrate the evolving mechanisms and considerations in the airdrop landscape.

Uniswap: Pioneer of the DeFi Revolution

Uniswap, as a cornerstone of decentralized finance (DeFi), is built around its Automated Market Maker (AMM) model, pioneering a trustless and permissionless way of trading cryptocurrencies. This innovation significantly promoted financial liberalization, creating an open trading environment for users.

On September 1, 2020, Uniswap showcased its deep gratitude to early participants through its airdrop event. This event not only made a significant contribution to DeFi airdrop culture but also acknowledged the loyalty and contributions of the platform's early users. All users who interacted with the Uniswap DEX before this date, regardless of the transaction scale, received at least 400 UNI tokens as an airdrop reward. Liquidity providers (LPs) received even more generous rewards.

Uniswap’s airdrop rules were highly praised by the community for their simplicity and fairness, reflecting the platform's respect and appreciation for early participants while setting a benchmark for other projects in the DeFi field.

ApeCoin: The Heart of the BAYC Ecosystem

ApeCoin (APE), as the native token of the Bored Ape Yacht Club (BAYC) ecosystem, carries the responsibility of governance and serves as the governance token for ApeCoin DAO. On March 17, 2022, ApeCoin held an airdrop event for holders of BAYC and Mutant Ape Yacht Club (MAYC) NFTs. This event was a significant reward for community members and a key step in the development of the ApeCoin ecosystem.

The airdrop event strictly allocated the number of APE tokens based on the unique attributes of each NFT and its combinations. For example, a single Bored Ape NFT holder received 10,094 tokens as a reward, while a Bored Ape NFT combined with a Kennel Club NFT received 10,950 tokens. This policy highlighted the project team’s respect for individual community members and acknowledged their contributions to the ecosystem.

Arbitrum: A New Chapter in Ethereum Expansion

Arbitrum, as a leading Layer 2 solution for Ethereum, uses innovative Rollup technology to offer users efficient and cost-effective transactions, significantly alleviating Ethereum network congestion while ensuring transaction security and decentralization.

On March 16, 2023, Arbitrum launched its grand airdrop event, meticulously designed to reward users who actively participated in the Arbitrum ecosystem:

• Points System: Arbitrum implemented a comprehensive points system, distributing token rewards based on user activity in Arbitrum One and Arbitrum Nova, such as cross-chain transactions, transaction frequency, transaction value, smart contract interactions, and liquidity provision.

• Anti-Sybil Rules: To prevent Sybil attacks, the Arbitrum team established a series of quantitative rules ensuring that airdrop recipients were qualified real users. For instance, wallets with very low balances and limited interactions or those conducting all transactions in a very short time were assigned fewer points.

• Data Cleaning and Clustering Analysis: Arbitrum used on-chain data to identify addresses controlled by the same user, collaborating with partners like Nansen, Hop, and OffChain Labs for data cleaning. They employed clustering technologies such as the Louvain community detection algorithm to accurately identify and exclude Sybil addresses.

The combination of these mechanisms ensured the fairness and effectiveness of the airdrop, demonstrating Arbitrum’s deep commitment to community building and decentralized governance, setting a new benchmark for airdrop practices in the blockchain industry.

ENS: Innovator of Ethereum Name Services

Ethereum Name Service (ENS), as a critical cornerstone of the Ethereum ecosystem, created a human-readable domain name system within the decentralized network. ENS allows users to convert complex Ethereum addresses into simple, memorable domain names, greatly enhancing user experience and the adoption of blockchain technology.

On November 9, 2021, ENS launched its highly anticipated airdrop event, ingeniously designed to reward long-term supporters. The airdrop rewards were proportional to the length of time users held ENS domains, effectively increasing the rewards for long-term supporters rather than simply based on the number of domain registrations. Additionally, users who set up reverse resolution, meaning those who integrated ENS into their daily blockchain operations, received double rewards, emphasizing the importance of actual usage and rewarding deeply engaged users.

Blur: Leading Platform for Professional NFT Trading

Blur, a platform tailored for professional NFT traders, features a Bloomberg-style professional interface, precisely meeting the needs of professional traders. Blur introduced advanced trading features such as batch bidding and NFT protection mechanisms, successfully attracting a large number of professional traders and flash traders in the NFT market.

Blur’s first airdrop took place on February 15, 2023. The airdrop mechanism was ingeniously designed, showcasing a phased reward model with seasonal and continuous airdrops:

• Phased Incentive Design: Blur’s airdrop strategy adopted phased incentives, coupled with seasonal and continuous airdrops, encouraging users to stay active across different phases.

• Increasing Reward Strategy: Blur’s airdrop rewards increased with each round, providing richer rewards for users who joined later.

• Innovative Batch Bidding Feature: Blur’s unique “batch bidding” feature allowed users to place unified bids on entire NFT series, effectively promoting the new feature.

• Liquidity Incentives Over Trading Volume: Blur’s token incentive mechanism focused on promoting market liquidity, fostering natural trading flow and transactions.

Blur’s airdrop mechanism stood out because it combined multidimensional strategies, not only in terms of token distribution but also in guiding and incentivizing user behavior and thoughtfully considering product features and market strategies.

IO: Decentralized Computing Pioneer on Solana Blockchain

io.net, an innovative pioneer on the Solana blockchain, is dedicated to unlocking the full potential of idle GPU resources, providing engineers and developers with the coveted computing power they need. The project’s grand vision is to build a decentralized physical infrastructure network (DePIN) as a solid foundation for technological innovation.

Starting from June 11, 2024, the IO project launched its highly anticipated airdrop event, featuring several highlights in its airdrop mechanism:

1. Multi-Dimensional Scoring System: IO adopted an innovative scoring mechanism, considering key dimensions such as bandwidth, GPU model, and uptime, ensuring fair and precise reward distribution.

2. Deflationary Burn Mechanism: The project implemented a deflationary burn strategy, using network revenue to buy back and burn \$IO tokens, enhancing the token’s scarcity and value.

3. Staking Requirements: To ensure network stability and security, each node is required to stake a certain amount of IO tokens, which helps lock in circulating tokens and promote the token’s stability and long-term development.

Despite the IO project’s clever combination of incentives and stability in its airdrop strategy to invigorate the community and maintain token value through deflation and staking mechanisms, the airdrop event also sparked some controversy, mainly focusing on:

1. Airdrop Points Transparency: Some users questioned the transparency of the IO project’s airdrop points calculation and distribution, calling for greater clarity in the points panel.

2. Technical Issues and Data Accuracy: Community members expressed concerns about the accuracy of front-end data displayed by the IO project, questioning the average daily earnings, number of online clusters, and total computing time.

3. Maintenance Costs and Anti-Sybil Measures: Users reported high technical thresholds and maintenance costs associated with participating in the IO project’s airdrop. The strict anti-Sybil measures set by the project team increased the difficulty of operations and maintenance time for users.

4. Airdrop Token Distribution and Management: Users expressed dissatisfaction with the cost-to-reward ratio, cloud service fees, and the high expectations versus actual returns of the project’s tokens.

Blast: Innovative Layer 2 Solution on Ethereum

Blast, a new Layer 2 (L2) solution on Ethereum, focuses on opening new paths for user value addition through its native yield mechanism. The Blast airdrop event, which began in May 2024, allows users to accumulate BLAST points through deposit and referral mechanisms, which can then be converted into BLAST tokens. Key highlights of the Blast airdrop mechanism include:

• Balanced Token Distribution: Blast’s airdrop strategy allocated half of the total tokens fairly to early adopters and the other half to developers contributing applications on the Blast platform, promoting ecosystem prosperity and sustainable development.

• Dual Incentive System: Blast’s incentive mechanism comprehensively covered both capital-rich users and active community participants, ensuring each party could earn corresponding Blast Points and Blast Gold rewards.

• Automatic Rebasement Mechanism: Blast introduced an automatic rebasement feature for ETH and its native stablecoin USDB, where users’ ETH balances automatically mapped to earnings, a unique feature among L2 solutions.

• Full Utilization of L1 Staking Yields: Blast utilized Ethereum L1 staking yields through protocols like Lido, automatically distributing the returns to users, ensuring sustainable earnings.

However, while the Blast airdrop event spurred innovation, it also faced community discussions and feedback, mainly focusing on:

1. Complex Claiming Process: Users viewed the requirement to watch videos and download mobile apps before claiming airdrops as cumbersome.

2. Share Distribution Disputes: Community discussions focused on the value of airdrops relative to the amount staked by large stakers.

3. Fairness Concerns: Despite efforts to balance the input of capital and time through the points system, concerns remained about the valuation and distribution fairness of the airdrops.

Merlin: Revolutionary Innovation on Bitcoin Layer 2 Network

Merlin Chain (Merlin), as a revolutionary innovation on the Bitcoin Layer 2 network, integrates ZK-Rollup networks, decentralized oraclenetworks, and on-chain fraud proofs to significantly enhance Bitcoin network performance and scalability. This integration injects new vitality into the native assets, protocols, and application ecosystems on the Bitcoin Layer 1.

Merlin Chain’s airdrop event was open to participants of the Merlin's Seal initiative, allocating 20% of the tokens for the airdrop. The event mechanism was detailed into:

1. BTC Native Asset Staking: Users could stake BTC, BRC-420 assets, or BTC-20 assets to support Merlin Chain’s development and earn M points.

2. EVM Asset Staking: For users without BTC native assets, Merlin Chain offered participation opportunities by depositing assets on Ethereum mainnet or Arbitrum, gaining native staking rewards.

3. Liquidity Support: Users could provide liquidity to Merlin Swap, enriching Merlin Chain’s ecosystem, increasing trading pair depth, enhancing transaction efficiency, and earning M points.

Merlin Chain’s airdrop event stood out due to its unique attributes:

1. High Proportion of Airdrop: Allocating 20% of the total tokens to the airdrop was notably generous within the Layer 2 project space.

2. Combination of Staking and Airdrop: Users could accumulate M points through staking BTC native assets, EVM assets, or providing liquidity to Merlin Swap, which could then be converted into MERL tokens.

3. M-Token Innovation: Staked Layer 1 assets generated 1:1 mapped assets, M-Tokens, enhancing asset liquidity and allowing users to freely interact within the Layer 2 network.

4. Team-Based Reward Boosts: The team mechanism allowed users to boost their rewards through collective staking, maximizing point accumulation.

5. Broad Support for Cross-Chain Assets: Merlin Chain supported cross-chain assets, enabling users holding BTC or EVM assets to participate in the airdrop.

Recent Airdrop Controversies

Recently, the highly anticipated Zk Sync and Layer Zero projects both issued tokens and conducted airdrops, simultaneously launching on Binance. However, this has sparked widespread controversy within the community. Users generally believe that they invested a lot of time and effort to obtain these potentially large airdrop rewards, but many did not receive the expected returns and were even ineligible to participate in the airdrops.

Currently, the long-term operation of these projects and high user expectations have led to massive participation. The large user base means that if a "universal distribution" approach is adopted, the amount distributed to each user will be very small, potentially not even covering their interaction costs. Therefore, users who aimed solely to gain from airdrops have developed negative feelings towards this situation.

Users' main complaints focus on the strict rules of the airdrop, which excluded many casual users. Even some genuine users who completed numerous interactions only received small airdrop rewards. We will review the entire process of these two airdrops and analyze the deeper reasons behind the controversies.

LayerZero Airdrop

LayerZero, a high-profile cross-chain interoperability protocol, enables the transmission of arbitrary information between different chains, bridging communication and enabling cross-chain operations. Unlike asset bridging that merely transfers tokens across chains, LayerZero deploys endpoint smart contracts on different chains to accept information, validated by off-chain oracles and relayed, allowing direct contract interactions from chain A to chain B.

Since its inception in 2021, LayerZero has garnered substantial capital support, raising over \$200 million from multiple rounds involving top institutions. However, until June 2024, LayerZero had not issued tokens, attracting a large user base hoping for a future airdrop by engaging in early interactions. By the token issuance, LayerZero had over 6 million users. Ultimately, after nearly three years of operation, LayerZero announced the issuance of platform tokens and airdrops in May 2024 and completed the airdrop snapshot. Despite the anticipation being met, the airdrop sparked intense controversy.

The controversy mainly centers around the self-reporting and reporting mechanism for Sybil accounts, opaque airdrop rules, and the forced donation requirement to claim the airdrop. We will chronologically organize the entire airdrop process.

Anti-Sybil Mechanism

Following the airdrop announcement on May 2, LayerZero announced on May 3 a one-month Sybil review period. Given the current environment with numerous gold-farming studios dedicated to airdrop farming and many users engaging with multiple accounts to maximize airdrop rewards, project teams conducting Sybil reviews to exclude these entities from airdrop rewards are inevitable. Although studios contribute significant interaction data that somewhat benefits the project, anti-Sybil measures are advantageous for long-term project development and loyal user protection. The community generally does not oppose Sybil reviews, as past projects have used clear rules to mark and reduce Sybil accounts' airdrop quotas or exclude them. However, the community criticized the strange nature of LayerZero's Sybil review system.

This Sybil review was divided into three stages: self-reporting, official review, and mutual reporting. In the first stage, users had 14 days to self-report. If users were unsure about their account's status and believed they might be marked as Sybil, they could self-report to retain 15% of the airdrop. However, if they did not self-report and were later identified as Sybil in the next stage, they would lose the entire airdrop. Users had to decide, if they thought there was a high probability of being Sybil, the best strategy was to self-report and secure a 15% reward. Since self-reporting retained only 15% of the reward, statistically, if users believed they had over a 15% chance of not being identified as Sybil, it was worth taking the risk for a higher expected value. Thus, users who suspected they were Sybil often were indeed Sybil.

Although the official stance was that the self-reporting targeted studios, not individual users, this phase mainly affected multi-account farmers. Large studios, aware of the likely Sybil reviews during airdrops, typically employed sophisticated strategies like fingerprint browsers, isolated wallets, and staggered transactions, confident in their methods, and thus were less likely to self-report. In this stage, over 338,000 addresses self-reported, and over 803,000 addresses were marked as Sybil, receiving 15% of the airdrop, with the remaining 85% allocated to compliant users.

The second stage was the official review stage. Here, the official team applied specific rules to conduct internal reviews based on common Sybil behaviors. Users identified as Sybil in this stage would lose their eligibility for the airdrop.

The third stage, the most controversial, involved mutual reporting. In this stage, the official team encouraged community-wide scrutiny, urging users to report Sybil accounts, with successful reports earning 10% of the reported account's airdrop while the reported account received nothing. Despite knowing this harmed the reported users' interests, the reporters were incentivized financially and morally justified by the anti-Sybil initiative. This reduced the psychological burden and moral criticism for reporters. Consequently, the community actively engaged in reporting, submitting thousands of reports, involving a wide range of addresses, including ex-studio employees reporting internal accounts, addresses of previous airdrop beneficiaries, and reports on prominent airdrop farmers and KOLs. Most reports during this stage were deemed valid, resulting in the reported users, despite their monetary and effort investment in interactions, ending up empty-handed.

In the end, the month-long LayerZero Sybil hunt concluded, revealing that of the 6 million users, only about 600,000 were eligible for the final airdrop, with the rest excluded. This significantly weeded out airdrop-farming Sybil accounts, partially filtering out genuine users, and drastically reducing the airdrop scope, allowing each user to receive more tokens. However, the glaring issue was the project's blatant exploitation of human nature, using users as tools, igniting internal community conflicts.

Opaque Airdrop Rules

The month-long Sybil hunt preceding the airdrop sparked extensive discussions, with another major contention being the opaque airdrop rules. After eliminating Sybil accounts, approximately 600,000 wallets qualified for the airdrop. The first day's circulation was 2,023,000 tokens, with Stargate ecosystem users receiving 10 million \$ZRO, Pudgy Penguins and Kanpai Pandas NFT holders each receiving 1 million tokens, and other RFP projects distributing their allocated tokens. According to the announced airdrop results, the tokens were mainly distributed based on interaction volume, with over half of the users receiving 50-100 tokens, and a small number of users (around 100) receiving up to 5,000 tokens.

The controversy mainly revolved around the distribution to NFT holders, as Kanpai Pandas was not well-known in the community, leading to suspicions of insider trading by the project team. However, it is worth noting that Kanpai Pandas has been operating continuously, with a stable floor price that did not fluctuate significantly before the airdrop. Moreover, the total airdrop volume relative to the overall distribution was not high, making the insider trading claim unfounded. This might just be the community venting their dissatisfaction with the distribution results. Ultimately, users were dissatisfied with the distribution outcomes. The closing price of \$ZRO on its first day on Binance was about \$3.4, meaning the entire airdrop distributed a total value of less than \$70 million, with over half of the users receiving less than \$340 in airdrops. The high expectations set by the project team and VCs throughout the long period of anticipation did not align with the reality, causing psychological disappointment among users. Fundamentally, the project’s long-term operational expectations and the market value at launch did not support the inflated expectations, leading to user dissatisfaction. This expectation was a useful tool during project operation, leveraging future potential incentives, but its failure to materialize caused backlash against the project.

Forced Donation and Strong Attitude

The final controversy arose during the claiming phase, where eligible airdrop recipients had to donate at least \$0.1 multiplied by the number of tokens to the Ethereum developers' funding organization, Protocol Guild, to claim their airdrop. Although \$0.1 per token was relatively small compared to the \$ZRO token price, the forced donation sparked strong dissatisfaction. Moreover, users also had to pay a substantial gas fee for mainnet interactions. Besides the opacity of the donation process, mandatory donations for claiming airdrops were unappealing.

After community opposition, LayerZero founder Bryan Pellegrino publicly responded, stating that no one was forced to donate, and those unwilling could forgo claiming the airdrop. However, this strong stance did not sit well with the community, as users believed that airdrops were rightfully theirs, not a favor from the project team. Users felt their efforts contributed to the project's development. Despite Bryan Pellegrino later explaining his perspective and vision for the project and airdrops, the community remained unconvinced.

Our Comments

Reviewing the entire LayerZero airdrop controversy, we believe there are inevitable factors, but the project team's strong stance violated the blockchain ethos. The community's long-standing expectations for project airdrops have fostered the airdrop farming industry. From Uniswap's universal airdrop to ENS's generous rewards for loyal users, the community consensus that "projects will airdrop to early contributors" has been established. Star projects inevitably attract studios and airdrop farmers. From the project team's perspective, anti-Sybil measures are essential to ensure genuine users receive more tokens. However, the project team's blatant exploitation of human nature in this instance was distasteful. Although effective,

such ruthless tactics alienate the community. From the project team's viewpoint, airdrop anticipation leveraged future potential rewards as a tool, essentially borrowing from the future. For users, the decentralized spirit of Web3 implies they are not only users but also early contributors whose efforts propel the project's development. Airdrops, as compensation for their efforts, are not a charity from the project team. LayerZero's project team's arrogant attitude violates this decentralized spirit, treating airdrops as a favor rather than earned compensation, and disregarding users' contributions and opinions. Even in Web2 projects, teams listen to users' feedback and provide adequate explanations. As a Web3 project, LayerZero exhibited a strong desire for control, viewing airdrops as a favor to users.

ZkSync Airdrop

ZkSync, an Ethereum Layer 2 scaling solution, uses zero-knowledge proofs to enhance Ethereum mainnet security while increasing transaction throughput, alleviating Ethereum's congestion issues. Since its inception, ZkSync's parent company has raised over \$250 million, garnering high expectations. ZkSync, along with Optimism, Arbitrum, and StarkNet, is considered one of the four major Layer 2 projects. By June 2024, the other three projects had already issued tokens with relatively generous airdrops, focusing attention on this last major project. On June 11, 2024, ZkSync announced it had completed a snapshot in March 2024, and would begin distributing token airdrops in mid-June, ending a four-year interaction marathon for users. However, the complexity and stringency of the airdrop rules sparked widespread dissatisfaction within the community.

ZkSync had over 6 million unique addresses, distributing a total of 3,675 million tokens, with 89% allocated to users and 11% to contributors. According to the rules, approximately 695,000 addresses qualified, about 10% of the total. Compared to other Layer 2 projects' airdrop rules, ZkSync's rules appeared more complex and unconventional. The airdrop criteria involved three aspects: eligibility multipliers, allocation multipliers, and reward multipliers, with minimum token requirements and regular anti-Sybil checks.

Eligibility Multiplier

Firstly, the eligibility multiplier was based on seven conditions, each granting one point, forming the first multiplier. The second aspect involved the user's average daily balance, providing the second multiplier. Notably, if either of these points was zero, the user would not qualify for any airdrop. The third aspect was the reward multiplier, with five conditions granting extra points but not zeroing out the multiplier.

The final airdrop amount was the product of these three multipliers. Additionally, users needed to meet a minimum of 450 tokens to receive an airdrop, with a single account capped at 100,000 tokens, with excess redistributed. Finally, eligible addresses underwent regular anti-Sybil checks. Airdrop farmers, who typically followed previous rules, found these conditions challenging, excluding many casual users, leading to conflicts.

Specifically, the seven conditions for the eligibility multiplier were:

• Interacting with ten smart contracts.

• Providing liquidity and borrowing in DeFi.

• Completing five transfers using Paymaster.

• Trading ten ERC20 tokens.

• Owning a Magic Lamp NFT.

• Being active on the lite network for three months before the era launch.

• Donating to Gitcoin projects on the lite network.

Meeting each condition earned one point. These conditions were stringent, excluding most casual users. For example, interacting with ten smart contracts required experiencing over ten DApps, providing DeFi liquidity and borrowing tested users' involvement in the DeFi ecosystem, completing five Paymaster transfers was niche, trading ten ERC20 tokens was challenging for regular users, owning a Magic Lamp NFT, and being active on the lite network for three months rewarded loyal users. The seventh condition of donating to Gitcoin projects tested users' support for the ecosystem.

In contrast, Arbitrum and other Layer 2 projects' airdrop rules more straightforwardly reflected user loyalty, such as cross-chain funds, transaction duration, transaction frequency, transaction value, and providing liquidity. ZkSync's conditions, although filtering out many airdrop farmers, appeared excessively strict and complex, not necessarily identifying genuine users. Moreover, the official documents mentioned that even meeting these qualifications did not guarantee an airdrop, with the final decision at the discretion of the project team, further provoking criticism.

Average Daily Balance

The second aspect was the average daily balance multiplier. This multiplier was calculated by summing the daily balances since the mainnet launch, divided by the total days, effectively a year, yielding the average daily balance. The rules specified that DeFi balances were doubly counted, meaning the wallet's balance and holding duration significantly influenced the airdrop amount. A normal account typically held several hundred dollars, potentially earning a higher multiplier if interacting since the era launch. Low-balance multi-account farmers and studios transferring large amounts were likely excluded, making this rule reasonable, filtering out airdrop farmers and studios while incentivizing major holders.

Reward Multiplier

The third aspect was the reward multiplier, with five conditions, where missing any condition did not impact the total airdrop amount. The conditions were:

• Holding a ZkSync native NFT.

• Holding over \$50 of ZkSync native tokens.

• Creating an abstract wallet.

• Holding ARB/OP/ENS airdrops, with over 50% of tokens unsold for over 90 days.

• Interacting twice with a smart contract earning over 100 ETH in Gas fees, being among the first 1,000 interactors.

The first two conditions naturally supported their ecosystem, and the third promoted the ZK-Rollup native feature abstract wallet. The last two conditions, though stringent, had minimal impact on the final airdrop. These conditions served as additional rewards for supporting the ZkSync ecosystem, making them acceptable.

Our Evaluation

In summary, conducting an airdrop with 6 million users is challenging. Users, based on other Layer 2 projects' airdrop rules, engaged in extensive loyal interactions, making filtering more complex and stringent. Although these airdrop rules set high thresholds, filtering out many users, they also sparked dissatisfaction and criticism within the community. The community's dissatisfaction could lead to increased distrust and criticism, potentially negatively impacting the project's long-term development.

Future of Airdrops

Following the airdrops from LayerZero and ZkSync, besides criticism of these projects, there is a sentiment within the community that "airdrops are dead," and ordinary people no longer have opportunities to get rich from airdrops. In fact, as blockchain technology and the market evolve, the early airdrop bonuses will inevitably diminish. Universal airdrops like Uniswap's, without Sybil reviews and low thresholds, will become increasingly rare. Instead, Sybil checks have become standard procedures, with increasingly complex rules and DID verification. This is because, in the course of development, vulnerabilities often get exploited, preventing them from achieving their original purpose. Therefore, to prevent abuse, the rules will only get more stringent.

In the tripartite game between VCs, project teams, and users, each party continues to grow. The airdrop farming studios' techniques become more sophisticated, and airdrop farmers optimize their quality accounts, making the farming field more competitive. The costs for participating in airdrop farming will only increase, while the expected returns decrease. Massive airdrops from early projects like Uniswap will become increasingly rare, as the early bonuses of this field gradually disappear. So, from the current perspective, how should we as users respond? We need to look from a higher dimension, analyze the current environment, and put ourselves in the shoes of the project team. If I were the project team, under the current environment, how would I optimally distribute my airdrop tokens? This way, we can better participate in the next project. At the same time, we need to adjust our mindset, accept missing early bonuses, and remain calm about projects where our efforts did not yield good results.

Reflecting on these two major projects' airdrops, the main conflict lies in the imbalance between the community's expectations and the project's airdrop strategy. The consensus that every project will airdrop to participants or contributors has become ingrained in the community. Users believe that the project's development relies on their participation, and airdrops are a reward for their hard work, not a favor from the project team. From the project team's perspective, airdrops are merely a tool. By rewarding early contributors, airdrops serve as a means for community building, project development, and token distribution.

From the perspective of a strong project team, airdrops are a reward, not compensation for users' efforts. The project team needs to balance the token price and market value at launch, balancing the total value of the airdrop for recipients with the purchase price and willingness of secondary market investors. With a fixed total airdrop value, the project team needs to consider how to reasonably distribute the token shares among participants. If the distribution group is too large, each user's total will be low; to ensure satisfactory airdrops for users, the number of eligible participants must be limited. Additionally, the project team must consider how to reasonably allocate the shares among participants with different contribution levels. The current mainstream approach is to first conduct Sybil checks, excluding fake users aiming solely for airdrops, then allocate tokens based on users' contribution levels through a point system.

When past methods become known and replicated, leading to failure, we cannot simply copy a project's rules to new projects for eligibility but should anticipate most people's behavior and possible project team rules. Returning to first principles, we analyze the factors influencing airdrop shares. Firstly, the project's funding situation is crucial. Although the community currently shows clear resistance to VC-backed projects, favoring meme projects, for airdrop purposes, a project with substantial funding has a higher chance of developing to the token issuance stage, likely with a higher market value at issuance. Regardless of the project team's vision and airdrop distribution ratio, the overall airdrop amount is likely higher. However, such projects also attract higher attention, meaning more competitors vying for the large pie, making the process more competitive.

Therefore, the best approach is to invest in projects with significant funding but not widespread attention. In such projects, multi-account farming can be employed for low-level airdrops, considering anti-Sybil measures. These projects are less competitive, and the project team does not need to filter many users, often providing consistent low-level airdrops. For projects with massive funding and high popularity like ZkSync and LayerZero, participation is still possible but should involve controlled costs and expectations, making high-quality accounts while anticipating rules.

Controlling expectations involves not falling for project team PUA. For projects that continuously leverage token airdrops as a marketing tool, with ambiguous rules and delayed specifics and token issuance, we should not expect them to have a grand vision. Judging the project team's actions and motivations becomes crucial. Users are not fools; every action and statement by the project team is observed. Therefore, controlling expectations and costs, and abandoning projects when necessary is vital. For suitable projects, even if highly competitive, we must consider the project team's intentions, possibly using on-chain data analysis. For projects with large user bases, distribution models typically exclude low-value users, then allocate remaining users, setting minimum and maximum thresholds, potentially more linear in between. Additionally, project teams tend to favor users supporting their direct revenue or liquidity. From these perspectives, users should approach such projects with a few high-quality accounts, genuinely supporting the project team's initiatives to secure airdrop eligibility. If the project team's constant PUA makes the input-output ratio disproportionate, boldly abandon the project.