Airdrop threadooors want to convince you that you can make $1M/year farming airdrops. It's true that some people make 6 figures per year farming airdrop. But here is the truth nobody is telling you:

All airdrops follow a Paretto like distribution: Few wallets get most of the airdropped tokens and the vast majority of wallets get very little. An illustration below with two recent airdrops: Entangle and Ether-fi

So is it worth farming airdrops if you belong to the 'Retail' Tier? On-chain data from past 30 airdrops shows that on average (median of the median), an eligible wallet receives $777 per airdrop.

Now let's define a framework for airdrop farming with a trading mindset so we can evaluate if it's worth the effort or not. We define 10 parameters and score each from 1 (worst) to 5 (best).

1/ Risk-to-Reward (RR)

Airdrops clearly represent one of the best RR setups in crypto.There are many instances where you could spend less than $10 and make $10k.It's difficult to find any better RR in the industry.Score: 5/5

2/ Win rate

There are 2 aspects:

1/ How many of the projects you farmed actually did an airdrop?2/ On how many of the project that airdropped were you eligible?

Airdrop farming is an established niche in crypto and it's possible to become better at it with more experience.

It's not difficult to guess chains like Optimism, Arbitrum, zkSync & Blast would do airdrops.Sometimes, the information is even known in advance.Score: 4/5

So far, considering these two parameters, it seems airdrop farming is a money printing machine.But this is where it gets more nuanced:

3/ Upside potential

Unlike in trading where you have, in theory, unlimited upside potential, there is a cap on how much you could make on each airdrop. We mentioned the ~$800 per airdrop on average. Even if you are extremely good at it, you can't make $100k on each airdrop. This is an important consideration. As you become more skilled, your upside potential doesn't increase proportionally.Score: 2/5

4/ Duration

It's well known that airdrops take time. It's usually a multi-month process between the time you do the first transactions until you get the airdrop (unless you are Justin Sun). It could even take more than a year. There is clearly a high opportunity cost here.Score: 1/5

5/ Number of opportunities

There aren't an unlimited number of airdrop opportunities. Often, you have to regularly spend some time on each of them or lock your funds. So even when there are many opportunities, you have to choose which ones you want to farm.Score: 2/5

6/ "Airdrop impermanent loss"

What if the protocol requires you to lock some tokens for a while and during that period holding (BTC/ETH/SOL) vastly outperforms that token + the airdrops you'll get. Also, when you are farming airdrops, you are interacting with a large number of smart contracts that might not be audited or are far riskier than using Uniswap or Maker smart contracts. Ignoring the large number of phishing scam links on airdrops.Score: 3/5

7/ Competition

The airdrop supply is fixed but you are getting more and more competition:

1/ Increasing number of retail seeking airdrop opportunities2/ Sybils3/ Whales and insiders using information you don't have4/ Influencers benefiting from referrals etc.Score: 3/5

8/ Market adaptation

Protocols want to exclude sybils. The eligibility criteria are becoming more and more demanding with time. Compare the Uniswap airdrop with the Starknet airdrop below. Shows the evolution of the airdrop landscape in less than 4 years.Score: 3/5

9/ Capital to deploy

Airdrops are great because many opportunities require little capital. Although increasingly, some airdrops require capital (think EigenLayer + LRTs, DEXs) to get the most out of them.Score: 5/5

10/ Skillset compounding

Can you get better at airdrops with time? Will airdrops still be a thing in 5, 10 years? I think the answer to both questions is yes. But as previously mentioned, you need to constantly adapt.Score: 3/5

🔸 So is it worth it?

Based on the system we defined, and our subjective score on 10 different parameters, the final score is 31/50 = 0.62

To consider if it's worth it for you or not, you should evaluate other opportunities in crypto (trading, yield farming, NFTs, etc.) and evaluate them similarly to find what works best for you.

Let's conclude with some (subjective) numbers:

Year 1: You successfully land one airdrop per month. $1k on each: $12kYear 2: You get better at it, bull market is here, you land $2k on 15 airdrops: $30kYear 3: Bear market hits. No airdrops = $0Year 4: Consolidation year. 5 airdrops, $2k each: $10k

That's $52k in 4 years. Or $13k/year on average. If these numbers are compelling to you and you are not good at trading, then you should certainly consider airdrop farming.

If you want to get better at farming airdrops, you need to study past airdrops. My 'History of airdrops' Dune dashboard will help you.

https://t.co/hJiThcxIlw