The Airdrop Playbook: How to get it right?
We analyzed 8 different airdrops and recent case studies of successful token launches. This article shares our findings and explores different ways protocols can target the right users.
Airdrops have long been a popular strategy to incentivize early users and drive community participation. While they often generate initial excitement, they can also lead to unintended consequences. The predictability of airdrops has led to industrialized farming that dilutes the value for genuine participants and often results in quick sell-offs. Some airdrops have had a lasting impact but most struggle to maintain long-term value and user engagement.
In the first section of this article, we explore the performance of airdrops over the past four years by analyzing user data from 8 major protocols. The goal is to examine user behavior and provide founders with actionable insights that can inform future token launches. Understanding how users interact with airdrops — hold, sell, or accumulate more tokens — enables founders to learn from past trends and refine their strategies. This approach can help projects avoid common pitfalls like rapid sell-offs and user disinterest leading to a more engaged and loyal community.
In the second section, we shift focus to strategies for customer acquisition and retention that can help projects move beyond the limitations of airdrops and achieve more sustainable growth. We also delve into the critical decision of when to launch tokens — whether before or after achieving product-market fit (PMF) — and how this timing can significantly impact a project's long-term success.
What we learned looking at the airdrop data over the last 4 years
Key takeaways
A significant portion of the community that projects aim to build leaves the ecosystem within the first week after launch, but users with experience across multiple protocols are less inclined to sell all their airdropped tokens.
More than 80% of light users (claimed 1 or 2 airdrops out of a total of 8) sell their airdrops within 7 days, compared to only 55% of power users (claimed 7 or 8 airdrops out of a total of 8).
A trend emerges where the majority of users eventually "Transferred / Dumped all" their airdropped assets. However, this pattern decreases as users become more engaged with other protocols and ecosystems.
Power and heavy users are more likely to be "HODLing" or "Accumulating" which suggests that those who claim more airdrops tend to have more belief in the tokens’ potential value.
Protocol selection criteria
To identify what the challenges are with the current airdrop trends, we first decided to analyze user behavior across eight popular protocols that conducted airdrops over the last four years. The protocols included in this study are Apecoin, dYdX, Blur, Ethereum Name Service, Uniswap, Ether.fi, Optimism, and Arbitrum. The rationale for picking these projects was that we believe they cover a diverse range of projects across different sectors with airdrops conducted across different cycles in the market. Following this, we segmented the users based on the number of airdrops they were eligible for from our list of protocols and examined their actions with these airdropped tokens over a 7-day period to determine trends in holding, selling or accumulating behaviors.
User segmentation
Users are classified into four categories based on the number of airdrops they claimed out of the eight possible :
Light users: Claimed 1 or 2 airdrops (87% of total wallets)
Active users: Claimed 3 or 4 airdrops (11% of total wallets)
Heavy users: Claimed 5 or 6 airdrops (<2% of total wallets)
Power users: Claimed 7 or 8 airdrops (<1% of total wallets)
Behavior segmentation
Once users were segmented into categories based on the number of airdrops claimed, their behaviors were further classified into four main categories:
Accumulating: Users who continued to acquire more of the same asset after receiving the airdrop.
HODLing: Users who held onto their airdropped assets without selling.
Sold partially: Users who sold a portion of their airdropped assets but still retained some.
Transferred / Dumped all tokens: Users who completely sold or transferred all of their airdropped assets.
Assumptions
We also make certain assumptions for this study which are important to note but are unlikely to significantly alter our findings:
Wallet ownership: We assume that each wallet address represents a user which may not be the case as a user can have multiple addresses.
User behavior: We are only tracking user behavior till up to 7 days from the date of the airdrop. Any activity that the wallet engages in after is not part of this analysis.
Trading activity: We are only gauging a wallet’s onchain behavior based on their trading activity on the following LP pools - WETH, USDC, USDT, DAI, WBTC, TUSD and TUSD.
Data source: We’ve used the public airdrop dataset for each protocol on Dune for getting the list of eligible wallets and subsequently tracking their onchain behavior. For Blur and Optimism, we’ve only looked at their first airdrop.
Data precision: To enhance clarity of our metrics we have rounded percentage figures to the nearest whole number. For example, 74.93% is presented as 75%. This minor adjustment does not impact the overall trends or conclusions drawn from the data.
Our primary goal with this research was to identify whether onchain behavior changes across different categories of users. Are light users more likely to accumulate? Do power users dump their allocation as soon as they get it? Are active and heavy users more likely to buy more of your token?
The more protocols a user has interacted with the more likely they are to not sell all their airdropped tokens
Our analysis shows that 75% of light users (those who claimed 1 or 2 airdrops out of 8) sold or transferred all of their tokens within the first 7 days. Light users make up 87% of all users which means that the vast majority of airdrop recipients are individuals who claimed just 1 or 2 airdrops. This indicates that a significant portion of the community that projects aim to build leaves the ecosystem within the first week after launch. This trend also suggests that many of these wallets may be Sybil accounts, created solely to farm airdrops and then dump or transfer the tokens once their objective is met.
Wallets that claimed between 3 and 6 airdrops (active and heavy users) represent 13% of the total user base and showed better engagement compared to light users. Specifically, 63% of active users and 60% of heavy users sold or transferred all of their tokens within the first 7 days, which is significantly lower than the 75% of light users who did the same.
Power users (claimed 7 or 8 airdrops out of the total 8) make up just 0.05% of the overall user base. Despite their small numbers, power users demonstrate much stronger long-term engagement than other groups. Only 54% of power users sold or transferred all their tokens within the first 7 days. This group is generally more committed and engaged, making them a better target for DeFi projects. They are often more "degen" in nature, have greater staying power, and are more likely to bring in additional capital than light users.
Using historical data to understand airdrop candidates
Airdrop strategies require careful consideration and should be based on systematic analysis rather than guesswork, sentiment, or precedent. To break this down, consider the broader issue: you have a diverse user base and the goal is to segment them based on value — specific to your project. There is no "magical airdrop filter" that can universally solve this. By analyzing the data, you can gain insights into your users and make informed decisions on how to best structure your airdrop through targeted segmentation.
From our analysis we know that for most tokens the enthusiasm fades quickly, often within the first week. This pattern speaks to a broader issue with the airdrop model: many users may simply be there to farm the incentive rather than engage with the protocol long-term. Distributing large amounts of native tokens to past users assumes that previous engagement will translate into future loyalty and yet protocol metrics often drop off sharply after an airdrop. The key question is how to better approach the problem of user acquisition and how a new project can better use the token as a growth accelerant for their product.
Projects can conduct similar studies to the one we’ve done by selecting 7 to 8 comparable projects and analyzing user behavior over time. This kind of research can provide powerful insights, helping projects make informed data-driven decisions on how to structure their airdrops through targeted segmentation. Projects should tailor their airdrop strategies to fit the unique needs of their ecosystem. For example, a social platform might prioritize a broad user base to drive network effects, while a DeFi project would focus on attracting liquidity providers. Different types of projects have distinct needs and their airdrop campaigns should be optimized accordingly to target the right user segments.
For example if a project wants to reward early users, it can conduct in-depth research on all eligible addresses and analyze their past behavior. By tracking addresses that typically sell all their tokens within the first 7 days of claiming, the project can make more informed decisions on how to distribute rewards. This type of research can significantly improve the sophistication of the airdrop system. If the goal is to build a sustainable long-term community, offering airdrops to users who have quickly sold tokens from multiple past projects may not be the most effective strategy. Instead, additional incentives could be provided to users who have historically held onto their airdropped tokens and actively contributed to multiple ecosystems which can foster lasting engagement and loyalty.
However, this is just one example — projects can adopt various innovative approaches to enhance user acquisition and retention. In the next section of this article we explore various issues around user acquisition and retention, and provide examples of projects that have taken creative approaches to improve the efficiency and effectiveness of their airdrop campaigns. The final segment of this article addresses the timing of airdrop launches and the optimal strategy around it.
How some protocols have managed to ace the airdrop process
Token incentives can be seen as a new form of customer acquisition. Each dollar of token incentives corresponds to a new customer or revenue, and projects should ensure their Token Acquisition Cost (TAC) does not exceed user’s lifetime value. The basic strategy of maximizing LTV while minimizing CAC in web2 holds true for most businesses in web3 as well but the means are different. Like tech startups that burn cash in their early days, it’s okay for protocols to run negative TAC as they optimise for growth but should be mindful of acquisition costs. In the medium run, the aim should be that revenue per user > TAC over a defined period.
Most protocols conducting airdrops need to assess the true benefits they’re gaining from distributing tokens to users. While airdrops may seem like a relatively inexpensive marketing strategy at first glance, their effectiveness in terms of customer acquisition is debatable. Projects allocate around 7.5% of their total token supply for airdrops on average, which is far from cheap. Our research shows that more than 75% of light users (those who claimed 1 or 2 airdrops out of 8) sell their tokens within 7 days, and these light users make up 87% of the total users targeted by the 8 major protocols. This correlation highlights a clear misalignment between what projects aim to achieve and actual user behavior.
From a user acquisition and retention perspective, it’s challenging to ensure that revenue per user exceeds Token Acquisition Cost (TAC) and the correlation mentioned above is a clear signal of this challenge. To address this, projects should adopt a two-fold approach.
First, airdrop strategies need to be data-driven. One of the biggest strengths of blockchain technology is the availability of real-time open data, and projects should leverage this to analyze user behavior. By consistently rewarding users who genuinely add value to the protocol — rather than providing one-off rewards — projects can create habits that increase the likelihood of long-term engagement and loyalty.
Second, there isn’t a one-size-fits-all solution when it comes to airdrops. Instead, projects should devise strategies tailored to their specific needs and learn from successful case studies where projects have crafted unique strategies which can offer valuable insights. In the next section, we cover three case studies — Drift, Across Protocol, and MarginFi & Kamino — to showcase how projects can leverage their tokens as growth accelerants for their products.
How Drift's time-delay mechanism and lower initial valuation helped double its market cap
Drift is a derivatives DEX that lives on top of Solana. Drift’s primary novel feature is that it is supported by three types of liquidity provisioning, which help create tighter spreads, more reliable liquidity, and faster fills.
During the day of the airdrop the Drift team included a time-delay mechanism in their token distribution strategy, offering to double the rewards for users who would wait 6 hours after the token launch to claim their airdrop. The time delay was added to mitigate the congestion typically caused by bots at the outset of airdrops and potentially help stabilize the token's performance by reducing the initial surge of sellers.
Despite the initial volatility in price on the day of the airdrop in May, Drift’s core metrics have continued to climb. Launching with a modest $56 million market cap, Drift surprised many, especially compared to other vAMMs with fewer users and less history but higher valuations. Drift's value soon reflected its potential, hitting a market cap of $120 million — a 2x now. The success lay in its thoughtful token distribution, which rewarded long-term loyal users.
Why Across protocol decided to launch in a bear market
Across Protocol chose to launch its token in a bear market, a move that set it apart from most other Web3 startups. Due to the lack of pump-and-dump opportunities in a down market, the token prices of projects that launch have an opportunity to climb more steadily, in line with product adoption. As a result, the people who accumulate tokens are the kinds who are building a long-term portfolio and will lay the groundwork for a healthy token ecosystem in the next up market.
Ethereum, Cosmos, Solana – they all hold something in common: they launched in a bear market when all was quiet in crypto and only the most committed remained. As a result, they were able to accrue a valuable community that sustains them to this day and that community was able to get ownership of the network’s native asset at a smaller marketcap in a permissionless manner.
Across Protocol took a similar path by implementing a liquidity mining program designed to reward long-term supporters. Unlike most protocols where loyal liquidity providers and short-term "mercenary" farmers earn the same APY, Across Protocol structured its reward system to benefit those who truly support the project. The protocol rewards loyal liquidity providers with higher returns, encouraging them to keep their accumulated rewards unclaimed. This approach has resulted in consistent growth in both total value locked (TVL) and token price — an achievement that remains rare in the Web3 space and the chart below is the testament of their growth.
Kamino protocol’s successful points campaign
Recently, we’ve seen the rise of a new trend - the points campaign.
The way these points campaign work is that the protocol rewards its users with points based on their level of engagement, which act as an unspoken promise for an airdrop in the future. This system can be a viable strategy to bootstrap engagement in the early days as it allows the protocol to retain users for the short to medium term. On the other hand, the points system offers better visibility for its users as they can use their point earnings to estimate the allocation of their potential airdrop. Users can also increase or decrease the level of their engagement depending on how bullish they are on the protocol itself. However, if the points campaign runs for too long it can have negative impact on the protocol too.
A prime case study for this can be when we look at the performance of Kamino Finance and Margin Finance — both lending platforms on the Solana ecosystem. Margin Finance started its points campaign back in July of 2023 when it was still in its early stages. The campaign helped the project bootstrap liquidity as it soon crossed $10M in TVL. It had a similar effect for Kamino as well since the project’s TVL grew exponentially after launching its points campaign in December last year. Today, however, it’s a different story altogether as both projects paint a picture in stark contrast.
Despite being ahead in terms of TVL up until Q1, MarginFi has seen a dramatic fall in most of its metrics as users seemingly have favored Kamino. A factor for such a rise in Kamino’s metrics can be attributed to its genesis token launch which took place in April 2024. Kamino’s airdrop campaign ran for 4 months which concluded with a rewarding airdrop for all its users. On the other hand, MarginFi is still running its points program, which has led to immense frustration from the community. The sentiment has shifted to such an extent that users started to feel that the protocol was farming its users and using them to raise capital at a bloated valuation for personal gain.
While points program has been a popular choice for many in this cycle, the caveat remains on the duration of each airdrop campaign as users aren’t willing to miss out on the opportunity costs associated with depositing their capital in a certain project. Most projects that have seen a successful points campaign have had a shorter duration, somewhere between 3 to 6 months, and have mixed it with a tier-based approach where users are rewarded in epochs for continuing to engage with the project. This way protocols have been able to incentivise long-term behavior too as users who have consistently engaged with a protocol get rewarded more in subsequent airdrops.
Overall, what we can see from these successful case studies is that projects should not be afraid to take a unique approach if it aligns with their purpose. On the other hand, none of them answer the problem around determining the optimal timing for their airdrop. Which part of the cycle should the token launch happen? Should it happen before or after building a meaningful community? And finally, should the launch take place before achieving product-market fit (PMF) or after?
Finding product market fit before an airdrop is key for long-term success
One of the main concerns for any startup is the timing of a token launch and how to create maximum impact through this Token Generation Event (TGE).
Launching new networks is a key yet challenging task in the development of any project, especially if they are building at an infra level. In this regard, tokens can be a powerful tool for bootstrapping networks, incentivizing early adopters to invest their time and resources before a project reaches product-market fit (PMF). Why?
Every network faces the “cold start problem,” where gaining users makes the product more valuable and sustainable for both validators and users. But on day zero there are no paying users, which results in no utility for validators and without reliable validators users cannot trust the network. This chicken-and-egg problem is often solved by incentivizing early participants.
Some application-focused projects have successfully leveraged early token launches and points programs to rapidly bootstrap liquidity and grow their user bases. Late movers, particularly in this competitive space, have used this strategy to their advantage. Blur's meteoric rise in the NFT trading space, Hyperliquid in the perpetuals market and Morpho in the lending market have demonstrated how effective point systems can be in driving significant traction when executed strategically.
However, early token launches may not have worked for the majority of projects as our study found that 73% of users sold their tokens within the first 7 days of the launch. Another study in which @cptn3mox looked at the effectiveness of such airdrops found that airdrops are not particularly aligned with long-term outcomes. Up to 74% of projects had their tokens trading below day 1 prices on day 100 and over time average price performance only deteriorated. This showcases that early token launches are not necessarily effective and need to be thought through properly.
In a bull market teams may rush to launch their tokens to reach a certain valuation and capitalize on favorable market conditions, but this can be a double-edged sword for both founders and investors. If the token is dumped post-launch, it becomes difficult for founders to manage. Poor token performance can shift the founders' focus away from refining the product and achieving PMF, and instead divert their attention to managing token performance, securing partnerships, negotiating exchange listings, and more. What was meant to solve the cold start problem can quickly evolve into a “hot start problem.”
What types of projects should go for early token launches?
Where token incentives are integral to the operation and function of the network and cannot be avoided.
If the project is a late mover in the system and wants to disrupt the status quo by rapidly bootstrapping liquidity and user base.
Bootstrapping networks when there’s passive jobs to be done – staking (Ethena), providing liquidity (Across Protocol), listing assets (Blur), or set-it and forget-it hardware (Helium).
Launching a degen-focused project targeting mercenary capital and seeking short-term gains.
If the purpose of your startups does not fall in the above mentioned category, the project should consider launching the token after achieving PMF and building a sustainable community organically.
There are good examples of projects that have taken this approach. Arguably, the most successful projects of this cycle, Polymarket and Pumpdotfun have shown no signs of launching a token soon. This has meant they’ve had the chance to focus entirely on product development and user acquisition without the distraction of token price volatility. Now, these projects can reward genuine users rather than speculators and use the token as a growth accelerant for an already proven product. While this approach can mean slower growth, it will end up being a more sustainable success in the long term.
No one size fits all but data-driven token launches tailored to your purpose can help target the right users
Our findings reveal that while early token launches can be a powerful tool for jumpstarting liquidity and user engagement, they often fall short of delivering long-term value. The data shows that 73% of users sell their tokens within the first week, with more than 80% of light users sell their airdrops within 7 days compared to only 55% of power users. These statistics serve as a cautionary tale for projects rushing into a TGE without taking a data-driven approach that targets the right user segments.
Case studies of different projects show that there is no one-size-fits-all strategy for airdrops. Projects like Drift Protocol, Across Bridge, and Kamino Finance show that projects should not be afraid to take a unique approach if it aligns with their purpose.
Most importantly, it’s essential to remember that the token is not the product; it’s a strategic tool for driving adoption and growth. Treating the token as an end goal can lead to short-term gains but often at the cost of long-term sustainability. By focusing on creating real value, building a strong foundation, and aligning token incentives with long-term user engagement, your startup can turn a token launch into a catalyst for long term growth and adoption rather than a fleeting moment of hype.
Hashed Emergent may have or can invest in companies mentioned in this article. This content is for informational purposes only and should not be construed as investment advice. Please do your own research before making any investment decisions.
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Amazing Read!