Cryptocurrency exchange Binance has released a new report detailing several inefficiencies around airdrops and possible lessons to apply moving forward.
According to the exchange, the affected airdrops fall into two categories. The first type is retroactive, where projects typically surprise existing users with rewards.
The second group is the engagement airdrops, which are pre-announced events designed to attract new users and fit emerging projects. Depending on the project stage, both airdrops focus on different goals.
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Regarding the lessons from existing inefficiencies, the exchange’s Where Are Our Airdrops Going? highlighted some challenges affecting this type of token distribution, such as planning inefficiencies, insider allocation concerns, and technical issues.
Reduced allocations
The first problem cited in the Binance Research March 2025 report was last-minute allocation reduction, of which the Redstone airdrop is an ideal example. Before the official distribution, the team lowered the initial community allocation from 9.5% to 5%.
Consequently, there was a massive backlash from community members, with concerns about the unfair treatment of users. The report cautioned that such abrupt changes signal poor planning, which erodes community trust.
As a lesson, Binance recommended locking in token allocations before the Token Generation Event (TGE), avoiding unilateral decisions, and engaging key stakeholders, like investors and community members, to promote transparency in communication.
Opaque eligibility
According to Binance, opaque eligibility criteria, which can lead to allegations of favoritism and unmet expectations, have also been a central area of focus when examining airdrop challenges. For this pitfall, Binance pointed to Scroll’s October 2024 airdrop of 70 million SCR tokens (7% of its supply).
While the airdrop intended to reward mainnet activity like transaction volume and dApp engagement, the October 19, 2024, snapshot left users puzzled due to undisclosed rules and inconsistent reward distribution.
To address this, the report suggested that projects outline participation rules leveraging tools like on-chain monitoring or proof-of-humanity to deter Sybil farming, where individuals create multiple fake accounts to exploit token distributions.
Insider and influencer-heavy distributions
Another lingering pain point with airdrops is insider- and influencer-heavy distributions, where projects prioritize their teams, investors, and VCs over the community.
The most recent project to face such backlash was KAITO’s February 2025 airdrop. Interestingly, the platform allocated 43.3% to its team and investors, with only 10% to the community, alongside large influencer payouts. In this case, influencers reportedly dumped their tokens, leading to scrutiny over KAITO’s insider focus.
While acknowledging the need to fund development, Binance noted that excessive allocations to insiders can destabilize token prices and alienate supporters. The report called for vesting periods and lock-ups to curb immediate sell-offs, aligning all parties with the project’s long-term vision.
Technical barriers
Finally, technical issues remain among the key challenges in airdrops, especially when they affect the claim process. Magic Eden’s December 2024 airdrop witnessed such problems.
The airdrop was meant to promote Magic Eden’s mobile wallet adoption, but instead, it left users frustrated with glitches and confusing instructions, leading to widespread frustration.
Binance emphasized the need for a smooth, intuitive claim process to avoid such headwinds. The exchange warned that unchecked technical problems could reduce payouts and discourage user engagement.
Looking ahead, the report recommended increasing transparency, involving the community more, and improving monitoring to refine airdrop strategies in the future.
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