The value of crypto airdrops in the past three years has neared $30 billion and that has these events particularly enticing to sophisticated and deep-pocketed investors who have the technical abilities or infrastructure to create software that can reap the rewards from these special situations without necessarily being involved with the projects that issue the tokens since the get-go.

In the past month, various projects saw their widely-expected crypto airdrops being plagued by Sybil attacks. This has undermined the credibility of the developing team as airdrop farmers have gained the upper hand compared to early adopters and backers.

However, despite these incidents, various projects are gearing up to launch their airdrops in July. In this article, we briefly discuss the impact that Sybils have had lately and which attractive airdrops are scheduled to occur in the following weeks.

Impact of Sybil Attacks on Recent Airdrops

In June 2024, several attractive airdrops took place. However, crypto enthusiasts felt disappointed as Sybil attacks distorted the allocation process and produced unfair results that primarily favored bots and their backers instead of diehard fans of the projects that launched these offerings.

The zkSync airdrop was one of the events that faced significant backlash due to the impact that Sybil attacks had on the distribution of the ZK token. According to the ZK Nation team, sophisticated Sybil wallets managed to bypass the airdrop’s checks by using “many distinct exchange addresses” and “randomized accounts” with the help of software that mimicked “daily patterns of human behavior.”

This made it incredibly difficult for the project’s anti-Sybil protocols to detect their activity. Despite these challenges, the ZK Nation team reported that 45% of the tokens that were airdropped were distributed across 225,000 wallets, meaning that real users did get at least a chunk of what they were promised.

LayerZero’s Unprecedented Anti-Sybil Campaign Raises Ethical Issues

Meanwhile, LayerZero, another protocol that airdropped its native token ZRO also implemented various measures to protect the event from being sabotaged by bots. Brian Pelegrino, the Chief Executive Officer of the crypto protocol, incentivized crypto analysts who spotted potential Sybil accounts by offering a 10% bounty to those who shared their findings.

However, the measure brought its own problems as the lines between which wallets are considered Sybils and which are legitimate farmers became blurry.

 

Moreover, LayerZero also imposed a mandatory contribution of $0.10 per claimed token as part of a “Proof-of-Donation” mechanism that aimed to reward Ethereum developers for their work.

Starknet’s February Airdrop Was Infiltrated by Farmers

Finally, Starknet, an Ethereum layer-2 scaling solution saw the value of its STRK native token drop dramatically in the first two days after its airdrop took place as crypto researchers found that the network had been penetrated by airdrop hunters many months before the token’s launch.

Crypto Enthusiasts Are Changing their Optics About Airdrops

Genuine users and early adopters have expressed their frustration with the situation as Sybil attacks sabotage the purpose of airdrops, which is to reward those who have been loyal to a specific crypto project since its early days.

This prevalent sentiment was echoed by a pseudonymous airdrop hunter named Farea, who told DL News: “Whales spend a lot of money to write scripts and farm hundreds of wallets. Retail users do one or two wallets so they don’t get the actual prize they should get.”

The infiltration of Sybil farmers has also raised questions about the true value of projects relying heavily on airdrop-driven growth. As pseudonymous DeFi researcher Ignas explained to DL News: “If you are a builder, you must launch points campaigns, because VCs demand adoption metrics to justify high valuations.” However, this reliance on potentially inflated metrics has led investors to scrutinize project valuations more closely.

Some experts are now advising users to focus on projects that they genuinely find interesting rather than chasing airdrops. Ignas suggested: “My best airdrops came from genuine curiosity and clicking buttons.” This involves a change in investors’ mindset that could lead to more sustainable growth for projects that prioritize real user engagement over short-term metric inflation.

Blockchain projects now face the difficult task of attracting users and showing evidence that they can actually grow while maintaining the integrity of their ecosystems. This balancing act is crucial, as overly strict measures to combat Sybils risk alienating legitimate users while lax policies can lead to indiscriminate farming.

Potential Solutions for Sybil Attacks

As the crypto industry continues to fight the Sybil problem, several potential solutions have been proposed by industry experts and developers.

  1. Enhanced Sybil Detection: Projects could invest in more sophisticated detection methods to identify and exclude fake accounts. The issue with this solution is that perfect detection remains elusive and it can lead to real accounts being flagged as Sybils.
  2. Identity Verification: Some projects are considering implementing stricter identity verification processes. However, this approach raises privacy concerns in the decentralized finance (DeFi) space, which should supposedly be KYC-free in most cases.
  3. Multi-Phase Airdrops: Distributing tokens in multiple phases could help projects adjust their strategies based on how Sybil activity evolves. It also allows projects to A/B test detection and distribution methods.
  4. Vesting Periods: Implementing vesting periods could reduce the immediate sell pressure that follows when a significant number of tokens go to Sybil accounts or airdrop farmers who usually dump their holdings right after claiming them.

Three Top Crypto Airdrops Scheduled for July 2024

July is just starting and here are three projects that have already launched points and loyalty programs that will be used to determine who will be eligible for an upcoming airdrop.

#1 – NX Finance

This Solana-based AirdropFi and yield aggregator announced a new system called Point Nadventure to accumulate points by engaging with its platform. The launch date is July 1 and points will be earned by both lenders and borrowers who interact with the protocol.

Programs like this typically precede an airdrop as protocols use them to identify early adopters that they later on reward by distributing the platform’s native token to the wallets that interacted with the project and accumulated points during a certain period.

#2 – Movement Network

This Ethereum layer-2 scaling protocol launched a hackathon that starts on 17 July that will allow developers and early adopters to compete for early access, recognition from the community, and rewards.

The event will be followed by the launch of the project’s mainnet and users and developers who participate in the event will be eligible to receive TGE tokens in an upcoming airdrop.

#3 – Rho Markets

Rho Markets launched a Loyalty Rewards Program in late April that will allow the platform’s users to become eligible for the upcoming airdrop of the RATE token.

Protocol and user engagement will be measured to determine the airdrop’s allocation and the fair distribution of $RATE. Rho XP Loyalty Points (RXP) will be earned by staking $RATE once the token is live or by borrowing assets from the project’s lending pool and also by inviting friends to engage and use the Rho Markets platform.