Airdrops

Earn money for engaging with Web3 projects

TLDR:

• Airdrops are when coins or tokens are sent from a project directly to their users’ wallets. They are often used as a marketing strategy to acquire users and liquidity.

• Airdrop farming is where users purposefully interact with a project just to gain an eventual rewards. Risks are low for users as they sacrifice time not money.

• EVM L2s are a popular category to farm today, and below there’s an example of how easy it is to farm on an L2 like Linea.

• Airdrops will likely become even more prevelant over time, so by just using Web3 projects you have the potential to be financially rewarded.

The market has been picking up over the past few months and ever since Blur’s successful season 2 airdrop people are “airdrop farming” left, right and centre.

You could even say that we’re in “airdrop season”.

So this week I decided to discuss airdrops and how projects use them as a marketing tactic, and users use them to make money.

Airdrop

An airdrop is quite simply when coins or tokens, fungible or non-fungible, get sent from a project directly to a user’s wallet.

Typically airdrops are given out by Web3 projects to incentivise usage of their product, to reward early supporters and to promote their token.

It’s become common for example to see networks or DeFi protocols create a new fungible governance token and airdrop it into their users’ wallets as a reward for their usage and providing liquidity. Tokens are often given out on a sliding scale with a higher percentage of the total tokens given to their most valued users.

The term airdrop relates to the idea of “airdropping” supplies as the military does to help civilians or soldiers out. In this case it’s a user’s wallet that gets airdropped a sort of “care package” to reward them for their support.

Historically an airdrop required no work from the user, they would simply check their wallets one day and find they had new tokens!

However with gas costs rising on most chains it’s become more common for users to have to claim their own reward manually on a project’s website. Unfortunately this provides an opportunity for scammers to create a fake airdrop page and drain users of their funds, so always be wary when claiming rewards!

Airdropped tokens are given a value by the market as traders add liquidity onto DEXs and begin buying and selling the tokens they’ve received, and some projects also inject liquidity themselves to set a base maket value.

Farming

Since some airdrops have made people significant amounts of money in the past, it has become more and more common for people to “farm” them by interacting with projects a lot to try and earn the highest tiers of rewards!

This does often mean that people will farm protocols and networks speculatively without any idea if they will ever get a token. But unlike trading there’s very little risk as you don’t generally put your money at risk, you just sacrifice your time.

Farmers see the time spent as being a small investment for the potential gain, especially since most will do it across many projects at once, so they only really need the rewards from one or two of the projects to be large enough to make the time investment worthwhile.

This recent tweet from @nobrainflip highlights just how profitable airdrop farming can be as he claims to have made over $300k in 1 year starting with just $8k.

Airdrop farming is often a win-win for projects and users.

Projects get users, liquidity, and visibility. Meanwhile users make money from interacting with the project and getting their friends involved, all with very little risk.

However, once the airdrop has come and gone the big challenge for projects is to keep people engaged and coming back. Most projects struggle to do this. The best execution that I’ve seen is from Blur as they managed to attract more interest into their token after their latest airdrop by introducing a complex points system and promising a *redacted* reward related to their upcoming EVM L2 called Blast.

Airdrop farming is happening all throughout the Web3 ecosystem, from L1s, to L2s, to DeFi projects, to NFT projects and everything inbetween. Below I’ll just look at the specific example of EVM L2 farming that’s prevalent today.

EVM L2 Farming

EVM L2s are currently popular for airdrop farmers because people see potential for significant returns. Popular L2s like Arbitrum and Optimism airdropped their own tokens in the past couple of years and now have market caps of over $1bn each, making airdrop farmers a lot of money and suggesting the potential for similar rewards on other L2s.

To airdrop farm on an L2 chain all you need to do is transfer money over to it, transact on it, and interact with different smart contracts on the network. The easiest and most reliable way to do this is by interacting with projects on the network like DeFi protocols or NFT marketplaces.

There are plenty of websites people use to track how much they’ve interacted with a project. An example for EVM L2s specifically is trustgo.trustalabs.ai, although there’s plenty of similar sites out there.

With trustgo you can input your address for a handful of L2s and get a score based on your usage of the chain.

In this example you can see that on the Linea chain my address has got a “MEDIA” score of 44 and puts me on the top 29% of wallets. Their scoring is imperfect but it gives you a sense of how highly you may be rewarded if they do an airdrop.

The site also gives different potential protocols for you to interact with to increase this MEDIA score.

Each of the L2s on this website has it’s own unique selling point, however there are 10s of EVM L2s out there and I might deep dive into a few of them at some point in the future. Continuing with the Linea example I’ll show how you could farm it below.

Linea

Start by sending money over to Linea with a bridge. In this case I’m using Orbiter.finance because it is a DeFi project that has no token and has the potential for it’s own airdrop too - so we’re farming on two projects by doing this.

Following from the list above you can see that there’s plenty of protocols on Linea that I could interact with. As an example I’ll use SyncSwap to trade from ETH to wstETH (I covered Liquid Staking last week), where even a tiny amount like 0.001 ETH (only $2.20 at today’s prices) is enough to be considered for airdrop farming.

Next I would go through the remainder of the list on trustgo.trustalabs.ai to see other projects and protocols to interact with, then check back a few hours later to see how I’m doing with the MEDIA score.

For this short example I’ve just farmed on Linea but you could farm on any or all of the networks on the site like Scroll, zkSyncEra, StarkNet, as none have a token but all have the potential to have one. Plus there are plenty of other EVM L2s out there that don’t yet have a token.

Conclusion

Airdrops are a smart marketing strategy for projects to acquire users and liquidity. By providing financial incentives projects can rapidly bootstrap themselves at the start.

However, it’s not without it’s risks for the users and projects. In the excitement of trying lots of different protocols and tools, a user might accidentally interact with a scam website and have all their assets drained! While projects may struggle to keep users engaged and find users abandoning them as soon as they’ve got their airdrop.

Really it’s on the project to use this opportunity to attract interest and keep users invested in them, with Blur being the best example of doing this successfully having totally ravaged Opensea’s marketshare through a strategic use of airdrop rewards.

Airdrops are happening everywhere, EVM L2s are a specific category of interest today, but there are plenty of other projects and protocols who have a lot of potential for a significant airdrop soon.

So go out and try out different Web3 projects and protocols and you may just be rewarded with free magic internet money in the process!