- A Keyrock study showed 88% of airdrop projects will collapse in 2024most of which were completed within 15 days of launch.
- The common thread that ties all these disasters together is fully diluted valuation (FDV). Overestimated FDV and not enough liquidity to support it.
- Win airdrop project With a good background, a mature product, and a well-thought-out, moderate launch.
Let’s admit it. many Cryptocurrency projects have gone bankrupt shortly after their airdrops into the market. 88% of airdropped tokens suffered significant lossesmost collapsed within 15 days.
But is this because of the airdrop? Or is the situation more complicated than that? A study by cryptocurrency market maker Keyrock may Answer this question.
Let’s see what it finds.
Why are airdropped crypto tokens dropping like flies?
Keyrock has discovered a worrying trend: The vast majority of airdrop projects fail and cannot be recoveredAfter three months, only a few showed positive results.
Here is a summary of the study’s findings:
- Most airdrops Crash within 15 days.
- Airdrop distribution 10% of total supply performs betterHowever, stocks with a shareholding ratio of less than 5% were quickly sold off after listing.
- Inflatable FDV generally Reasons for project failure.They slow down liquidity and growth.
- Liquidity is crucial To avoid sales pressure after launch.
- Successful airdrop projects With smart distribution, strong liquidity and realistic FDV.
The highlights of this study are Airdrop projects have a short lifespanAs shown in the figure below, only a few projects recovered, and after three months, seven projects achieved positive performance.
So, what was the main reason for this crash? Was it the percentage of airdropped tokens? The higher the percentage, the worse the performance?
Keyrock doesn’t think so.
this FDV is a serious sinThis is the estimated total market value of a project if all of its tokens were in circulation.
Keyrock identified two reasons for the collapse of airdropped tokens with high FDV:
- They can’t stay motivated.
- They lack the liquidity to support valuations.
Who are the winners and losers in the airdrop arena?
Keyrock also discovered the biggest winners and losers in the airdrop space.
Solana trading platform Drift’s IPO price triplesWhat are the reasons for its success? Moderate market capitalization, fair issuance, thoughtful distribution and long-term approach.
It has a long history, a mature product, a phased issuance structure (which minimizes selling pressure), and a realistic valuation.
In short, Drift succeeds because it doesn’t take on tasks that are beyond its capabilities.
On the other hand ZkLend crashed by 95%the market value fell from $300 million to a daily trading volume of $400,000.
It made several big mistakes:
- Failed to review participantsattracting reward hunters who seek short-term rewards. This leads to low retention and quick cashing out.
- Building on Starknet’s momentum Hype rather than providing value For investors.
- No brand recognition and the loyalty of participants, resulting in a lack of real engagement.
Isn’t over-hyping a project, attracting short-term speculators, and providing low value enough to succeed in the cryptocurrency space?
Bottom line: Prioritize real, genuine value over over-hyped hype
Keyrock’s research shows a familiar pattern of unsuccessful airdrops Encourage participants to maximize returns Rather than investing in the long-term development of the ecosystem.
This leads to the only logical conclusion: launch and sell off quickly. After all, if you attract speculators, then they will speculate.
But so far, The worst mistake is overestimating FDVIf there is not enough working capital to “realize” the otherworldly FDV, your project is doomed from the start.
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Disclaimer: The opinions expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.
