Current Crypto Airdrops And Why We Should Reconsider Them

Moonrock Capital
6 min readMar 22, 2023

Airdrops serve as an inherent marketing tactic within the web3 ecosystem. When executed appropriately, they can facilitate the expansion of new users, enhance retention rates, and the TVL.

Having this in consideration, let’s scrutinize previous airdrops such as UNI, HOP, ENS, 1INCH, Mooncats, and Optimism to evaluate the actual effectiveness of airdrops. Unfortunately, the present approach to airdrops yields unsatisfactory outcomes: retention rates plummeting to as low as 1%, requiring four years to recuperate marketing expenses, widespread sell-offs, and inadequate voting participation.

So let’s look at the current status of airdrops and how we could change it so that not only the users but also the project benefits.

Importance Of Airdrops

To comprehend the significance of airdrops in the present web3 landscape, it’s crucial to acknowledge the following two reasons:

  1. Airdrops serve as one of the most effective strategies to reach pseudonymous users.
  2. Airdrops offer a mechanism for distributing ownership to users, a fundamental principle of web3.

Current Airdrops

Each project that implements an airdrop utilizes it as a web3 marketing tactic to attract new users. They aim to foster a community, retain user engagement, and encourage users to hold onto their tokens instead of selling them off.

However, the current reality is that achieving these goals through airdrops is becoming increasingly challenging.

Let’s delve into the two types of airdrops that are prevalent today:

Push Airdrops

A legitimate token or NFT can appear in your wallet through a full-on drop or a claim, which is often perceived as a magical occurrence. Push Airdrops have the potential to attract new customers to projects when wallet owners discover the tokens in their wallets and try out the dapp. However, many Push Airdrops are now being used as scam tactics.

Pull Airdrops

In the case of active reward claiming, such as with Uniswap, ENS, 1INCH, and Cow Swap, users are required to take action in order to receive their rewards. On the other hand, pull airdrops are often used by projects to incentivize usage of their platform, typically through token or NFT rewards. The aim is to attract new customers, but the criteria for claiming the rewards is often kept secret to prevent exploitation of the system.

Despite both approaches being mechanically effective, the past indicates that they are not producing sustainable growth.

Challenges Of An Airdrop — The Uniswap Case

Regarding the UNI airdrop, users who had transacted on Uniswap before September 1, 2020 were eligible to receive it. Uniswap distributed 150 million UNI tokens, with about half going to insiders such as investors and employees. Eligible users received 400 tokens each, valued at approximately $1,200 at the time. Currently, the market cap of UNI tokens exceeds $6 billion.

According to a Dune analysis, airdrops reach a large number of people but may not drive long-term user behavior. Out of the 220,000 people eligible for the UNI airdrop, only 6.7% of the original airdropped wallets still hold UNI today, which raises questions about the retention of users. Furthermore, only 0.6% of airdropped users have increased their UNI ownership over time. Additionally, 30,000 users haven’t claimed their airdrop for 400 UNI tokens each, and those 12 million tokens are currently worth around $65 million and cannot be recovered.

Tomasz Tunguz made a great analysis on the efficiency of the UNI airdrop:


The campaign to distribute approximately 88 million tokens at a cost of around $4 each totaled $351 million. Since the September 2020 airdrop, airdropped users have generated approximately 17% of cumulative trading fees, resulting in roughly $208 million over the course of two years.

Based on these findings, it appears that it would take roughly 5.9 years for the marketing dollars invested in airdrops to pay back. This is significantly longer than the typical 1.4 year payback period for ad spend in private startups and the average 1.6 year period for public companies.

This means airdrops are 4–7 times more expensive than spending venture dollars on sales and marketing.

Additionally over 93% of recipients of the airdrop have sold their entire allocation and only 1% of UNI airdrop holder are still active today.

Overall, this confirms that airdrops, as they are currently structured, remain an inefficient marketing channel for web3 startups.

More Efficiency For Airdrops

Although airdrops are currently perceived as less effective than desired, many projects still allocate around 44% of their supply to the community. While some of this is intended to incentivize work, a significant portion is often allocated to marketing efforts such as incentivizing usage or airdrops.

Fortunately, we are seeing some projects experiment with new approaches that we believe will bring us closer to the next evolution of more effective airdrops.

Behavior Loop

Regarding Pull Airdrops, the current criteria mostly fall under the general category of “product usage”. Although these airdrops are advantageous to the user, they do not effectively engage them with the product.

Additionally, taking into account the behavioral loop helps to identify the ideal users and potential “hooks” that may engage them. This approach can also positively impact acquiring and retaining new users through marketing efforts.

On the other hand, for Push Airdrops, as there is no previous interaction with the project, the evaluation criteria will focus on behaviors and reputation within similar projects or projects targeting similar buyers.


Upgrading the criteria for airdrop selection to a “Reputation Criteria” is crucial as projects evolve from taking a chance on a blind date to finding a reliable matchmaker. To illustrate, consider the following scenario:

Under the general criteria, a burger place with 500 customers in a month may give each of them $50 and hope they return. However, with the reputation criteria, the restaurant would give $50 to customers who spent 50% of their food budget on burger, visited the store five times a month, attended sport night regularly, and occasionally visited the competitors.

Airdrop Waves

Blur and Optimism have demonstrated a successful approach to airdrops by adopting a schedule of “waves” of airdrops based on more focused criteria, instead of a one-time massive event. This strategy is effective for two reasons:

Firstly, it encourages continuous engagement with the product, leading to better customer retention.

Secondly, it enables the project to test and refine their reputation criteria using data to achieve the desired results, such as improving customer lifetime value (CLV).

By implementing airdrop waves, a project can establish a systematic process of setting reputation criteria, conducting an airdrop, evaluating the outcomes, and using those insights to enhance the next airdrop.

Project Loyalty

Loyalty holds immense significance not just because of the marketing budget invested in acquiring customers, but also due to the fact that returning customers spend 67% more than new customers, based on web2 as a benchmark.

Analyzing the Dune report on UNI, 1INCH, and other tokens, it is not surprising to find that retention rates are low when most users exit after receiving the airdrop, and only 2% of airdropped users participated in UNI voting. Governance and financial incentives, such as staking, are not adequate to retain users. Therefore, we need to explore innovative ways to build customer loyalty. Successful brands, both in web2 and web3, establish loyalty by tailoring customer experiences, incorporating good tokenomics and NFT design, providing incentives to revisit, creating a sense of community, and offering redeemable rewards.


We can see that current airdrop strategies are not quite as successful as projects would like them to be or as they appear at first glance. So in our opinion your best users must be identified and rewarded with airdrops in order to sustain long-term growth and use an airdrop as a really successful marketing tool.

Who We Are

Moonrock Capital is a Blockchain Advisory and Investment Firm, incubating and accelerating early stage startups since 2019.



Disclaimer: None of the information contained here constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy.



Moonrock Capital

Moonrock Capital is a Blockchain Advisory and Investment Firm, incubating and accelerating early stage startups since 2019.