Binance Report Highlights Airdrop Inefficiencies, Calls for Transparency

Binance, a prominent cryptocurrency exchange, has published a comprehensive report that delves into the inefficiencies associated with airdrops and offers valuable lessons for future implementations. The report categorizes airdrops into two main types: retroactive airdrops, which surprise existing users with rewards, and engagement airdrops, which are pre-announced events aimed at attracting new users and supporting emerging projects. Each type of airdrop serves different objectives depending on the project's stage of development.

The report, titled "Where Are Our Airdrops Going?", identifies several challenges that affect the distribution of tokens through airdrops. These challenges include planning inefficiencies, concerns over insider allocations, and technical issues. One of the primary problems highlighted is the last-minute reduction of token allocations, as seen in the Redstone airdrop. The team behind Redstone reduced the community portion from 9.5% to 5% just before the official distribution, leading to significant backlash from community members who felt unfairly treated. This abrupt change was seen as a sign of poor planning, which erodes community trust. Binance recommends locking in token allocations before the Token Generation Event (TGE) and involving key stakeholders, such as investors and community members, to ensure transparency and fairness.

Another issue identified is the lack of clear eligibility criteria, which can lead to allegations of favoritism and unmet expectations. The Scroll airdrop in October 2024, which distributed 70 million SCR tokens, is a prime example. The airdrop aimed to reward mainnet activity, but users were left confused due to undisclosed rules and inconsistent reward distribution. To address this, Binance suggests that projects outline participation rules using tools like on-chain monitoring or proof-of-humanity to prevent Sybil farming, where individuals create multiple fake accounts to exploit token distributions.

Insider- and influencer-heavy distributions are another pain point with airdrops. Projects often prioritize their teams, investors, and VCs over the community, as seen in KAITO’s February 2025 airdrop. KAITO allocated 43.3% of its tokens to its team and investors, with only 10% going to the community, and large payouts to influencers. This led to influencers dumping their tokens, raising questions about KAITO’s focus on insiders. Binance notes that excessive allocations to insiders can destabilize token prices and alienate supporters. The report recommends implementing vesting periods and lock-ups to curb immediate sell-offs and align all parties with the project’s long-term vision.

Technical barriers in the claim process, such as those experienced in Magic Eden’s December 2024 airdrop, also undermine user onboarding. The airdrop aimed to promote Magic Eden’s mobile wallet but was plagued by glitches and unclear instructions, leading to widespread frustration. Binance emphasizes the importance of a smooth, intuitive claim process, warning that technical issues can reduce payouts and deter users from further engagement with the project.

Looking ahead, the report recommends increasing transparency, involving the community more, and improving monitoring to refine airdrop strategies. By addressing these inefficiencies, Binance aims to enhance the effectiveness of airdrops and build stronger, more trusting relationships with the community.