Solana
Solana Sanctum Project to Double Airdrop Rewards for “Long-Term Aligned” Users – DL News
- Sanctum promises to double airdrop rewards, if recipients wait.
- This is part of the protocol’s plan to create a more stable and sustainable token launch.
- Several parachute drops have failed in recent months.
Cryptocurrency airdrops are a popular way for DeFi protocols to attract users, generate interest, and ultimately launch tokens.
Yet in recent months, new token launches, which traders previously flocked to in droves, have not attracted the same attention as before. Many recent airdrops have seen their tokens plummet as soon as they launched.
Observers have blamed everything from the Sybil airdrop attackers to the projects themselves for the situation.
Controversies
Sanctum, a liquid staking protocol on Solana, is attempting to avoid the controversies that have marred recent airdrops.
People eligible for the July 18 project airdrop To have the choice.
They can claim their tokens immediately, giving them the option to sell them, or wait and double their initial allocation.
“You can claim immediately, but waiting gives you up to 100% bonus,” Sanctum co-founder FP Lee said in a statement. X post announcing details of the airdrop.
Sanctum’s deposits briefly topped $1 billion earlier this year.
The hope is that by incentivizing airdrop recipients to wait before claiming and selling, while still selling tokens publicly to investors, Sanctum can create a more stable and sustainable token launch.
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But whether the recipients of the parachute will be willing to defer their payments is another matter.
To get the maximum possible bonus, Lee said, recipients will have to wait six months before claiming their tokens.
In an ever-volatile cryptocurrency market, that’s a long time.
The Airdrop Dilemma
DeFi projects launching tokens face a difficult balance.
The distribution of a token, whether through sales to early investors or through an airdrop, can make or break a project.
In recent months, several DeFi projects have been critical to deliberately launch tokens at high valuations to make their project appear more valuable.
“If you start at $20 billion and you drop 95% in a bear market, you’re still a $2 billion project,” said Marc Weinstein, a partner at cryptocurrency investment firm Mechanism Capital. DL News.
At the same time, Sybil attacks are a constant concern. These hacker DeFi actors create multiple wallet addresses to spoof airdrops while pretending to run a legitimate activity.
Sybil attackers cashing out en masse after airdrops cause prices of newly launched tokens to plummet, leaving a bad taste in the mouths of many legitimate users.
When crypto bridge Wormhole launched its W token in April, it initially traded at $1.33. It has since dropped 71%.
Similarly, the ZK token of the layer-2 Ethereum network ZKsync has fallen by around 32% since its June airdrop.
There are exceptions, however. The token of LayerZero, another crypto bridge that has taken steps to exclude Sybil attackers, has retained its value since its launch via airdrop.
Delayed gratification
Sanctum’s strategy is twofold.
Incentivizing airdrop recipients to delay their requests only works if these users believe that the token will increase in value in the future. Therefore, trying to increase the value of the token in the short term is not an option.
“Projects in the past started with so little and were launched with souped-up utility vehicles,” Sanctum co-founder FP Lee previously said in a statement. X Spaces A stream describing the launch. “We don’t want that. We want to start low and work our way up.”
Lee was referring to fully diluted valuation, or FDV, the total value of a token’s supply, including those locked or yet to be distributed, not just those in circulation.
To avoid launching with a high FDV, Sanctum will let investor demand for CLOUD tokens help set a fair market price.
The project is selling 50 million CLOUD – 10% of the token supply – to the public at $0.15 each via Jupiter’s LFG launchpad.
The CLOUD token will start trading at a higher or lower price depending on how much of the 50 million tokens are purchased by investors.
But there’s a catch. Like those who postpone their airdrop requests, tokens purchased through the launchpad will be locked up for six months before investors can sell them.
“The key question to ask yourself on launch day is: Are you aligned for the long term or curious about the short term?” Lee said.
Tim Craig is DL News DeFi correspondent based in Edinburgh. Feel free to share your tips with us at tim@dlnews.com.