Types of Crypto Airdrops

In previous issues, we have established that airdrops have emerged as a popular strategy for distributing tokens to users. Let’s delve into various types of crypto airdrops, from rewarding holders to engaging in bounty programs and beyond.

1. Liquidity Based Airdrops

Liquidity-based airdrops are designed to incentivize users to provide liquidity to the project, which will improve the TVL (total value locked) metric for the project, which investors and the overall community look for to measure a project’s success.

Money markets (lending protocols), L1 or L2 blockchains, and DEXs usually reward users or early adopters based on liquidity provision.

A good example is the recent Linea Surge program. Linea is a Layer 2 rollup on the Ethereum network. The Surge was a program that began in March and runs for 6 months. They even released a dedicated dashboard showing users’ points based on liquidity provided.

It was very transparent as to what assets are whitelisted to earn points, and which protocols on their L2 are eligible. You also get bonuses for being an early adopter and referring other users.

If this sounds complicated, OneClick Labs’ Airdrop Tracker provided detailed steps on how to maximise your points for Linea Surge:

2. Activity-Based Airdrop

Activity-based airdrops reward users based on their engagement with a platform or specific actions such as trading, staking, or simply pushing transactions through the network. These airdrops encourage user participation and help drive user adoption and engagement.

A good example is Arbitrum, another Layer 2 of Ethereum. Arbitrum rewarded users who were early adopters, measured user activity based on:

• Conducted transactions on distinct months (multipliers for 2, 6 and 9 months)
• Interacted with 4 or more distinct smart contracts
• Conducted 25 or more transactions on 25 different smart contracts (a smart contract can be seen as a dApp)
• Conducted transactions exceeding $10K in value or more (multipliers for $50K and $250K+)
• Extra points for conducting more than 3, 5, and 10 transactions on its sister chain Arbitrum Nova
• Bridge volume was also taken into account
• Points are accrued on each criteria and converted into tokens
• Anti-sybil measured were implemented.

3. Incentivized Testnets:
Incentivized testnets are airdrops that reward users for participating in testing new blockchain networks or protocols. Users are incentivized to push transactions with testnet tokens of zero value to help test and stress test the network, or provide feedback to help improve the network’s performance before its mainnet launch.

A good example is the Mitosis “Game of Mito” incentivised testnet that is ongoing at the time of writing. Mitosis is an upcoming Layer 1 protocol with EOL (Ecosystem Owned Liquidity).

Users get XP (experience points) for performing certain types of activities as well as need to plan strategically how to best make use of their testnet tokens of which the quantity of these tokens will play a role in the final calculation of the airdrop.

4. Trading-based Airdrops

Most new Perp DEXes reward users based on their trading activity. This is great news for traders as they can simply trade on these tokenless Perp Dexes as opposed to other centralised exchanges which have no incentive programs.

Even if you are not a trader, you can still participate by providing liquidity in the form of the platform’s “liquidity provider” token, such as the $JLP of Jupiter Exchange or $HLP of HyperLiquid X. These tokens accrues fees generated by traders and distributed to holders as yield. This is a good way to earn a return on your stablecoinns as well as potentially qualifying for an airdrop at the same time.

A good example was HyperLiquid X, which rewarded points to users based on:

• Trading activity
• Liquidity Provisioning (HLP)
• Referring users

What was unique about their points system that the weighting for these activities change each week based on market needs. This creates some degree of gamification which helped fostered community growth.

The HyperLiquid was a huge success, trading at close to $14B FDV at the time of writing. The $HYPE token is up more than 6x since launch and experienced no major drawdowns during its first few days of launch as even the biggest airdrop recipients only sold less than 25% of their airdrop (some earned 6–8 figures from this airdrop), which is not typical of airdrops, despite:

• launching at a low valuation of $2B (Perp DEX with the most trading activity and highest TVL, closest competitor Jupiter is trading at 13B at the time of writing)
• extremely high airdrop supply (30%+ of total token supply)
• no lockups
• no vesting
• no claiming process, tokens were dropped straight into users’ trading accounts
• no CEX listings
• no staking at launch

This was possible because the project had great product market fit and developed a cult following for this reason due to its successful airdrop execution.

In conclusion, crypto airdrops come in various forms, each serving a unique purpose in incentivizing and rewarding user participation. Whether it’s rewarding liquidity providers, active users, testnet participants, or trading activity, airdrops play a vital role in driving engagement and adoption in the crypto space. Stay tuned for more insights on the evolving landscape of crypto airdrops in our upcoming newsletters.

Disclaimer: This article, including insights on airdrop farming and other DeFi strategies, is for informational purposes only and should not be considered as financial advice, investment recommendations, or an endorsement of any particular investment or strategy. The cryptocurrency and DeFi markets are highly volatile and unpredictable. Past performance is not indicative of future results. One Click makes no representations or warranties regarding the accuracy, completeness, or timeliness of the information provided. Readers should conduct their own research and consult with independent financial advisors before making any investment decisions. By using this information, you agree that One Click is not liable for any losses or damages arising from your investment choices.

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