Research Summary
The report discusses the practice of airdrop farming in the cryptocurrency industry, where users are incentivized to engage with protocols in exchange for potential token rewards. It highlights the manipulative tactics employed by some protocols, the impact on users, and the need for due diligence and informed decision-making in airdrop farming.
Key Takeaways
Manipulative Tactics in Airdrop Farming
- Points for Airdrop System: The report criticizes the points for airdrop system used by protocols like Blur, where users are incentivized to engage in activities that may lead to financial losses. The protocol benefits from increased trading volumes and fees, while users may end up with depreciating assets.
- Excessive Fees: Some protocols, such as Friend Tech and Ekubo, are criticized for charging high fees under the guise of points. These fees often go to the protocol owners rather than being distributed to liquidity providers.
- Point Inflation: The report highlights the issue of point inflation, where protocols issue excessive points to attract total value locked (TVL). This can lead to dilution of points for existing users and create a sense of urgency among potential users.
Importance of Due Diligence in Airdrop Farming
- Research and Engagement: The report emphasizes the need for users to conduct thorough research and engage with protocols before participating in airdrop farming. It advises users to look for protocols they enjoy using and to be wary of protocols that obfuscate their rules.
- Reputation Risk for Influencers: The report also highlights the reputational risk for influencers who promote airdrop opportunities. It suggests that influencers may be either paid or earn risk-free airdrops for sharing referral links.
Actionable Insights
- Conduct Thorough Research: Users should conduct thorough research and due diligence before participating in airdrop farming. This includes understanding the rules of the protocol, the potential risks, and the potential rewards.
- Engage with Protocols: Users should actively engage with protocols, ask questions, and seek satisfactory answers. If the answers are not satisfactory, they should look for better opportunities.
- Be Wary of Influencer Promotions: Users should be wary of influencers who promote airdrop opportunities. They should understand that influencers may have vested interests and may not always provide unbiased advice.
