This article examines the pitfalls of current crypto airdrop incentive mechanisms, arguing that relying solely on native token rewards often leads to fleeting engagement, low user retention, and ecosystem exhaustion.

In recent years, massive airdrops before Token Generation Events (TGE) have become standard practice. Projects leverage free tokens to generate hype and attract users pre-launch. Yet, the reality is often an "all-time high at launch," followed by rapid declines in both attention and token prices. Users typically dump airdropped tokens immediately, pressuring markets and dissolving community enthusiasm—leaving projects with collapsed user bases.

While airdrops deliver short-term traffic, they rarely convert into lasting community or product adoption. Most projects lack real commercial use cases, forcing them to sustain engagement through endless token incentives—a model that inherently cannibalizes future value. Ultimately, these tokens and users flow into arbitrage loops dominated by "airdrop hunters," wasting resources that could have supported genuine growth. What was meant to bootstrap ecosystems instead weakens their vitality.

To break this cycle, the solution is simple: Projects must become ones where "the pig pays for the sheep’s wool." Benefits to users should be funded by willing third parties, not the project itself. This Web3 adaptation of the classic business adage means projects provide value upfront, while other stakeholders foot the bill—creating a triple win: users gain freely, projects scale influence, and payers acquire users, data, or exposure.

A Three-Step Framework: Building Closed-Loop Ecosystems
If you’re a project founder wondering, "How do I get others to pay for my users?" here’s a roadmap:

1. Define Core Users: Precisely identify which user segment drives your project’s success. Are they traders, product users, or token holders? Ask: "What behaviors signify meaningful adoption?" Clarity here prevents misaligned incentives.

2. Leverage Unique Advantages: Audit your moat—be it proprietary tech (e.g., robust infrastructure), an engaged community, or unique data assets. Ask: "What do we have that others desperately lack?" This value funds the model.

3. Find the Paying ‘Pig’: Partner with entities that need your resources. For example:

   • A liquidity-rich exchange could charge new projects for exposure (e.g., listing fees subsidizing user rewards).

   • A high-traffic dApp might monetize its user base by facilitating third-party airdrops.
     In short, whoever lacks your edge becomes the paying "pig."

This framework transforms "getting others to fund your users" from fantasy to engineered reality. By trading core resources for partner subsidies, projects create self-reinforcing ecosystems where users reap sustained benefits.

Case Study: Binance’s Liquidity Flywheel
Binance, the world’s largest exchange, exemplifies this. Its strengths—deep liquidity and a massive user base—attract new projects willing to pay for exposure. Through initiatives like Alpha Airdrops, Binance distributes new project tokens to BNB stakers and liquidity providers. This delivers value to users while onboarding projects efficiently.

Notably, Binance excludes market makers (MMs) from airdrops, as they already profit from liquidity. Instead, rewards target retail users—expanding the ecosystem while letting projects and MMs (the "pigs") fund the "sheep’s" gains.

Kaito’s Social Incentive Experiment (And Its Risks)
Social platform Kaito monetizes user engagement (e.g., Twitter activity) by partnering with pre-TGE projects that pay to distribute tokens to content creators. Here, users earn via attention ("sheep"), projects buy visibility ("pigs"), and Kaito intermediates.

However, sustainability hinges on Kaito’s ability to remain the dominant attention gateway. If projects find cheaper acquisition channels, its intermediary value erodes—a structural risk for such models.

Coopetition Is Key: Core Value Dictates Longevity
Whether tech or community-driven, projects must safeguard their unique value—the "pig" pays only while seeing ROI. If differentiation fades, the model collapses.

For founders: Instead of burning cash on incentives, audit tradable assets (e.g., user networks, data). Partner creatively—say, offering your community as a growth lever for others. When external resources fuel your ecosystem, users win, stickiness grows, and partners achieve goals—a true win-win-win.

Investor Lens: Betting on Sustainable Models
As crypto matures beyond hype, investors prioritize projects with:

1. Technical/product breakthroughs (long-term value), or

2. Innovative economics (self-sustaining loops).

When evaluating projects, ask: Can it keep the "pig" flying indefinitely? Only models that balance "pigs paying daily" with "sheep thriving perpetually" will endure.

The "shearing the pig" philosophy isn’t a slogan—it’s an operational blueprint. It demands clarity of value, smart subsidy design, and partnerships that compound growth. For builders who master this, the rewards will be anything but air.

This article examines the pitfalls of current crypto airdrop incentive mechanisms, arguing that relying solely on native token rewards often leads to fleeting engagement, low user retention, and ecosystem exhaustion.

In recent years, massive airdrops before Token Generation Events (TGE) have become standard practice. Projects leverage free tokens to generate hype and attract users pre-launch. Yet, the reality is often an "all-time high at launch," followed by rapid declines in both attention and token prices. Users typically dump airdropped tokens immediately, pressuring markets and dissolving community enthusiasm—leaving projects with collapsed user bases.

While airdrops deliver short-term traffic, they rarely convert into lasting community or product adoption. Most projects lack real commercial use cases, forcing them to sustain engagement through endless token incentives—a model that inherently cannibalizes future value. Ultimately, these tokens and users flow into arbitrage loops dominated by "airdrop hunters," wasting resources that could have supported genuine growth. What was meant to bootstrap ecosystems instead weakens their vitality.

To break this cycle, the solution is simple: Projects must become ones where "the pig pays for the sheep’s wool." Benefits to users should be funded by willing third parties, not the project itself. This Web3 adaptation of the classic business adage means projects provide value upfront, while other stakeholders foot the bill—creating a triple win: users gain freely, projects scale influence, and payers acquire users, data, or exposure.

A Three-Step Framework: Building Closed-Loop Ecosystems
If you’re a project founder wondering, "How do I get others to pay for my users?" here’s a roadmap:

1. Define Core Users: Precisely identify which user segment drives your project’s success. Are they traders, product users, or token holders? Ask: "What behaviors signify meaningful adoption?" Clarity here prevents misaligned incentives.

2. Leverage Unique Advantages: Audit your moat—be it proprietary tech (e.g., robust infrastructure), an engaged community, or unique data assets. Ask: "What do we have that others desperately lack?" This value funds the model.

3. Find the Paying ‘Pig’: Partner with entities that need your resources. For example:

   • A liquidity-rich exchange could charge new projects for exposure (e.g., listing fees subsidizing user rewards).

   • A high-traffic dApp might monetize its user base by facilitating third-party airdrops.
     In short, whoever lacks your edge becomes the paying "pig."

This framework transforms "getting others to fund your users" from fantasy to engineered reality. By trading core resources for partner subsidies, projects create self-reinforcing ecosystems where users reap sustained benefits.

Case Study: Binance’s Liquidity Flywheel
Binance, the world’s largest exchange, exemplifies this. Its strengths—deep liquidity and a massive user base—attract new projects willing to pay for exposure. Through initiatives like Alpha Airdrops, Binance distributes new project tokens to BNB stakers and liquidity providers. This delivers value to users while onboarding projects efficiently.

Notably, Binance excludes market makers (MMs) from airdrops, as they already profit from liquidity. Instead, rewards target retail users—expanding the ecosystem while letting projects and MMs (the "pigs") fund the "sheep’s" gains.

Kaito’s Social Incentive Experiment (And Its Risks)
Social platform Kaito monetizes user engagement (e.g., Twitter activity) by partnering with pre-TGE projects that pay to distribute tokens to content creators. Here, users earn via attention ("sheep"), projects buy visibility ("pigs"), and Kaito intermediates.

However, sustainability hinges on Kaito’s ability to remain the dominant attention gateway. If projects find cheaper acquisition channels, its intermediary value erodes—a structural risk for such models.

Coopetition Is Key: Core Value Dictates Longevity
Whether tech or community-driven, projects must safeguard their unique value—the "pig" pays only while seeing ROI. If differentiation fades, the model collapses.

For founders: Instead of burning cash on incentives, audit tradable assets (e.g., user networks, data). Partner creatively—say, offering your community as a growth lever for others. When external resources fuel your ecosystem, users win, stickiness grows, and partners achieve goals—a true win-win-win.

Investor Lens: Betting on Sustainable Models
As crypto matures beyond hype, investors prioritize projects with:

1. Technical/product breakthroughs (long-term value), or

2. Innovative economics (self-sustaining loops).

When evaluating projects, ask: Can it keep the "pig" flying indefinitely? Only models that balance "pigs paying daily" with "sheep thriving perpetually" will endure.

The "shearing the pig" philosophy isn’t a slogan—it’s an operational blueprint. It demands clarity of value, smart subsidy design, and partnerships that compound growth. For builders who master this, the rewards will be anything but air.