Airdrops Need to Be More Secure—Here’s How We Can Do It

As Ethereum co-founder Vitalik Buterin wrote this week, blockchain-based identity frameworks can secure airdrops without compromising user’s privacy.

Crypto airdrops were once seen as a novelty to engage the community and generate visibility and user loyalty for a project by distributing tokens. These distributions have since increased massively, including user claims of $630 million worth of tokens from a recent zkSync airdrop. However, airdrops have also fallen victim to manipulation, exploitation, and fraud. 

Sybil attacks are a security breach that occurs when a single entity operates multiple fake identities to undermine authority in a peer-to-peer network. These attacks have forced projects deploying airdrops to be stricter and more stringent on the distributions, at the expense of real users. As Ethereum co-founder Vitalik Buterin recently commented, blockchain-based identity frameworks can secure airdrops without compromising user privacy. 

Tokenized identity is a subset of digital identity that replaces aspects of a person’s identity with a private, non-transferable token that does not contain any sensitive information. In the context of airdrops, these tokenized identities can be used to filter out malicious users while protecting real users and meeting the goals of airdrops. Further, tokenized identity offers privacy and security — all without the computational overhead of a zero-knowledge proof approach.

The Double-Edged Sword of Anonymity in Crypto

Anonymity is central to the ethos of blockchain technology. It ensures privacy, data protection, and the freedom to participate in a decentralized financial system without revealing sensitive information publicly. However, anonymity presents significant challenges when it comes to airdrops. While the promise of privacy allows users to engage freely, it also opens the door for exploits, including Sybil attacks, airdrop farming, and fraud, which undermine token distribution integrity and network security.

To address this, many projects have resorted to implementing Know Your Customer (KYC) procedures to ensure airdrop legitimacy. However, many KYC procedures rely on older Web2 methodologies that detract from the efficiency of blockchain, even as newer blockchain-based solutions exist. Additionally, these solutions require more identity information than is necessarily required by the transaction, which could be as simple as a Proof of Personhood and a governance token proving community membership, rather than a full government-issued ID card.

Read more: Airdrops Just Aren’t Working Anymore

While anonymity continues to be important, the growing need for airdrop safety calls for a solution that balances privacy and security. Tokenized identity offers a way forward, giving projects blockchain-based tools to verify users without compromising their personal privacy.

Why Airdrops Remain Vulnerable

Despite experimentation with KYC, white lists, point systems and Sybil self-reporting, airdrops are still vulnerable because many projects have yet to implement truly effective safeguards. 

That’s because projects often prioritize reducing user friction over everything else. This means they focus on immediate distribution over long-term stability, and short-term visibility over sustainable growth or security. Token farming, rather than ensuring distribution to the right users, has become a byproduct of this approach, driven by the desire for quick adoption and numbers.

However, as Vitalik suggested, blockchain-based identity and credential frameworks offer promising solutions. By further advancing and testing these frameworks, we can significantly improve the security of airdrops and ensure that tokens are distributed to actual community members.  

A Path to Fairer Airdrops

Tokenized identity is a non-transferable token in a user’s wallet that represents a verified aspect of their identity. This enables seamless, interoperable identity verification across platforms and applications. A protocol offering an airdrop could use tokenized identity to allow users to securely prove that they are unique humans and community members, or even hold a verified government-issued ID card, before confirming eligibility for an airdrop.

Tokenized identity works within the crypto ecosystem to verify users’ legitimacy without directly revealing their identity. This system offers multiple benefits, including the preservation of pseudonymous identities, which align with the core values of decentralization and privacy. It also introduces more accountability without compromising security, offering privacy-preserving verification methods that ensure the integrity of the airdrop. The more identity attributes you can verify for any given wallet without compromising privacy, the better you can manage an airdrop and ensure fair distribution.

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To further protect their assets, projects can also implement set expiration dates on verified credentials. For example, they can require the wallet owner to retake a video selfie when claiming airdrop tokens, proving that they are the same user who initially qualified for the airdrop.

A Better UX

As the digital asset ecosystem continues to evolve, the importance of maintaining anonymity while addressing security challenges has become increasingly clear. Airdrops, however, remain vulnerable to manipulation. To protect them, we need to build practical solutions that protect users from bad actors trying to take over the drop. Tokenized identity systems offer a clear path forward, allowing us to protect privacy while ensuring fairness and security in airdrop distribution. 

Read more: Is It Fair That Crypto Bankruptcies Are Denominated in Dollars? Here’s a Solution to Dollarization

This isn’t just about protecting the tech-savvy few —it’s about creating a system that is easy to use and works for everyone, not just Web3 experts. By integrating tokenized identity into airdrop mechanisms, we can restore trust in the process and create a more equitable and secure ecosystem for all participants. The potential for wider adoption of Web3 technologies depends on implementing these solutions effectively

Titus Capilnean is Vice President of Go-to-Market at Civic, a leading provider of identity and access management solutions, including Civic Pass. Titus has also coordinated the writing for two books on artificial intelligence, co-authored a paper on AI with the World Economic Forum, and written a paper on decentralized identity.