Study Finds Majority of Tokens Airdropped This Year Crash After Launch, But Some Outliers Succeed

A new study from crypto market maker Keyrock has revealed that the majority of tokens launched alongside airdrops this year have experienced a significant decline in price, with most crashing within just 15 days of their launch. The study found that a staggering 88% of these tokens have seen their value plummet, leaving many investors disappointed.

Airdrops, which are giveaways of valuable tokens distributed to early or frequent users of a DeFi protocol, have become increasingly popular in recent years as a way to reward users and attract new participants. However, despite the initial excitement surrounding these airdrops, many tokens have failed to maintain their value in the long run.

According to Keyrock, one key factor in determining the success of an airdrop is the token’s fully diluted valuation (FDV). The study found that projects with inflated FDVs often struggle to sustain momentum, as the perceived upside becomes limited and the tokens lack the liquidity to support their valuations.

Interestingly, the study also found that larger airdrops do not always lead to dumps, contrary to popular belief. In fact, a token with a 70% airdrop allocation saw positive gains, highlighting the importance of FDV management in determining the success of an airdrop.

Despite the overall decline in token prices following airdrops, there have been some outliers that have managed to buck the trend. Solana trading platform Drift, for example, saw its token value nearly triple following its airdrop, thanks to its modest launch value and fair distribution.

On the other hand, ZkLend, a lending protocol and Ethereum layer 2 Starknet, was identified as the worst performer in the study, with its token down 95% from its launch price. Keyrock attributed this poor performance to the project’s high launch value and failure to build traction around its brand.

Overall, the study serves as a reminder that while airdrops can generate hype and attract users, they do not guarantee long-term value or sustainability for a project. Investors should be cautious when participating in airdrops and consider factors such as FDV and distribution strategy before making investment decisions.