Author: daniel@footprint.network

In GameFi, doing a good airdrop is one of the hardest things to get right.

While airdrops have been a hot topic this year with campaigns from Arbitrum and Blur, the profitability of airdrops has created a bot problem, where airdrop farmers use multiple accounts to game the system.

Trading volume on Blur exploded after its Feb. 14 airdrop

Bots can create the optics of popularity and even be leveraged to gain real users; but how can projects avoid the pitfalls of bots and use airdrops to incentivize their actual community?

Footprint Analytics joined Jackson from Web3 Waves, Micheal of Game Space, Sunny from QuestN, and Jay from Notifi, to discuss.

In the last couple of years, airdrops have become an integral component of whitepapers and Web3 marketing plans.

Most recently, Arbitrum made headlines with its airdrop.

“I do think airdrops are an essential part of the industry, especially with DeFi, and are a great way to get exposure for your project, and your token as well,” said Jay.

“Everyone on the timeline was talking about Arbitrum — that was the talk of the town for the past 2 or 3 weeks. Not only about the token, but the ecosystem itself. It’s a great way to support early adopters but also a way to increase exposure.

However, for all of their benefits, airdrops also have several pitfalls.

“It’s pretty hard afterwards — a lot of it comes with a lot of selling pressure, and that can be the main challenge,” Jay continued.

Critically, projects must add some utility and some aspect to increase buy pressure in order for airdrops to be beneficial in the long run. They remain an interesting way to market your project and get mass exposure.

Like any marketing technique, airdrops can be executed well or badly. Jackson emphasized this in his take on the topic.

“Airdrops are another tool in the arsenal. We’ve seen them be very effective. We’ve seen campaigns where they haven’t been super effective,” Jackson said. “A lot of it comes down to the team that’s running it, how experienced they are, and the community they’re serving. It’s a very nuanced question, and it varies from project to project.”

Despite the pitfalls of airdrops, they remain an incredibly effective way to gain users.

“Perhaps projects don’t really care if their tokens are distributed to unique wallets, that it’s just one guy who runs 400 accounts and who’s able to cheat the system to gain a lot of tokens and swap them back into USDT,” said Michael.

“This happens on a daily basis with a lot of smaller projects. Many of these big projects put a lot of thought into how they’re going to distribute the airdrop, with many different steps that a user has to take to earn it, to prevent gaming the system. But on an industry-wide scale, tons of projects use this kind of advantage to gain followers and gain traction, but it’s not good for the project, and it’s not good for the industry as a whole.”

In fact, airdrops are so effective for gaining users that just the promise of an airdrop alone is enough for a project to get a kickstart, whether they execute on it or not.

“Since 2021, this has been a tactic, saying they’re going to airdrop, and then stay there for 3 years,” said Sunny. “And they don’t need to do any other product updates. It’s giving the project too much leverage to gain too many followers, and they don’t need to do any good on the product side, so it’s not that beneficial from that standpoint.”

With the growth of people trying to game the system, user data and analytics have become increasingly important. Several tools have emerged to help projects identify real users, such as Footprint Analytics.

“The key here is identifying and learning more about your user,” said Jay.

“I think that’s a very good spot where Footprint comes in as an analytics platform. Learn more about your user and separate those airdrop farmers and real users who transact on-chain or utilize your protocol. The most significant difference is separating those key indicators — who supports and builds on that protocol compared to airdrop farmers who set up bots and go crazy with transactions.”

“If you just airdrop your tokens to more of those farmers you’re likely to get dumped on, and that’s hard to overcome in the long run. If you learn more about your users and reward quality users, you’re way more likely to succeed in the long term.

Micheal noted that while on-chain tooling has limited the number of bots, no platform has solved the problem entirely and is unlikely to in the future. The most viable solution, at least for GameSpace, is engaging with the community and managing roles/incentives directly.

“How we overcome it is by handling it on a community level. Within our Discord, we have 15–20 roles, and some of those roles require [in-app activity] that results in a badge. When we host airdrops and tournaments, we will always prioritize those Discord roles, and make sure they’re very engaged. This way, we know these are active users, and we want to reward them more.”

Jackson concurs that bots might be in Web3 to stay and says that the industry will have to face the reality of being in a constant battle between security apps and people trying to game the system.

“If money is involved, people will fight for innovation there. We aren’t necessarily going to get rid of bots — the prevalence of AI will fuel that — but it also incentivizes other players to build. There will always be actors who, if the money’s there, will make something to fight it off or fix it. It’s always going to fluctuate.

“There are going to be points where the bots have the other hand, and there’s going to be points where the security organizations have the upper hand. It’s going to be a never-ending battle.”

This piece is contributed by Footprint Analytics community.

The Footprint Community is a place where data and crypto enthusiasts worldwide help each other understand and gain insights about Web3, the metaverse, DeFi, GameFi, or any other area of the fledgling world of blockchain. Here you’ll find active, diverse voices supporting each other and driving the community forward.

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