Token airdrops have either resulted in a crypto community rallying behind a project, or backlash in the form of social media outrage and mass boycotting.
The Eigen Foundation controversy is a recent example of a token distribution plan gone wrong, with the foundation eventually opting to allocate $1,000 additional EIGEN tokens to users in response to criticism from the community. Last month, blockchain interoperability platform Wormhole was the focus of angry users, with several complaining that the distribution mechanism didn’t adequately reward “real users.”
Uniswap founder Hayden Adams shared his take on what a good token distribution should look like in a post on X, noting that his thoughts were not aimed at any project in particular.
Not aimed at any specific project, but have seen a ton of discourse recently on the topic so figured I’d share my take on good token distributions:
1) tokens, not points
2) don’t farm the farmers – teasing and creating ambiguity around a token distribution to grow your numbers…
— Hayden Adams 🦄 (@haydenzadams) May 4, 2024
‘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,” said Adams, in one of his seven points on the issue.
He noted that real liquidity should be created on the first day of distribution, so that price discovery for the token can happen on decentralized exchanges (DEXes). In his view, people should think about the fully diluted valuation (FDV) of a crypto project, rather than market capitalization.
Adams also advised against “farming the farmers,” by creating ambiguity around a token distribution to grow numbers. Airdrop farmers are users that increase their interactions with a protocol through multiple addresses to boost the number of tokens they receive from an airdrop. These users are often criticized for distorting the organic distribution of tokens to genuine users.
“If you don’t know yet, don’t speculate publicly. If you do know but are not ready to share full details, don’t tease them out. Just share real details when ready,” said Adams, who also advised against creating an absurdly high token supply to farm people with unit bias.
“Don’t end up in a situation where you’re fighting or apologizing to crypto twitter,” he concluded. “Create something you’re proud of and stand behind it.”
