A deep dive into the resurging trend of crypto airdrops, including ENS, SOS, LOOKS and GAS

Cryptocurrency airdrops have experienced a remarkable resurgence as a token distribution method, particularly gaining momentum in late 2021 and early 2022. This revival was prominently initiated by Ethereum Name Service (ENS), a well-established decentralized domain issuer on the Ethereum network. Following ENS's successful airdrop, numerous projects quickly adopted this distribution strategy, though with varying degrees of legitimacy and value proposition. This comprehensive analysis examines the crypto airdrop phenomenon, with particular focus on the LooksRare airdrop and similar distribution mechanisms, distinguishing between sustainable projects and those that fail after initial excitement fades.

Why airdrop?

A cryptocurrency airdrop represents a distribution event where digital tokens or coins are given freely to eligible participants who meet specific criteria established by the issuing project. This distribution method serves multiple strategic purposes for blockchain projects.

The concept originated with Auroracoin in 2014, which aimed to circumvent Iceland's restrictive capital controls following the 2008 financial crisis. The project distributed 31.8 AUR to Icelandic citizens registered in the national database, exemplifying how airdrops can democratize access to digital currencies. As developer Baldur Friggjar Odinsson explained, the goal was to introduce the nation to cryptocurrencies that operate beyond governmental control while bootstrapping network effects.

Modern airdrops have evolved to reward existing protocol users retroactively. Uniswap's September 2020 distribution of 400 UNI tokens to all Ethereum addresses that had used the protocol before September 1 marked a significant milestone. According to Uniswap Labs, this approach places tokens in the hands of actual users and active community members, establishing robust governance structures driven by engaged participants who are best suited to guide protocol development.

Ethereum Name Service followed this model in November 2021, distributing ENS tokens to users who had registered domains before October 31, 2021. The allocation amount varied based on contract length and other factors. ENS Director of Operations Brantly Millegan stated that the airdrop represented the most effective method to distribute governance power across the existing ENS community while decentralizing key protocol parameters.

Airdrops to attract users

Beyond empowering existing users with governance rights, airdrops have emerged as powerful tools for attracting users from competing platforms. The LooksRare airdrop, launched in January 2022, exemplifies this strategy by attempting to lure users from the dominant NFT marketplace through its LOOKS token distribution.

During a period when NFTs achieved mainstream recognition and major NFT marketplaces generated substantial trading volume, platform users increasingly demanded tokens to participate in governance or share profits. When established platforms failed to respond, alternative marketplaces emerged. The LooksRare airdrop targeted users from competing platforms who had at least 3 ETH in combined trading volume over the previous six months, demonstrating a clear strategy to capture high-volume traders.

The LOOKS token offered through the LooksRare airdrop provides holders the ability to stake and earn platform trading fees plus new token issuance, creating tangible utility beyond governance rights. This dual-benefit approach addresses user frustrations while potentially establishing a sustainable value proposition for the LOOKS token. The LooksRare airdrop strategy has become a notable case study in how projects utilize token distribution to build user bases and compete with established marketplaces.

Airdrops and hype — the underdeveloped, the cash grabs and the scams

As successful concepts generate community enthusiasm in crypto, opportunists inevitably emerge to exploit the hype. Airdrops following the LooksRare airdrop and similar distributions have ranged from potentially underdeveloped projects to outright scams and blatant cash grabs.

OpenDAO represents the potentially ill-formed category. Announced during the holiday season to NFT marketplace users, the project initially lacked clear purpose, prompting many recipients to immediately sell their SOS tokens as "free money." While lead developer 9x9x9 has since revealed plans for an NFT marketplace with novel features like collection short-selling, the initial ambiguity damaged credibility. The developer emphasized their belief in distributing tokens to space contributors without keeping allocations for original contributors, distinguishing their effort from more malicious schemes.

Gas DAO, launched in late December and distributed to wallets that spent significant amounts in Ethereum gas fees, appears to fall into the cash grab category. Despite claiming to be the "heartbeat and voice" of Ethereum's active users, the project launched with minimal direction. Critics noted that a substantial percentage of the total supply allocated to core contributors seemed unwarranted for what appeared to be minimal effort, potentially enabling significant immediate dumps on investors.

The most egregious example is EtherWrapped's YEAR token, an outright scam that disappeared after launch. Web3 security researchers documented how the token's smart contract contained malicious code disguised as innocent functionality, preventing claimants from selling while creating the illusion of strong investment potential. After a brief period, the creator withdrew liquidity and absconded with funds, demonstrating how bad actors hide exploits in plain sight within code that appears to contain novice mistakes.

Some airdrops thrive, others die

Cryptocurrency airdrops have been industry staples for years, with varying degrees of long-term success. While nearly all airdrops precede periods of enthusiasm or mania, lasting value depends fundamentally on the associated project's utility and established market fit.

Retroactive token airdrops to users of established protocols with clear utility tend to retain value. Uniswap's UNI token has demonstrated resilience based on the platform's established position as a leading decentralized exchange. Despite market fluctuations, holders continue recognizing value in governance tokens associated with protocols that have proven utility and sustained trading volume, whether for voting rights or speculative purposes.

The LooksRare airdrop demonstrates similar promise through tangible utility. LOOKS staking enables holders to share platform trading fees and new token issuance. While generous rewards initially encouraged wash trading—a common bootstrap strategy where early high volumes attract participants—this represented part of the long-term strategy. Early wash trading increases staker yields, attracting more participants and incentivizing them to trade on the platform instead of competitors. As rewards adjust over time, wash trading incentives diminish while organic volume should increase. The LooksRare airdrop model showcases how token distribution combined with revenue-sharing mechanisms can create sustainable incentive structures.

Conversely, tokens lacking utility or clear purpose struggle to maintain value. Adventure Gold (AGLD), distributed to Loot NFT holders during the Loot ecosystem hype period, exemplifies this pattern. After multiple governance adoption proposals failed to reach quorum, AGLD's price experienced sustained decline, demonstrating how lack of utility leads to diminished value over time.

Ethereum Name Service's Brantly Millegan emphasized this distinction, noting that ENS has operated as a working protocol with real governance needs, unlike projects that merely promise future development or provide exit liquidity for early investors. Projects with established market fit like Uniswap, ENS, and those following the LooksRare airdrop model with clear utility attract buyers more successfully than those riding hype alone.

Conclusion

The cryptocurrency airdrop phenomenon reflects a recurring pattern in the industry: viable, innovative concepts generate speculative interest before attracting low-effort copycats capitalizing on fear of missing out. This pattern has appeared during various crypto trends, from ICO booms to NFT avatar crazes and protocol fork proliferations. The more successful a concept proves in crypto, the faster opportunists emerge to exploit enthusiasm.

Successful airdrops share common characteristics: established protocols with proven utility, clear governance needs, active user communities, and tangible value propositions beyond speculative trading. The LooksRare airdrop, along with distributions from Uniswap and Ethereum Name Service, demonstrates how retroactive token distribution to genuine users can create sustainable value and robust governance structures. The LooksRare airdrop specifically illustrates how strategic token distribution combined with fee-sharing mechanisms can compete with established platforms while building engaged communities.

Projects launching without clear purpose, those serving primarily as cash grabs for developers, or outright scams inevitably fail after initial hype subsides. The declining quality of many airdrops launched after successful distributions like the LooksRare airdrop reflects broader crypto market dynamics where innovation spawns imitation, legitimate projects face competition from opportunistic schemes, and investors must carefully distinguish between sustainable value propositions and temporary hype.

As the airdrop mechanism continues evolving, the fundamental principle remains: tokens backed by established protocols with real utility and engaged communities will thrive, while those lacking substance will fade into obscurity. The LooksRare airdrop and similar well-designed distributions provide valuable blueprints for how projects can leverage token distribution to build sustainable ecosystems and compete effectively in competitive markets.

FAQ

How can I claim my airdrop?

Connect your wallet to the project's smart contract, follow official instructions, and sign the transaction to claim your airdrop. Ensure wallet security.

Does airdrop really pay?

Yes, airdrops can pay, but significant returns are rare. Most participants earn minimal amounts. Focus on quality opportunities.

What is LooksRare crypto?

LooksRare is a decentralized NFT marketplace that rewards traders, creators, and collectors. It operates on blockchain technology, using the LOOKS token to incentivize participation.

Are NFT airdrops worth anything?

Yes, NFT airdrops can be valuable. Their worth varies based on project success and market demand. Some airdrops have become highly valuable over time, offering significant returns for recipients.