I’m not too sure about you guys but one of the most fascinating things I’ve seen in DeFi is airdrops.
In 2017, airdrops were all the rage. But often the case, all users did was dump them, and most of the time, they weren’t worth all too much.
But this has changed with the introduction of decentralized finance. Airdrops have become extremely sizeable for all users and there have been investors holding their coins as sometimes, holding the airdropped coins performs better than selling them right away for Bitcoin, Ethereum, or stablecoins.
I recently broke down the top airdrops of 2020 (though one was in 2021) and what effect they had on Ethereum DeFi users.
When people ask me how they should learn about DeFi, I tell them to load up an account with some money and starting playing.
The reasons:
1. IMO, there is no better teacher than getting ur hands dirty
2. It pays to be a testerA thread about the top airdrops of the past yr ?
— Nick Chong (@n2ckchong) January 26, 2021
The airdrop phenomenon
There have been five (or six) major airdrops in the DeFi space over the past 12 months. Here are each of them and some details about each one:
- Uniswap (UNI): 252,803 addresses could (and still can) claim. Average amount is 593.3 UNI.
- 1inch (1INCH): 55,224 addresses could (and still can) claim. Average amount is 1,629.76 1INCH.
- BadgerDAO (BADGER): 32,262 addresses could (and still can) claim. Average amount is 64.31 BADGER.
- BadgerDAO’s DIGG: Average airdrop of 0.0704 DIGG.
- Curve DAO Token (CRV): Average airdrop of 16,043 CRV
- Tornado Cash (TORN): Around 8,000 addresses will be able to claim. An average of 66.54 TORN will be allocated to each user.
This means that assuming you were an “average” DeFi investor this past year and used only one address, you made nearly $20,000 in airdrops alone. Of course, the use of “average” is a bit of a misnomer here due to the sometimes heavily skewed distribution to whales, though it goes to show how much value there is in someone just playing around with Ethereum and DeFi.
When to sell?
One thing I’ve noticed is the difference between selling an airdrop and keeping it.
The best example of this is Uniswap, which listed at around $1.5-2 when it first launched. There were some that rapidly dumped their tokens in expectations of everyone doing the same. But due to the excitement around Uniswap and the cash flows the protocols sees, things quickly reversed on the sellers as UNI shot to $7 literally 48 hours later.
A similar trend was seen with Badger, when listed around $6-7, though has reached as high as $22 just yesterday.
The difference between the airdrops before and the airdrops now is that the tokens that are actually dropped are or soon will be entitled to cash flows of the protocol they are from. That’s to say, by holding or staking the airdropped token, some Ethereum users may be able to earn dividends and boost their portfolios over time.
Disclaimer: This author is an analyst at ParaFi Capital. ParaFi Capital may hold positions in assets mentioned in this article. The views displayed in this article are opinions of the author—and the author only.
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