Airdrops are becoming more and more popular. It's free money. Airdrops are a terrible community-building mechanism because they fail to retain people. The community must emerge gradually and organically. Technology, principles, utilities, and the good feeling of being part of a community must be the foundation of community growth. There is a difference between the Cardano community that arose organically and projects that are only behind marketing and airdrops.
People Receive The Airdrop And Move On
Projects usually offer an airdrop, i.e. free tokens, for some project-related activity. For example, a DEX can offer tokens for the liquidity provided or the execution of a swap. An airdrop can be perceived as a bribe. The project will gain users and liquidity, at least in the short term.
It is difficult for projects to attract people's attention in a highly competitive environment. Projects are fighting each other for users and liquidity. That's why they are willing to offer rewards for early adopters. Understandably, teams use airdrops. Airdrops are part of marketing.
The problem with airdrops is that they can't sustain a community long-term. In an environment where airdrops become the norm, it is convenient for people to move from project to project. As people leave, liquidity usually decreases as well.
Airdrop can only serve to attract attention temporarily. That is all. Nothing else can be expected from it.
Some projects offer some form of staking by which they want to keep users, i.e. their tokens. However, even this is not sustainable in the long term. Staking can gradually bleed the reserve if infinite inflation is not in place. The combination of airdrop and staking usually does not work in the long term.
If the team gets fees for using the app in the form of native tokens and people only get airdrop tokens through staking, it's a foul game. The team is greedy and does not want to share the profit of the application. Native coins are usually more valuable than airdrop tokens.
Staking rewards are usually less profitable than selling tokens and going elsewhere providing liquidity to get another airdrop.
If the airdrop is an invitation to governance, that can be a problem.
Airdrops tend to put downward pressure on the market value of tokens. If an entity is interested in governance and buys tokens, it can have a significant position in project decision-making. But it depends on how many tokens are used for the airdrop. If it's only say 10% and the team (and VC funds) keeps the majority, the airdrop is almost meaningless from a governance point of view.
I believe it is not possible to build a loyal user base or community based on airdrops. The project must offer something more than just an initial bribe. There must be a vision behind it, top technology, a strong competitive advantage, and a strong team or partnership.
The Cardano Community Is Growing Organically
The Cardano community has been growing since 2017 when it was possible to buy ADA coins on the exchange for the first time. Many people noted the strong team, Charles Hoskinson, and the long-term vision that the project offered. People from the IT business knew that a scientific approach, formal methods, and peer review had their justification for building a global financial and social operating system. They became interested in Cardano sooner or later. Some left, but most stayed.
Anyone interested in Cardano in detail knows what it was like in 2017 and sees a significant difference today. The IOG team delivered a substantial part of what was in the roadmap. Superior staking and a unique SC platform built on top of the UTxO model.
Fulfilled expectations are the things that sustain a community and lead to its organic growth.
A healthy and loyal community must be based on trust in the technology being built, decentralization, which is the meaning of the entire industry, and principles.
Cardano's utility grows every year. In DeFi, we see teams competing to deliver ever better and more decentralized applications.
Cardano was in the top 10 in the bull market in 2021 and it is likely to remain there in the next bull market in 2025. It can be stated that Cardano is not just a one-season project that people suddenly lose interest in due to marketing or airdrop.
Of course, it is not possible to compare L1 with DeFi applications. If I'm not mistaken, there was never an airdrop for any L1 project. However, this may change. I will discuss it in more detail at the end.
Marketing, paid media and influencers, various reports from analytical teams (that intentionally omit Cardano) and so on is a form of bribery. It's not an airdrop, but the team is paying someone to bring attention to the project.
VC funds can pump TVL. Some influencers even advocate using bots to artificially increase TPS.
Cardano doesn't need this. Transparency, fairness, and decentralization are principles that in the long run will defeat fraud, unfair initial coin distribution, and projects that sacrificed decentralization for TPS.
Cardano staking is not a bribe for loyalty. The protocol rewards stakers for participating in the decentralization of the network. The long-term sustainability of staking is based on the utility of the protocol. The number of users is still gradually increasing, so there is a real chance that there will be enough ADA for rewards. No protocol, including Bitcoin, is guaranteed long-term sustainability.
The Midnight team is planning an airdrop of DUST tokens. Details are not yet known. We only know that ADA holders will receive it. This variant of the airdrop is interesting in that it will be received by the Cardano community. This way, Midnight can get a relatively solid decentralization right from the start. You can say it's an L1 airdrop to some extent. I know, I said I didn't know about the L1 airdrop. However, airdrops close to this form take place in some ecosystems.
The same will apply to Midnight as it does to DeFi applications. In the long run, Midnight will only be successful if it is useful and gains a strong user base. Staking DUST tokens by itself does not generate user activity, i.e. not income (fees) for the project.
The DUST airdrop can be seen as a form of reward for ADA holders. Can it also be seen as a bribe? To a certain extent, yes. The difference I see is that Midnight will be a separate blockchain (partner chain) tied to the Cardano ecosystem. DUSTs are L1 coins used for decentralization (at least I hope), so it's a bit different than staking of airdrop tokens on DeFi applications.