A new study by crypto market maker Keyrock reveals that 88% of tokens released via airdrops in 2024 saw their prices drop, with most of the drops occurring within the first 15 days.
Key Study Findings
Keyrock’s report details that most price movements occur immediately after an airdrop, with very few tokens recovering three months later. “After three months, very few tokens manage to post a positive result, with only a handful bucking the trend,” the report reads.
Peak Interest and Value Retention Issues
Airdrops are the distribution of free tokens to early or frequent users of decentralized finance (DeFi) protocols. Originally, airdrops were designed to reward loyal users who contributed to the success of a protocol, but in recent years they have evolved into marketing strategies to generate interest and attract new users to various platforms. The excitement around airdrops peaked in early 2024, with Bitcoin reaching new all-time highs and spot Bitcoin exchange-traded funds launching. The bullish sentiment lifted many other cryptocurrencies. However, despite the positive market conditions, many airdropped tokens this year have struggled to maintain their value. It is widely assumed that larger airdrops lead to poor price performance, but Keyrock’s data shows that this is not always true. Generous airdrops are widely believed to encourage buyers to sell quickly, leading to price declines. Additionally, DeFi users who qualify for multiple airdrops and perform Sybil attacks also increase selling pressure.
Best and Worst Airdrop Examples
Keyrock’s analysis identified Solana’s trading platform Drift as the best-performing airdrop. Launched with a modest valuation and careful distribution, the DRIFT token is currently trading at nearly three times its initial value. Solana-based airdrops like WEN and JUP have also seen strong results, making Solana the leading blockchain for airdrops this year. On the other end of the spectrum, ZkLend, a lending protocol on Ethereum’s Layer 2 solution Starknet, performed poorly. Its ZEND token has fallen 95% from its launch price. According to Keyrock, ZkLend’s decline was due to its high launch valuation and failure to generate interest around its brand.
Keyrock's study highlights the importance of Fully Diluted Market Cap (FDV) management. Tokens with high FDVs typically underperform due to difficulties in sustaining momentum and lack of liquidity to support valuations.
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