Distributing tokens, especially in the form of airdrops, can pose a chicken and egg scenario. Cynics say that airdrops only attract airdrop farmers and the new holders will dump them as soon as they can, but more sympathetic observers say they can fill a void where there is little starting community and or funding.
The problem addressed is that a new project needs developers to build on their chain to prove their unique technology, however good developers are only interested in building if there is a sufficiently large user base to make it worth their time and effort. But the community is only going to grow organically if there are good dapps and use cases available. Hence the chicken and egg scenario.
Something new projects will have is lots of their native token which they can exchange for things they lack, notably attention and community, in order to attract developers.
As a marketing technique for a new ecosystem, particularly one without heavy VC backing, airdrops can make a lot of sense. Building a community costs significant money via advertising, KOLs and other traditional marketing channels and even trying to grow organically, while cheaper, takes a long time. This is where the viable shortcut becomes attractive.
Nick Campion, head of marketing with Flare Network, has a nuanced approach to airdrops. He is of the opinion that even if some recipients are not interested in the chain long term, it might still be considered a success if the campaign delivers early numbers and generates sufficient public awareness, thereby catalysing early community growth.
“The question is how to design an airdrop to maximise the short-, and long-term benefits while minimising waste and any possible negative side effects,” says Campion. This he says is a function of incentive design.
“The incentive design needs to look at what behaviours are being rewarded, how to minimise Sybil attacks to ensure a broad distribution and what long term benefits will this have on the wider ecosystem.”
There is also a more recent trend towards points-based system rewards with airdrops being promised long after a protocol is live. The thinking behind these airdrops is to drive participation in the network over time. There are also specific behaviours being rewarded such as providing TVL, performing transactions or staking to support security.
“Done well, these can effectively function as extended learn and earn campaigns, with people needing to dive deep into the ecosystem project to receive any rewards. In addition, if the project and ecosystem partners are good, and people have a positive experience during this phase, it’s entirely possible that they will retain at least a portion of airdrop holders,” says Campion.
Flare took a different approach with its FlareDrops. These have been designed to incentivise long term network participation and to minimise barriers to entry to the scheme. By January 2026, there will have been 36 monthly FlareDrops. Every month, every holder of wrapped Flare and every person that has staked to support the security of the Flare network receives a share of that month’s FlareDrop. This happens automatically as a function of the tokenomics and requires no input from the foundation. That means anyone can join the scheme at any time by acquiring some FLR on the open market, thus minimising barriers to entry and encouraging as many people as possible to learn about Flare. This has helped Flare create a very active community and gives developers confidence that the community will continue growing at pace throughout the entire FlareDrop period.
