Airdrops: Giving Money Away Is Harder Than It Seems

Airdrops are a common strategy used by blockchain protocols to attract and grow an initial user base. Tokens are typically distributed to select users as a "reward" for engaging with the protocol, aiming to foster long-term community loyalty and sustained economic activity. Despite their prevalence, there is limited understanding of what makes an airdrop successful. This paper outlines the design space for airdrops and proposes key outcomes for an effective strategy. We analyze on-chain data from six large-scale airdrops to assess their success and find that a substantial portion of tokens is often sold off by "airdrop farmers." Based on this analysis, we highlight common pitfalls and offer guidelines for improving airdrop design.