In the crypto space, the term “airdrop” refers to the unsolicited distribution of tokens, usually for marketing purposes or as a reward for network pa
In the crypto space, the term “airdrop” refers to the unsolicited distribution of tokens, usually for marketing purposes or as a reward for network participation or contributions.
The first recorded crypto airdrop took place back in 2014 when Auroracoin handed out its native cryptocurrency, AUR.
Another well-known airdrop was that of decentralized exchange Uniswap, which gave its UNI (UNI) governance token to its users in 2020. In total, over 250,000 accounts received 400 UNI each.
While airdrops may have encouraged some to be more active on blockchain networks, Chris Bradbury, CEO of decentralized finance (DeFi) platform Oasis.app, told Cointelegraph that users have realized how airdrops can be exploited, which has led to the phenomenon of “airdrop hunting.”
Airdrop hunters aim to make money by farming tokens from airdrops, hoping they will become valuable.
One recent example occurred during Arbitrum’s ARB airdrop, with on-chain activity revealing that airdrop hunters consolidated $3.3 million worth of ARB from 1,496 wallets into just two.
We found 2 super airdrop hunters of $ARB.
0xe1e2 received 1.4M $ARB($1.92M) via 866 addresses and added all 1.4M $ARB to #Uniswap to provide liquidity.https://t.co/sncsZTHrP2
0xbd4e received 933,375 $ARB($1.28M) via 630 addresses.https://t.co/p5vbqXMYxD pic.twitter.com/yK3LzbeC8t
— Lookonchain (@lookonchain) March 24, 2023
According to blockchain analysis platform Lookonchain, one wallet received 1.4 million ARB from 866 addresses, worth around $2 million at the time, while another wallet received 933,375 ARB from 630 addresses, worth around $1.38 million.
On March 20, Lookonchain revealed that six specific airdrop hunters had gotten nearly every massive airdrop in crypto.
1/ Missed the $ARB airdrop?
We found 6 smart airdrop hunters who have gotten nearly every massive airdrop in crypto.
Including:$ARB, $OP, $BLUR, $SOS, $LOOKS, $ENS, $DYDX, $1INCH, $UNI, $HOP, $FORTH, $GTC.
Follow their transactions and you won’t miss the next airdrop. pic.twitter.com/5XGmDgFj1t
— Lookonchain (@lookonchain) March 20, 2023
Bradbury told Cointelegraph that “pro airdrop hunters will use scripts” to consolidate many different addresses into only a handful. “We’re not talking here about someone with thousands of wallets; these will be sophisticated developers to perform multiple actions across many wallets all programmatically,” he said.
A dangerous game
Bradbury further noted that while the tactic has the potential to be profitable once the costs and time involved are subtracted, it comes with some serious financial risks.
“Airdrop hunting is effectively a game,” he said, stating that it requires finding protocols that have not released a token, then interacting with them in all the various ways that could qualify the hunter to earn a portion of the airdrop.
Bradbury added that the risks are even higher when the protocols are new or unproven:
“The nature of retroactive airdrops means you’re often using new protocols, ones that haven’t stood the test of time. And in most cases, you have to deposit your assets into these protocols, adding risk that you could lose your assets to bugs or hacks.”
“The cost of airdrop hunting can quickly outweigh the value of any airdrop if it doesn’t become a top-tier protocol,” he added.
Failing to consider gas fees and other financial costs can also prove to be an issue for hunters.
4/
How many of you missed Aptos #airdrop ? How many missed Arbitrum? Missed DyDx, Blur, Space ID etc.. ?Airdrop hunting is not an exact science.
We spend many hours, we hope, we get discouraged, we do not see rewards coming, then when it falls, the result is always the same :— (@0xFastLife) April 15, 2023
Bradbury said it can wind up being tricky to find and complete the tasks required to earn a potential airdrop, as protocols are coming up with more innovative criteria.
“It can lead to losses if you end up doing a lot of things that don’t qualify, and most protocols now try to come up with innovative ways of deciding who gets an allocation — so the chance of spending time and money on something that doesn’t count is getting higher,” Bradbury said.
“You ultimately have to use the protocols, hoping to ‘win’ by performing the right actions on the right protocols but not really knowing exactly what you have to do — like a game,” he added.
Consequences of airdrop hunting
Airdrop hunting has become a relatively common practice in crypto as individuals and groups seek opportunities to receive free tokens and make a profit.
Crypto Twitter has many users offering tips on the best ways to airdrop hunt, sharing protocols that might provide a chance to make a profit and swapping other airdrop-related advice.
Some platforms, such as DeFi analytics platform DefiLlama, even have a page showing projects that don’t yet have a token but might in the future.
Zoe Wei, head of developer relations and marketing at BNB Chain, told Cointelegraph the extent of…
cointelegraph.com