Are airdrops now a game for whales or can shrimps still play it?
Investors with smaller amounts of funds can still hunt for rewards, but they must adapt their strategies, says analyst.
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AltLayer and Manta Network airdrops took place in January and didn’t reward users with small amounts of staked Ether (ETH), with both cases having more than 1 ETH staked as an eligibility criterion.
Since airdrops are known as a good way to access capital and be prepared for bull cycles, this could mean a fundamental shift in this industry, where only investors with $2,000 or more to spare could participate.
João Kury, co-founder and analyst of the Brazilian research team Modular Crypto, highlights “excessive farming” as one of the reasons why the eligibility criteria went up. Thus, unfortunately, airdrops still tend to favor those with higher capital, while investors with small amounts of capital get sidelined. This applies to staking, total volume, the amount of capital in pools, and more, he adds.
Look for engagement campaigns
However, he emphasizes that users with smaller amounts of crypto can still get their way into the rewards promised by protocols if they adapt their strategies. One alternative is using platforms like Galxe or Intract to get engagement campaigns related to protocols, which can give points after completion.
“For a long time, these campaigns were neglected by most users because they didn’t involve only on-chain tasks, but it seems that protocols are starting to reward engagement during these events. Manta, for example, allocated the first phase of its airdrop to engagement campaigns it had conducted, like ‘MantaFest: Dawn’, ‘MantaFest – Treasure Cruise’, and Manta Takeover,” Kury explains.
The “big secret” might be finding campaigns on those platforms that don’t have a lot of users participating yet. Although this might be challenging, Kury says it’s often rewarding.
Use DeFi and avoid ETH
Another new strategy Modular Crypto’s co-founder points out is the staking of newly launched tokens, such as Celestia (TIA), Pyth (PYTH), and Manta Network (MANTA). All those crypto assets are expected to have related airdrops in the future, and networks using Celestia as a data availability layer are a good example.
“Also, what many users have been doing is using leverage to farm these airdrops, for instance, by using a liquid staking token as collateral for a loan where the borrowed amount is then reinvested in the staking platform,” explains Kury.
In summary, there are many possibilities for those users with limited funds to invest in airdrop hunting. Users can then use decentralized finance (DeFi) tools to get an edge while hunting for airdrops, Kury adds.
Yield protocols or airdrops?
As the competition for airdrop hunting and the amount of ETH needed for staking rises, investors may wonder if studying and interacting with DeFi applications isn’t a better way to invest time and funds.
Kury admits that this is a difficult question to answer, and it’s probably a good thing to mix it up. The reason why users don’t give up on airdrops is the potential 50 to 100-fold returns, that aren’t seen in DeFi yield protocols. Despite that, airdrops are still risky, because the token launch is not granted in many cases.
With that being said, Kury assesses that it may be wise to fit both strategies when transacting in decentralized applications.
“The best approach is to combine both strategies, interacting with some protocol and still farming its airdrop, such as AVNU, MarginFi, and Kamino,” said Kury.