5 Best Airdrop Practices All Crypto Protocols Should Follow

Airdrops as a way to reward and maintain early adopters of a crypto protocol remain a cornerstone of the crypto ecosystem.

In the past five months, crypto projects such as Jito, Jupiter, Kamino, Parcl, Wormhole, Mode, Starknet, EigenLayer, Renzo, and EtherFi have all conducted airdrops, with varying degrees of success.

Like all projects doing airdrops, these protocols faced the same challenge of identifying real users contributing to the network and rewarding them to incentivize continued engagement.

Yet, protocols have different airdrop designs, by virtue of the different services they provide.

For example, a staking protocol looking to conduct its token genesis event through a community airdrop will largely define contributions by total amount staked and the length of time staked, while an interoperability protocol such as LayerZero has more variables to consider, EtherFi CEO Mike Silgadaze told Unchained.

Here are five top airdrop practices from the perspective of builders, founders, and protocol team members:

1. Make Sufficient Allocations to Users

One common practice founders and project team members can implement that results in more satisfied users is setting a minimal, sufficient threshold for user’s airdrop allocation, according to Mike Silgadaze, CEO of restaking protocol EtherFi. “We set a minimum amount of 175 ETHFI tokens, which ended up being, depending on the exact time, $500-$800… which led to people being pretty happy, whereas other protocol that ended up dropping people like one or two tokens… really pissed people off.”

Jito, widely respected for its airdrop, allocated a minimum of 4,941 JTO tokens to eligible wallet addresses. This amount was valued around $9,000 when Jito’s airdrop claim went live, but has since increased to around $22,500 based on current market prices from CoinGecko,

“I definitely respect the Jito team. I think what they did in terms of how they distributed their airdrop was very fair [and] they gave a very high amount of tokens to people,” said Andrew Van Aken, a data scientist at blockchain analytics firm Artemis, to Unchained.

Hayden Adams, the founder of Uniswap, a decentralized exchange that airdropped a minimum of 400 UNI worth $1,376 at the time in Sept. 2020, said it succinctly on X: “Don’t be stingy — give a significant amount away. If you don’t think the community deserves a significant amount, don’t release a token.” At the time of publication, 400 UNI is worth about $3,000.

By airdropping a minimum amount of tokens that isn’t miniscule, builders can make the early adopters of the protocol believe their contributions were worth it in a way that incentivizes continued engagement.

2. Specify Long Claim Windows

Another good practice for airdrops is having long claim windows, the period of time when users are able to claim their airdropped tokens into their wallet addresses, that span over a couple months.

For example, Drift’s claim window is three months, between May 16 to Aug. 16, while StarkNet and EigenLayer’s claim windows are roughly four months.

Crypto users who are eligible for Jito’s airdrop allocation, which had its claims open in Dec. 2023, have until June 7, 2025 to claim their tokens.

Certain policies are “obviously predatory about some airdrops… for example, having very short claim windows like if some protocol has a 30-day claim period,” said Silgadaze. “Most people are just not going to or a significant percentage of people are just not going to claim, because they didn’t notice [or] they forgot about it.”

3. Offer Multi-Phase Airdrops

Implementing several rounds of airdrop allocations is also a good practice, according to several sources Unchained interviewed, several of whom pointed to Optimism as a prime example.

Layer 2 blockchain network Optimism, which has a total value locked of $801 million, according to DefiLlama, has conducted multiple rounds of airdrops. Its first airdrop occurred in May 2022, then Optimism did two more airdrops in Feb. 2023 and Sept. 2023, respectively, with a fourth airdrop in Feb. 2024.

Kevin Liu, the co-founder of zero-knowledge rollup ZKM, really liked how Optimism had a multi-round airdrop to reward users who contributed to the network’s construction. “As you can see from their practice [of having multiple airdrop rounds], people can realize or can analyze [their] past practice and know which areas they can work on,” Liu said, referring to the fact that users could look at their allocations in the previous rounds of Optimism’s airdrop and adjust accordingly for future ones.

The Optimism Foundation has also earmarked additional tokens for future airdrops, and said in its documentation that “the intent behind airdrops is to distribute them to addresses which positively impact the Optimism community.”

Optimism “got a lot of praise for doing their job in multiple waves,” Carlos Mercado, a data scientist at Flipside Crypto, told Unchained. He expects more crypto protocols to conduct multi-phase drops in the future.

4. Implement Anti-Sybil Mechanisms

One of the most important airdrop practices is having strong anti-sybil mechanisms in place.

Sybil addresses refer to when actors use a plethora of different identities and wallet addresses to incur strategic advantages, which in this case means receiving a bigger airdrop allocation.

Sybil addresses pose a massive threat to protocols, because airdrops are trying to reward their most loyal users who are actively contributing to the network. By using Sybil addresses, a single entity can claim a disproportionate share of the airdrop, which undermines community trust and the goal of a broad distribution.

“There are groups out there that are specifically running around, scouring the crypto world for airdrops and for ways to game those particular airdrops,” Titus Capilnean, the go-to-market vice president of Civic Pass, an onchain identity management firm told Unchained.

Artemis’ Van Aken pointed to Parcl, LayerZero, and Hop as examples of protocols that have enacted anti-sybil mechanisms in their airdrops.

Team members of Hop not only conducted an internal analysis to eliminate large-scale Sybil addresses for receiving an airdrop allocation but also incentivized their community members to hunt for Sybil addresses by offering more tokens to those who reported Sybil addresses. Moreover, Hop encouraged Sybil addresses to report on themselves by allowing them to receive 25% of the tokens they may have otherwise received.

In a similar vein, Parcl, which had its airdrop last month, ran a Sybil analysis “to remove users who were deemed to exploit the point system brazenly,” a blog post from April 2024 stated. LayerZero is currently conducting its sybil analysis for its airdrop expected to take place in the first half of 2024.

LayerZero finished its Sybil bounty-hunting campaign yesterday. Addresses that self-report as Sybil receive 15% of their intended allocation, while Sybil addresses that don’t self-report will not receive anything, wrote the LayerZero team on X Tuesday.

5. Allocate Tokens Based on Risk Incurred

Another top practice for founders and builders designing airdrops entails allocating a larger amount of tokens to protocol users who incur more risk, according to Van Aken, with risk defined as the probability that one’s crypto assets are safely returned to their owners

For example, a user depositing their crypto assets into a smart contract that has been around for years and has never been exploited is much less risky than a user depositing higher volatility assets into a smart contract with minimal audits and rolled out by a team that isn’t publicly revealed.

In this case, the airdrop allocation to the users who decided to place their assets into a newer smart contract that hasn’t been battle-tested should be rewarded more than the user who places their assets into a more well-known smart contract.

By allocating an appropriate amount based on the risk incurred by a user, protocols don’t alienate their customer base, which increases the possibility of long-term sustainability.