Decoding Binance Research's Report: From Simple Distribution to Complex Strategies, Where Are Our Airdrops Going?

By: CryptoDavid

Translated by Cheryl L.

Quick Take:

• While the airdrop model is imperfect, its importance in the crypto industry remains undeniable.

• Two Key Types of Airdrops:

  • Retroactive Airdrops: Designed to reward existing users based on their historical activities, fostering loyalty within established communities.

  • Engagement Airdrops: Announced in advance to incentivize specific user actions, making them ideal for early-stage projects seeking to capture market share and build a user base.

• Areas for Improvement:

  • Transparent allocation rules and clear eligibility criteria can reduce dissatisfaction and misunderstandings.

  • Active community feedback ensures better alignment with user expectations.

  • Avoid concentrating resources excessively on internal teams or large stakeholders to protect the interests of smaller participants.

  • Leveraging on-chain monitoring tools and "human verification" technologies can mitigate fraud, enhancing fairness and efficiency.

These insights offer a structured framework for addressing current airdrop challenges while paving the way for their future evolution.

For newcomers to crypto, airdrops often serve as an entry point. Initially a straightforward method of token distribution, airdrops have evolved into a strategic battleground between project teams and users, eliciting mixed reactions.

From the user’s perspective, airdrops are celebrated for their potential rewards but criticized for increasingly complex rules, tedious tasks, and sometimes opaque allocation processes. For project teams, airdrops generate short-term buzz and attract attention, but issues like fake engagement and eroding community trust have presented significant challenges.

Both sides have adapted over time. After multiple bull and bear market cycles, crypto users remain attracted to "free rewards" but approach them with greater pragmatism. Meanwhile, project teams recognize that simple airdrops are insufficient for fostering sustainable communities and are exploring more transparent and sophisticated distribution models.

For example, Hyperliquid’s airdrop earned widespread praise for rewarding early adopters, while Redstone faced backlash for last-minute changes to its allocation ratios.

As we move into 2025, the question remains: Can airdrops still fulfill their original purpose?

Recently, Binance Research released a report titled "Where Are Our Airdrops Going?", offering a comprehensive analysis of the current state of airdrops, their challenges, and potential improvements. This report provides actionable insights for both project teams and users seeking more effective solutions.

BlockFlow has distilled the key findings from this report, which we will explore in detail below.

From Simple Distribution to Complex Strategies: The Evolution of Airdrops

Since their inception in 2014, airdrops have evolved from a simple token distribution mechanism into a sophisticated tool for user engagement and community building. The first notable airdrop, conducted by Auroracoin in 2014, aimed to promote a national cryptocurrency among Icelandic residents. Users could easily claim tokens by entering their permanent resident ID.

Fast forward to 2024, the landscape has transformed significantly. Hyperliquid’s HYPE airdrop, with a peak valuation exceeding $10 billion, became the largest airdrop by market value, surpassing Uniswap’s. This marked a turning point, solidifying airdrops as a powerful engagement strategy. However, the rise of Sybil attacks has driven project teams to introduce increasingly complex eligibility requirements, such as interacting with testnets, participating in governance, and transferring assets across chains. These tasks not only deter fraudulent activities but also directly benefit projects by boosting on-chain activity and social media visibility.

Two Main Types of Airdrops in 2025

1. Retroactive Airdrops

     Retroactive airdrops, like those from Auroracoin, Uniswap, and StarkNet, reward existing users based on their historical activities. These airdrops are typically kept secret until distribution, aiming to foster loyalty within established communities. Key Characteristics:

     This type is ideal for established projects seeking to reward loyal users and strengthen community ties.

   1. User-centric approach

   2. Executed by mature protocols with an established user base and market share

   3. Not intended for building an initial user base

2. Engagement Airdrops

     Engagement airdrops, such as those from Redstone, Kaito, and Hyperliquid, incentivize user actions by announcing upcoming token events. These airdrops aim to attract new users and establish an initial market presence. Key Characteristics:

     This type is most effective for emerging projects looking to compete with rival protocols and expand their user base.

   

   1. Project-centric approach

   2. Primarily used to acquire new users and drive early adoption

   3. Often involve point-based reward systems to encourage specific behaviors

Sentiment Analysis of Token Airdrops: Insights from the Past Year

To analyze recent trends in token airdrops, this report utilizes Grok AI to conduct a sentiment analysis of notable events over the past year. By assessing community feedback and engagement, the analysis offers a detailed view of how these airdrops were received by the crypto community. Each airdrop was assigned a sentiment score, with higher scores indicating more positive reactions.

The analysis primarily draws from posts on X, capturing both positive and negative comments, engagement levels, and specific critiques or praise. Grok AI also considered official announcements, tokenomics, and eligibility criteria.

Based on the dominant tone of community reactions, the sentiment for each airdrop was categorized into three types: positive, negative, or mixed.

Lessons Learned from Past Airdrops

The history of token airdrops has revealed valuable lessons for crypto projects, showcasing both effective strategies and critical mistakes.

Last-Minute Reduction in Allocation Percentages

Some projects have pledged specific token allocations to their communities, only to reduce these percentages at the last moment, redistributing tokens to insiders or treasuries. For example, Redstone’s airdrop faced widespread criticism when the team cut the community allocation from 9.5% to 5% just before the token distribution. This move was widely deemed unfair by the community.

Lessons Learned:

• Define Allocation Percentages Early: Clearly outline and communicate the token allocation plan well in advance of the Token Generation Event (TGE).

• Avoid Last-Minute Changes: Refrain from making sudden adjustments to allocation plans.

• Discuss with Stakeholders if Necessary: If changes are unavoidable, consult key stakeholders—including investors, the community, and exchanges—and ensure transparent communication.

Lack of Transparency in Eligibility Criteria and Mismatched Expectations

Unclear eligibility standards have led to uneven reward distributions that fail to reflect user contributions. For instance, Scroll’s October 2024 airdrop, which distributed 7% of its SCR token supply (70 million tokens), was criticized for arbitrary snapshot mechanisms and hidden rules.

Lessons Learned:

• Communicate Distribution Rules Clearly: Transparency in eligibility criteria is essential to avoid mismatched expectations and user frustration.

• Prevent Sybil Attacks: Use on-chain monitoring tools or identity verification protocols, such as Proof-of-Humanity, to deter fraudulent behavior.

Overweight Allocations to Insiders and KOLs

Many projects allocate disproportionately large shares of tokens to teams, investors, and VCs, leaving minimal allocations for the community. For example, KAITO’s February 2025 airdrop allocated 43.3% of tokens to insiders while only 10% went to the community, sparking heated debates on X. Additionally, excessive token allocations to influencers (KOLs) have drawn criticism, as some immediately sell their holdings, diluting token value and harming genuine users.

Lessons Learned:

• Carefully Plan Allocation Ratios: Study the token allocation outcomes of similar projects and consider community and market reactions.

• Implement Vesting and Lock-Up Mechanisms: Apply vesting schedules and lock-ups for insiders and influencers to reduce sell pressure post-TGE and align their interests with the project’s long-term goals.

Technical Barriers in Claiming Processes

Complex or flawed claiming processes can hinder users from accessing their tokens, effectively reducing the payout and undermining the purpose of the airdrop. For example, Magic Eden’s December 2024 airdrop, designed to promote its mobile wallet, faced backlash due to bugs and unclear instructions, as reflected in user feedback on X.

Lessons Learned:

• Streamline the Claiming Process: Airdrop claiming is often a user’s first interaction with a project. Ensuring a seamless and user-friendly process can improve retention and foster positive sentiment.

How Airdrops Can Be Improved

As the crypto industry evolves, token airdrops remain a vital tool for community engagement and project promotion. To maximize their effectiveness and avoid common pitfalls, projects must adopt more refined strategies. Below are key recommendations for designing and executing better airdrops.

Increase Transparency

• Set Clear Objectives: Define specific goals for the airdrop or token incentive program to ensure alignment with the project’s long-term vision.

• Communicate Goals Clearly: Transparent communication helps align community behavior with project objectives, minimizing dissatisfaction caused by perceived inconsistencies in reward allocation.

Enhance Community Engagement

• The Community as Core Competence: While technology and products can be iterated quickly, building a loyal and stable community takes time and effort. Long-term success depends on fostering this foundation.

• Balance Transparency with Engagement: Transparency is essential but insufficient on its own. Projects should encourage deeper involvement through interactive feedback mechanisms to build a sense of belonging and loyalty.

• Address User Mobility Challenges: In the open crypto ecosystem, low switching costs make it easy for users to migrate between projects. To retain users, projects must invest in creating stronger community stickiness and fostering a sense of belonging.

Implement Advanced Monitoring Mechanisms

Some projects are leveraging on-chain analytics tools to enhance the fairness of airdrops. For example, LayerZero partnered with Nansen to identify and disqualify Sybil attackers by analyzing blockchain data. This approach reduces unfair practices and bolsters the credibility of token distributions.

As technology advances, on-chain monitoring tools will become more sophisticated and widely adopted, enabling project teams to detect and eliminate malicious behaviors more effectively. These tools ensure that airdrop participants are genuine and valuable community members.

Additionally, Proof-of-Humanity tools offer a promising solution to combat airdrop abuse. By preventing misuse while preserving user privacy and anonymity, these tools foster greater trust within the community and strengthen the integrity of airdrop campaigns.