Airdrop farmers drove a spike in total value locked ahead of Scroll’s snapshot and token airdrop, but the gains didn’t last.
Posted October 21, 2024 at 2:17 pm EST.
In a clear sign of the growing trend of airdrop farming in the crypto industry, Ethereum Layer 2 network Scroll saw its total value locked (TVL) surge in the days leading up to its snapshot, only for the gains to rapidly dissipate afterward.
Following Scroll’s announcement on Oct. 9 that a snapshot would be taken for its upcoming airdrop on Oct. 19, the protocol’s TVL skyrocketed from approximately 496,000 ETH to 572,000 ETH within just three days, according to data platform growthepie. The spike was driven by airdrop farmers rushing to maximize their participation in hopes of qualifying for the distribution.
Learn more: What Is a Crypto Airdrop? A Beginner’s Guide
However, this boost was short-lived. Since Saturday Oct. 19, when the snapshot was taken, TVL has already dropped back down almost 15% to 506,000 ETH—erasing most of the gains from the farming frenzy.
The reason the Scroll team might have decided to pursue the path of announcing a future-dated snapshot was likely to drive new users to their platform. Airdrops are always enticing, and by announcing a snapshot, Scroll likely aimed to create buzz and attract liquidity. However, the reality is that they mostly attract airdrop farmers, as shown by the numbers. In this case, Scroll’s farmers will most likely receive an allocation of $SCR tokens when it goes live tomorrow, despite their having provided liquidity for less than 10 days.
This is problematic because it dilutes the rewards for loyal users who have supported the network for much longer. Instead of benefiting the community that has been actively involved, a significant portion of the airdrop will likely end up in the hands of short-term participants who contributed little beyond the snapshot period.
This pattern is a familiar one in the world of crypto, where so-called “mercenary airdrop farmers” flock to projects to maximize their rewards, but quickly withdraw their assets once their eligibility is secured. The spike and subsequent drawdown in TVL around airdrop events have become a hallmark of the industry, as seen in previous cases with projects such as Mode, Manta, and ZKSync. However, these surges in TVL are often misleading indicators of long-term user engagement.
Read more: Airdrops Just Aren’t Working Anymore
As seen with Scroll, such activity inflates TVL metrics temporarily but leaves projects grappling with volatility and a potential loss of trust when these farmers inevitably exit. Despite efforts by projects to create more sustainable reward systems, airdrop farming remains a pervasive tactic in the crypto space, especially among protocols using token incentives to build communities.
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