Retroactive Airdrop Strategies: Key Mistakes to Avoid
Turning a profit from retroactive airdrops is now more akin to navigating a minefield than finding a shortcut to riches. The risk of investing considerable time and ending up in the red is all too real. The keys to success involve meticulous research, following essential guidelines, and employing nuanced strategies.
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Conduct Thorough Project Analysis ?
Before engaging with any project, carrying out in-depth research is essential. You'll need to address a series of pertinent questions.
- Does the project have its native token? If it doesn't, is there any hint of one being introduced? Investigating the white paper, examining the open-source code, and monitoring the actions of the project’s developers or founders are advisable steps.
- Is there a solid basis to anticipate token distribution? Examining the tokenomics may offer insights, though it may not always provide a complete understanding.
- Who are the project's investors and how much have they committed? The greater the investment and the higher the prestige of the investing entities (Tier 1 being the most desirable, Tier 3 the least), the more promising the project appears. This information is typically provided by analytic services like Cryptorank or Dropstab.
A thumbs-up from the Paradigm fund is often seen as a positive signal by airdrop hunters, thanks to its investment history in successful platforms such as Uniswap, dYdX, Optimism, Starknet, and Blur.
- What's the level of interest among airdrop hunters in the project? Employing on-chain analysis tools (e.g., Dune Analytics or other services) and gauging the project’s buzz can provide clarity. If the participation requirements are minimal or low-cost, the funding modest, and the number of attracted hunters high, the venture may prove economically unrewarding.
Beware of Manipulation Tactics ?♂️
Recently, it's become apparent that projects are using the allure of airdrops as a compelling strategy to draw in a vast user base and secure free ambassadors, not to mention beef up their on-chain metrics. This approach helps them generate revenue through transaction fees and draw the attention of new investors. However, it's crucial to temper your expectations; the anticipated retroactive airdrop might not materialize, or the rewards could turn out to be disappointingly small.
It's essential to rely on your detailed analysis instead of taking the promises of developers and crypto influencers at face value, especially since their motivations might include earning from your sign-up through a referral link.
Minimize Your Expenses ?
The advice applies equally to monetary and time investments. You need to identify which specific activities or benchmarks are required to qualify for an airdrop. Pay close attention to the project's focus, verify the developers' claims against their actions, and scrutinize on-chain data for insights.
Consider the following:
- Is engaging in Discord roles beneficial?
- How many transactions are necessary to rank among the top participants?
- Would it be more advantageous to engage in Ethereum network activities or to accumulate 20 points in Gitcoin Passport?
Also, it's wise to keep an eye on transaction fees. Gas prices on the Ethereum network (and its L2 networks) tend to be lower during weekends, influenced by the time of day and general blockchain activity levels. Network congestion can be monitored through dedicated services like Etherscan. We've explored ways to reduce gas expenses more thoroughly in a separate piece.
Sometimes, you can kill two birds with one stone by engaging with multiple projects with a single action or two. For example, engaging in the zkSync and Scroll networks through a cross-chain bridge, which, according to your analysis, might potentially issue its own token and reward users, allows you to be eligible for airdrops from multiple projects in one go.
Stay Alert ?
Some projects demand consistent participation. Missing certain tasks, like filling out a form, could result in forfeiting rewards. To avoid this, it's crucial to monitor the project's social media pages regularly. Patience is key—commit to completing the process.
Safeguard Your Assets ?
Managing the risk related to the amount of time and money you're prepared to spend on airdrop participation is vital. At the same time, engaging with a greater number of projects increases your chances of consistently receiving rewards. Finding the right balance is essential.
Steer clear of questionable projects, pay attention to the permissions you grant when signing smart contracts, and refrain from downloading software or games from unreliable sources. Adhere to cybersecurity guidelines.
Keep in mind that decentralized applications can be targeted by hackers, so it's important not to invest more in lending protocols or liquidity pools than you can afford to lose.
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