Time to Fix Crypto Aidrops to Bust Fraudsters and Reward Early Adopters - Research
The crypto sphere needs to address the issue of airdrops, a new report has concluded – in order to prevent theft, ensure that early adopters are not cut out of the picture at a later stage and avoid “unsavory” side effects.
The claims were made in the latest “State of the Network” report from crypto intelligence firm Coin Metrics, authored by Kyle Waters and Nate Maddrey, who noted that airdrops have become “a regular event in crypto and a standard for token distribution.” But, they warned, airdrops, in the course of “facilitating experiments with new models of protocol ownership,” face a range of challenges and have left “room for design improvements.”
Waters and Maddrey noted that so-called Sybil attacks – whereby individuals or small groups pretend to be larger groups of individuals “by creating multiple addresses” in order to “farm” airdrop events.
However, they noted that some operators have trialed ways to “snuff” the practice out, including an airdrop for a token named paraswap (PSP). During this event, Waters and Maddrey noted, the Paraswap team “designed an airdrop that attempted to distribute tokens to only the most active users” it could detect, even going so far as to create a three-tiered system for their drop.
They added that protocol operators needed to change the perspective of many token recipients, noting that “many addresses will tend to offload their tokens immediately after the airdrop.”
This, the authors claimed, has created a need to “incentivize users” to “hold” their tokens and go on to become involved in “protocol governance.”
Recipients “might also be incentivized to send the tokens to a [decentralized exchange] pool to provide liquidity early on,” they suggested, but conceded that “undeniably” many
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