Survey on 60+ airdrops in 2024: Selling on the first day can maximize returns, but high FDV restricts growth and liquidity

Original title: Airdrops in the Barren Desert: Surveying the traits behind 2024’s 11% success rate

Original source: Keyrock

Original translation: TechFlow

Acquiring and retaining cryptocurrency users is difficult. Airdrops attract long-term engagement by offering free tokens, but often lead to a rapid sell-off. While some airdrops successfully boost user adoption, many fail. This article will explore the performance of airdrops in 2024 and the factors that affect the results.

Key Takeaways

Difficult to sustain

Most airdrops fail within 15 days. In 2024, 88% of tokens lost value within a few months, despite initial price surges.

Large Airdrops, Big Winners

Airdrops distributing more than 10% of total supply show stronger community retention and performance. Those below 5% often see a quick sell-off after launch.

Focus on FDV

Inflated fully diluted valuations (FDVs) have the biggest impact on projects. High FDVs constrain growth and liquidity, triggering large price drops after airdrops.

Liquidity is Crucial

Many tokens fall under selling pressure when there is not enough liquidity to support high FDVs. Deep liquidity is key to price stability after airdrops.

A tough year

2024 has been a tough year for cryptocurrencies, with most airdrops being hit the hardest. The few that have succeeded have: smart allocation, strong liquidity, and realistic FDV are their winning strategies.

Airdrops: The Double-Edged Sword of Token Distribution

Since 2017, airdrops have been a popular strategy for distributing tokens and creating early hype. However, in 2024, many projects have struggled to take off due to market saturation. While airdrops still inspire early excitement, most have triggered short-term selling pressure, leading to low community retention and protocol abandonment. Despite this, there are a few standout projects that have managed to stand out, proving that with the right execution, airdrops can still lead to sustainable long-term success.

Purpose of the Study

This report explores the airdrop phenomenon of 2024 - separating the winners from the losers. We analyzed 62 airdrops across 6 chains, comparing their performance across multiple dimensions: price action, user feedback, and long-term sustainability. While each protocol brings its own unique factors to the table, the overall data clearly demonstrates the effectiveness of these airdrops in achieving their intended goals.

Overall Performance

When looking at the overall performance of the 2024 airdrops, most failed to perform well after going live. While a few tokens saw impressive returns early on, the majority experienced downward pressure as the market re-evaluated their value. This pattern reflects a deeper problem in the airdrop model: many users may be simply in it to extract incentives rather than participate in the protocol long-term.

For all airdrops, a key question arises - is the protocol sustainable? After the initial reward distribution, do users still see value in the platform, or is their participation simply transactional? Our analysis, based on data from multiple time periods, reveals an important finding: for most of these tokens, enthusiasm fades quickly, often within the first two weeks.

Overall Performance

Looking at the 15-day, 30-day, and 90-day price action, it can be seen that most of the price volatility occurred within the first few days after the airdrop. After three months, only a handful of tokens were able to see positive returns, and only a few bucked the trend. Still, it’s important to consider the bigger picture: the overall crypto market underperformed during this period, which further complicated the situation.

Classification of Chains

Despite the overall underperformance, not all chains performed poorly. Of the 62 airdrops we analyzed, only 8 had positive returns after 90 days — 4 on Ethereum and 4 on Solana. BNB, Starknet, Arbitrum, Merlin, Blast, Mode, and ZkSync all had no winners. Solana had a success rate of 25%, and Ethereum had 14.8%.

This is not surprising for Solana, as the chain has become a darling of retail investors over the past two years and poses a real challenge to Ethereum’s dominance. It’s not surprising that only the parent chain has retained these select winners, given that many of the other chains we analyzed compete directly with it.

While we didn’t take into account Telegram’s TON network, we wanted to highlight that there have indeed been quite a few successful airdrops on that network as enthusiasm and adoption grew.

Normalized Performance

That being said, what changes if we try to separate the larger chains from their airdrops? Does the data look different if the price movement of the parent token is taken into account? When we normalize these airdrop prices to the performance of their respective ecosystems — for example, comparing an airdrop on Polygon to the price movement of $MATIC, or an airdrop on Solana to the price movement of $SOL — the results remain unsatisfactory.

Yes, the market has fallen, back off its 2023 highs, but this is still not enough to make up for the decline in airdrops, both compared to system tokens and other altcoins. These sell-offs are not related to the larger narrative, but reflect the market’s general concerns about developments in the short term. When projects that are already considered “mature” are down, people are more reluctant to embrace something that is untested or “new.”

The overall improvement is modest at best, with Solana and Ethereum seeing maximum drawdowns of around 15% to 20% over some 90-day periods, but this still suggests that these airdrops are far more volatile than other assets and are only relevant to the overall narrative, not price action.

The Impact of Allocation on Performance

Another key factor that affects airdrop performance is the allocation of token supply. How much of its token supply a protocol decides to distribute can significantly impact its price performance. This raises key questions: Does a generous distribution pay off? Or is it safer to be conservative? Does giving users more tokens lead to more positive price performance, or does it come with the risk of distributing too much too quickly?

To do this, we divided airdrops into three categories:

· Small airdrops: < 5% of total supply

· Medium airdrops: > 5% and ≤ 10%

· Large airdrops: > 10% We then analyzed their performance over three time periods — 15 days, 30 days, and 90 days.

In the short term (15 days), smaller airdrops (< 5%) performed better, likely because limited supply led to less immediate selling pressure. However, this initial success is often short-lived, and tokens from smaller airdrops experienced a notable sell-off within three months. This is likely due to a combination of factors: initially low supply suppressed selling, but over time, the narrative changed or insiders began to sell, and the community at large followed.

Medium-sized airdrops (5-10%) performed slightly better, balancing supply allocation and user retention. However, large airdrops (>10%) performed best over longer time frames. These larger allocations, while more risky in terms of short-term selling pressure, appear to enhance community ownership. By distributing more tokens, protocols may empower users with more equity, giving them a greater stake in the project's success. This, in turn, can lead to better price stability and long-term performance.

Ultimately, this data suggests that being more generous with token allocations pays off. Protocols that are generous with their airdrops tend to foster a more engaged user base, which leads to better outcomes.

Allocation Dynamics

The Impact of Token Allocation

Our analysis shows that the size of an airdrop has a direct impact on price performance. Smaller airdrops create less initial selling pressure, but tend to see a significant sell-off within a few months. On the other hand, larger allocations do produce more early volatility but ultimately lead to stronger long-term performance, suggesting that generous allocations encourage greater loyalty and token support.

Correlating Allocations with Market Sentiment

Community sentiment is a key factor in the success of an airdrop, though it is often difficult to quantify. Larger token allocations are generally perceived as fairer, giving users a stronger sense of belonging and involvement. This creates a positive feedback loop—users feel more engaged and therefore less likely to sell their tokens, which promotes long-term stability. In contrast, smaller allocations may appear safer at first, but often lead to a brief burst of enthusiasm followed by a rapid sell-off.

While it is difficult to measure the sentiment or “vibe” of the 62 airdrops, they are still an important indicator of a project’s lasting appeal. Signs of strong sentiment include active and engaged user communities on platforms like Discord, organic discussions on social media, and genuine interest in the product. Additionally, the newness and innovation of a product often help maintain positive momentum because they attract more engaged users rather than opportunists seeking short-term rewards.

The Impact of Fully Diluted Value (FDV)

An important research focus is whether the fully diluted value (FDV) of a token at launch has a significant impact on its performance after an airdrop. FDV represents the total market value of a cryptocurrency if all possible tokens were in circulation, including those that have not yet been unlocked or distributed. It is calculated by multiplying the current token price by the total token supply, which includes tokens in circulation, locked tokens, vested tokens, or future tokens.

In crypto, we often see projects with fully diluted values (FDVs) that appear too high relative to the actual utility or impact of the protocol at launch. This raises a key question: Are tokens penalized for having inflated FDVs at launch, or does the impact of FDV vary from project to project?

Our data includes a wide range of projects, from those that launched with a modest FDV of $5.9 million to those that launched with a staggering $19 billion — a 3,000x difference.

When we plot this data, a clear trend emerges: the larger the FDV at launch, the higher the probability of a significant price drop, regardless of project type, hype, or community sentiment.

Reasons for the FDV Relationship

There are two key factors at play here. The first is a basic market principle: investors are attracted to the prospect of upward mobility. Tokens with smaller FDVs offer room for growth and the psychological satisfaction of “early investment,” attracting investors with the promise of future gains. On the other hand, projects with inflated FDVs often struggle to maintain momentum because the expected upside is limited.

Economists have long discussed the concept of “market space.” As Robert Shiller notes, “irrational overexcitement” quickly fades when investors feel gains are limited. In crypto, this excitement can fade just as quickly when a token’s FDV indicates limited growth potential.

The second factor is more technical: liquidity. Tokens with larger FDVs often lack the liquidity to support these valuations. When large incentives are distributed to the community, even if only a small fraction of users want to cash out, it can create huge selling pressure, while there is a lack of buyers on the other side.

Take $JUP as an example, the token launched at $6.9 billion fully diluted value (FDV), supporting what we estimate to be $22 million in liquidity pools and market makers on launch day. This gives $JUP a liquidity-to-FDV ratio of just 0.03%. While this is lower than meme token $WEN which has a 2% liquidity-to-FDV ratio, it is still relatively high among similar projects.

When we compare this to Wormhole, which launched at $13 billion fully diluted value (FDV). To match the 0.03% liquidity ratio, Wormhole would need to have $39 million in liquidity across venues. However, even taking into account all available liquidity pools, both official and unofficial, as well as liquidity on centralized exchanges, our estimate is closer to $6 million, a fraction of the amount needed. With 17% of tokens allocated to users, the potential unsustainability of market capitalization has become apparent. Since launch, the price of $W has fallen 83%.

As market makers, we understand that without sufficient liquidity, prices become very sensitive to selling pressure. These two factors combined — the psychological need for growth potential and the actual liquidity required to support a large FDV — explain why tokens with higher FDVs struggle to hold their value.

The data bears this out. Tokens with lower FDVs experienced far lower price declines, while those that launched with high valuations suffered the biggest price drops in the months following the airdrop.

Overall Winners and Losers

To get a deeper understanding of some of the projects, we’ve selected one example of a winner and one loser from this airdrop season to examine. We’ll explore what exactly they did right and where they made mistakes that led to successful and less successful project launches.

Airdrop Season: A Case Study of Winners and Losers

As we dive deeper into the airdrop season, let’s examine a notable winner and an underperforming project to analyze the factors that led to their starkly different outcomes. We’ll examine what these projects did right — or wrong — that ultimately impacted their success or failure with the community.

Winner: $DRIFT

Let’s start by introducing Drift, a decentralized futures trading platform that has been operating on Solana for nearly three years. Drift has experienced many triumphs and challenges along the way, including several hacks and vulnerabilities. However, each setback has forged a stronger protocol, evolving it into a platform that is far more valuable than just an airdrop farm.

When Drift’s airdrop finally arrived, it was met with a warm response, especially from its long-time user base. The team strategically allocated a relatively large 12% of the total token supply for airdrops, and introduced a clever bonus system that took effect every six hours after the initial distribution.

Launching with a relatively small market cap of $56 million, Drift surprised many, especially compared to other vAMMs (virtual automated market makers) that had fewer users, shorter histories, and higher valuations. Drift’s value quickly reflected its true potential, reaching a market cap of $163 million—a 2.9x increase since launch.

The key to Drift’s success has been its fair and thoughtful distribution approach. By rewarding long-term, loyal users, Drift effectively filters out new Sybils, fostering a more authentic community, and avoiding the negative fallout that is common in such events.

What makes Drift unique?

Long history and strong foundations

· Drift’s mature history allows it to reward its existing base of loyal users.

· With a high-quality, market-proven product, the team is able to easily identify and reward truly active users.

Generous Tiered Allocation

· Allocating 12% of total supply – a sizeable percentage for an airdrop – demonstrates Drift’s commitment to the community.

· The phased release mechanism helps reduce selling pressure and maintain stability in value post-launch.

· Crucially, the airdrop is designed to reward actual usage, not just metrics artificially boosted by click farmers.

Realistic Valuation

· Drift’s conservative launch valuation avoids the trap of over-hype and keeps expectations at a reasonable level.

· Sufficient liquidity is injected into the initial liquidity pool to ensure smooth market operation.

· The low fully diluted valuation (FDV) not only makes Drift stand out, but also triggers a wider industry discussion about overvalued competitors.

Drift’s success is not accidental; it is the result of prioritizing product strength, fairness, and sustainability over short-term hype. As the airdrop season progresses, it is clear that protocols that want to replicate Drift’s success should focus on building strong fundamentals, promoting real user participation, and maintaining a realistic view of market value.

$ZEND: From Hype to Crash — The Failed Starknet Airdrop

ZkLend ($ZEND) is now facing a severe downturn — its value has plummeted by 95% and its daily trading volume cannot exceed $400,000. This is in stark contrast to a project that once had a market cap of $300 million. Even more strangely, ZkLend’s total value locked (TVL) is now more than double its fully diluted valuation (FDV) — an unusual phenomenon in the crypto world, and not a good one.

So how did a project that once received attention for its work around Starknet, a zk-rollup solution designed to scale Ethereum, end up in such trouble?

Riding the Starknet Wave, But Missing the Opportunity

The concept of ZkLend was not innovative - it was intended to be a platform for lending and borrowing for a variety of assets, riding on the Starknet narrative. The protocol rode the momentum of Starknet to position itself as a key player in the cross-chain liquidity ecosystem.

Premise:

· Generate a mining network where users can earn rewards across different protocols.

· Attract users and liquidity through rewards and cross-chain activities.

However, in implementation, the platform ended up attracting “hired mercenaries” of participants - users who only focused on short-term rewards and had no commitment to the long-term development of the protocol. Instead of building a sustainable ecosystem, ZkLend was dominated by reward-seeking users, resulting in short-lived engagement and low user retention.

The Counter-Effect of Airdrops

ZkLend’s airdrop strategy exacerbated its problems. Lacking significant product or brand awareness prior to the airdrop, the token distribution attracted speculators rather than actual users. This critical misstep — the failure to adequately vet participants — led to:

· A large number of reward hunters eager to cash out quickly.

· A lack of loyalty and real engagement, with participants not making long-term commitments.

· Rapid decline in token value, with speculators immediately dumping their tokens.

Rather than building user stickiness and loyalty, airdrops created a short-lived spike in activity that quickly faded.

A Warning for the Industry

ZkLend’s experience offers a powerful lesson: while hype and airdrops can attract users, they do not naturally create value, utility, or sustainable communities.

Key Lessons:

· Hype alone is not enough —building real value requires more than just the noise around a popular narrative.

· Airdrops to unvetted users invite speculation and destroy value, as ZkLend experienced.

· High valuations for new products come with significant risk , especially without proven use cases.

Conclusion

If maximizing returns is the goal, selling on the first day is often the best strategy — 85% of airdropped tokens fall in value within a few months. Solana became the leading blockchain for airdrops in 2024, but has performed relatively well overall after adjusting for market conditions. Projects like WEN and JUP have stood out as success stories, showing that a strategic approach can still deliver strong returns.

Contrary to common belief, larger airdrops do not always lead to sell-offs. One token with a 70% airdrop allocation achieved positive returns, highlighting the importance of FDV management. Overestimating FDV is a serious mistake. High FDV inhibits growth potential and, more importantly, raises liquidity issues — artificially high FDVs require a lot of liquidity to maintain, which is often difficult to obtain. Without sufficient liquidity, airdropped tokens are susceptible to dramatic price declines because there is not enough capital to withstand the selling pressure. Projects with realistic FDV and solid liquidity provision plans are better positioned to weather post-airdrop volatility.

Liquidity is critical. When FDV is too high, it creates significant pressure. When liquidity is low, large sell-offs can depress prices, especially in airdrops where recipients often sell quickly. By maintaining a manageable FDV and focusing on liquidity, projects can increase stability and the potential for long-term growth.

Ultimately, the success of an airdrop depends on more than the size of the allocation. FDV, liquidity, community engagement, and story are all important. Projects like WEN and JUP have found the right balance and created lasting value, while others with inflated FDVs and shallow liquidity have failed to attract investor interest.

In a fast-moving market, many investors make decisions quickly—selling on the first day is often the safest option. But for those investors who focus on long-term fundamentals, there are always quality projects worth holding on to for the long term.

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