Rethinking Crypto Airdrops: From Quick Gains to Sustainable Growth with ‘Holder Score’

Traditional finance has long hailed the success of Initial Public Offerings (IPOs) as a reliable way for companies to achieve impressive gains upon entering the stock market. In contrast, the crypto world grapples with the challenge of airdrops, which often fall into a ‘high-open, low-close’ pattern, failing to sustain initial enthusiasm.

Industry expert Haseeb, managing partner at Dragon, suggests that the issue isn’t with airdrops themselves but with how they are executed. The key lies in leveraging blockchain transparency to create a system akin to a ‘credit score,’ which accurately identifies and rewards genuine, long-term participants, thus promoting healthier token distribution.

Why IPOs Shine While Airdrops Fade

The first-day surge of a traditional IPO is no accident. Companies design this outcome by prioritizing long-term shareholders over short-term speculators. They achieve this by offering discounted shares to reputable institutional investors like BlackRock or Fidelity. These entities rarely sell off shares immediately, establishing a stable shareholder base. In contrast, retail investors without insight into the commitment level of others must purchase at market price, fostering stability in the marketplace.

In the crypto realm, while blockchain transparency allows developers to review past behaviors of wallet addresses, the focus often remains narrow, aiming primarily to weed out sybils or farmers. Little effort goes into identifying addresses with the potential for long-term holding and value contribution, missing an opportunity to reward genuine participation akin to smaller but equally committed institutional investors.

The Current Airdrop Dilemma: Farmers Win, True Users Lose

Initially hailed as the ‘fairest’ distribution method in crypto, airdrops have often failed to achieve their intended purpose. Instead, projects spend months engaging users, only to have the bulk of the rewards clinched by ‘airdrop farmers’ who use automation to register en masse. According to Haseeb, these farmers generate artificial activity, dumping tokens post-launch, demoralizing founders and discouraging genuine contributors.

Even with reward mechanisms from projects like Optimism and Arbitrum attempting to boost long-term engagement post-Token Generation Event (TGE), these measures often feel like temporary fixes. The largest allocations occur during the initial airdrop phase; if secondary recipients cannot be distinguished from primary holders, later incentives lose their impact.

Introducing ‘Holder Score’: A Blockchain Credit Framework

To address this, Haseeb introduces the ‘Holder Score’ concept. It’s a behavior-based scoring system tracked on-chain, enabling ongoing evaluation of user actions. Key metrics might include:

• Percentage of retained tokens over time

• Governance participation, including voting, delegation, or staking

• Actual product usage such as fee payments, providing liquidity, or feature interaction

• Constructive contribution or community involvement

• Social media engagement or participation in research

Standardizing these metrics publicly allows projects to reference historical behaviors in allocation decisions, creating a new incentive structure. Users will likely adopt higher-value, longer-term behaviors to maintain eligibility for future airdrops.

Crowdsales Over Airdrops: A Healthier Path

Haseeb also suggests phasing out blanket airdrops in favor of ‘Crowdsales’, solving problems of farmer attraction by instilling a natural filter. High Holder Score users would benefit from preferable purchase terms, while lower score speculators might pay market rate.

With regulatory clarity expected to mature by 2025, crowdsales could offer a more robust fundraising framework than airdrops. In this context, Ethereum’s historical success via crowdsale serves as a notable case study.

Evolve or Die: The Future of Airdrops

In summary, Haseeb envisions a token economy grounded in ‘on-chain reputation’. Genuine users should enjoy rewards for early involvement and sustained participation, spotlighting the renewed importance of the InfoFi sector.

Using Holder Score and tiered crowdsale mechanisms, the crypto market might shift from the adverse cycle of initial highs to a cleaner, more sustainable distribution model.