Optional supplemental pre-listen: Bell Curve: What's the Future for Airdrops? | Roundup on Apple Podcasts
TLDR:
- I think that Passport and Grants provide some interesting primitives to create killer apps for creating ecosystem growth by helping ecosystems design better airdrops.
- Because tokenization is a big part of crypto, airdrops are the biggest market in crypto. A way bigger TAM than public goods (which is funny because ecosystems use airdrops to build their ecosystems public goods, they just dont use those words public goods to describe what they’re doing).
- Modern airdrop design suffers from a sybil problem + lack of datasets + toolsets to data-drive design of airdrops. Many teams will hand-roll the merkle roots containing their airdrops, the process is surprisingly cowboy.
- Airdrop season will be upon us again if/when the market ever returns.
- Before then, we could build tools to help people solve the problem of airdrops
(using them to build their ecosystems public goods), by making it easy to ̶b̶u̶i̶l̶d̶ ̶t̶h̶e̶i̶r̶ ̶e̶c̶o̶s̶y̶s̶t̶e̶m̶ ̶p̶u̶b̶l̶i̶c̶ ̶g̶o̶o̶d̶s̶ do sybil resistent airdrops using Gitcoin Passport + reward the best builders in your ecosystem via Gitcoin Grants Stack.
Airdrops - a delicate dance of building an ecosystem
Airdrops are a means to an end.
- For airdrop recipients, they are a way of earning a stake in the governance of a network.
- For ecosystem builders, they are a means of building traction + spinning a flywheel of ecosystem engagement, liquidity, and network effects.
As multiple airdrops have occurred over time in the last several years… airdrop recipients & ecosystem builders have entered a delicate dance. An airdrop happens, Airdrop farmers enter the scene + go fishing for aidrops. Ecosystem builders try to stamp out airdrop farming, or sometimes look the other way.
Meanwhile, to those in the know the meta (most effective tactic available) for airdrops is changing, the meta has been evolving over time as best practices start to develop + trickle out through whisper networks, + people will learn more about how to do effective airdrops.
Here is some notes about the evolution of a handful of prominent retroactive airdrops
- uniswap - 2020 - 1 airdrop Sept 2020, went to LPs on uniswap network
- gitcoin - 2021 - 1 airdrop May 25 2021, tokens went to Kernel Alumni, Gitcoin active users, Gitcoin most active funders/earners.
- ENS - 2021 - 1 airdrop Nov 1 2021, users who have registered ENS names were rewarded.
- optimism - 2023 - did multiple airdrops over time, the first OP Mainnet Users, Repeat OP Mainnet Users, DAO Voters, Multisig Signers, Gitcoin Donors (on L1), Users Priced Out of Ethereum
… (probably many more, if anyone has an exhaustive table of airdrops & their TLDR attributes, pls link it!) …
The general arc I see in airdrops is
- more & more sophisticated datasets
- more recognition that multi-airdrop campaigns over time are optimal (as opposed to one big one at the launch of a network).
As ecosystems move towards multi-airdrop campaigns over time, I think this flywheel begins to develop.
If this graphic looks familiar, it should be. Its a variant of a graphic I used to use to talk about Gitcoin Grants.
What if instead of being positioned around building public goods, Gitcoin Grants was positioned as a tool to do better airdrops? In many ways, the tools are already there is the same: Governance tokens go in a pool + are allocated to the most important addresses.
Right now, Gitcoin is known for Quadratic Funding. But as Gitcoin’s Allo Protocol reaches it’s endgame of building all sorts of Allocation protocols, there will be many other mechanisms for distributing these tokens. QF is just the start, in the future, any allocation mechanism could be programmed into these tools. QF, QV, conviction voting, contribution-weighted delegation, etc.
As airdrops get more & more sophisticated, and if/when Allo protocol becomes the ultimate capital allocation swiss army knife, I think these two design spaces will converge.
Opportunities
I see a few opportunities (which I will cover bellow) in this design space.
- Retroactive airdrop tool
- Passport gated airdrop tool.
- Active ecosystem airdrop tool.
- There are probably more I don’t see??
1. Retroactive airdrop tool:
^^ I’m told that there are people building this in my mentions. Hopefully one of them goes to market soon.
2. Passport gated airdrop tool.
Supermodular has made a lightweight Passport gated airdrop tool.
We’ll need to keep iterating towards more usage (setting social norms to use this, improving the tool, etc).
For example, I’d like to see the ability to plug in your own merkle tree (or set of EVM-computed conditions) to the tool, so you can gate by more than just sybil resistance.
3. Active ecosystem airdrop tool.
Rumour has it there are many ecosystems that are designing their airdrops now, to be deployed if the market ever turns around.
Right now, many ecosystems are using point systems, like the one arbitrum used (below) to design their merkle trees.
These are great for rewarding usage of protocols. But they suffer from the problem of “once you make a measure a target, it ceases to become a good measure problem.” eg once you publish a point system like this, you invite people to airdrop farm those actions on your ecosystem. Airdrop farming is artificial inflation of your ecosystem numbers, and is not genuine organic usage. Once an ecosystem is being airdrop farmed, it enters an ongoing adversarial game with airdrop farmers that will evolve every epoch (each occuring airdrop as in epoch).
Point systems are also not good at is rewarding high-level ecosystem development. If you need people doing deep research, dapp development, protocol hacking, etc, you can’t reward that with a point system. What if it became a norm to run a Grants Stack campaign (QF, QV, or otherwise) during each of your airdrops? That would solve the problem of high-level ecosystem development not being included in.
Types of ecosystem development & how they are stimulated:
- Team/Investors (covered by insider distribution)
- Usage of protocols (covered by point systems)
- High-level ecosystem development (not yet covered in airdrops) <=== oportunity is here.
What I think is neat about this idea of positioning Gitcoin Grants Stack as an ecosystem development tool is that the tool already works, its just a marketing/positioning change.
4. What else?
I’ve likely missed some really important ideas.
What would you build if you had the ultimate Allocation protocol? What would you bulid with the data coming out of Gitcoin Grants? Open to other ideas in this design space.