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The Rise and Challenges of Ethereum Layer-2s: Airdrops and Beyond
The L2 Boom of 2023 and Beyond
The year 2023 signaled the meteoric rise of Ethereum’s Layer-2 (L2) solutions and rollups, solidifying their significance by exceeding $60 billion in total value locked (TVL). In 2024, this momentum persisted with a wave of governance token releases via airdrops, including prominent L2s like Starknet, ZKsync, Scroll, Blast, and others. While these airdrops served to reward early adopters and incentivize user engagement, they also sparked debates, frustration, and a growing realization of challenges that come with an over-reliance on these strategies.
Airdrop Frenzy of 2024: Success or Chaos?
In 2024, Ethereum’s Layer-2 ecosystems continued the trend of leveraging airdrops to reward users and attract activity. However, the outcomes were mixed, with some rollups facing significant backlash within their communities.
Starknet’s Bold Move: 700 Million STRK Tokens
At the start of 2024, Starknet aimed big by distributing a colossal 700 million STRK tokens to its early supporters. While the plan initially sparked excitement, it soon faltered. Many early adopters criticized the rewards as insufficient, and the criteria for determining eligible participants fueled further discontent. The fallout highlighted the delicate balance between meeting community expectations and ensuring fair reward systems.
Mode Network and Blast: Different Approaches, Similar Outcomes
Mode Network and Blast opted for point-based campaigns to measure user activity before their respective airdrops. This method, intended to reward users proportional to their engagement, had its drawbacks. Mode’s 500 million MODE token airdrop on May 7 attracted criticism for favoring influencers and large wallets, leaving smaller users disgruntled. Similarly, Blast distributed 17 billion tokens in June, but the reception mirrored Mode’s–largely disappointing for the broader community.
ZKsync Era: Great Expectations, Greater Disappointments
ZKsync’s airdrop was one of the most anticipated events, with 3.6 billion tokens distributed to nearly 700,000 wallets. Despite the buzz, the aftermath proved underwhelming. Within weeks, ZKsync’s TVL plummeted, trading volumes dropped sharply, and users abandoned the platform en masse. The event became a cautionary tale, with widespread acknowledgment that airdrops alone are insufficient to sustain long-term user engagement.
The Harsh Reality of Airdrop Culture
While airdrops initially felt like a "gold rush" for early adopters, 2024 marked a shift in perception. They are no longer guaranteed to foster lasting adoption. Data from industry analysts confirms that most airdrop-driven L2 networks suffered sharp declines in TVL and activity shortly after token distributions.
The "Airdrop Farmers" Dilemma
Airdrops often unintentionally attract opportunistic "airdrop farmers" who quickly abandon the platform post-reward for the next lucrative opportunity, leaving a void in user engagement. This rapid migration undermines the intended purpose of airdrops—to build a loyal, active user community.
Poor Planning and Mismanagement
Some projects further damaged their reputation by mismanaging airdrop announcements and eligibility criteria. Vague promises, lack of transparency, and arbitrary selections created more frustration than excitement, ultimately alienating their core audience.
Institutional Selling Pressure
Many projects allocated significant portions of their tokens to venture capitalists and institutional investors. While this ensured funding, it also added selling pressure as these investors sought quick returns once token unlocks began. Starknet, for instance, faced backlash over its investor token unlock schedule, forcing the foundation to revise its approach, albeit with limited success in stabilizing prices.
Token Prices Post-Airdrop: A Downward Spiral
A common trend across L2 projects post-airdrop was a sharp decline in token prices. Even when crypto markets experienced broader gains, many L2 tokens struggled to reach previous highs or hold their value consistently. The root causes lie in poor distribution strategies, short-term farming by users, and heavy sell-offs by institutional players.
The Future of Layer-2s: Adapt or Decline?
The growing airdrop fatigue among both projects and users raises critical questions about the future of Layer-2 solutions. While airdrops may have once created instant hype, they are now proving an unreliable strategy for fostering sustainable adoption. Success in the L2 space will likely depend on innovative solutions, transparency, and models that prioritize long-term engagement over short-term rewards.
Some industry players are reconsidering their approach by offering 100% community-driven token allocation models. For instance, recent experiments by certain projects have shown promise in aligning incentives with genuine user participation.
As the Ethereum Layer-2 space evolves, the crypto community will expect fresh ideas that go beyond legacy airdrop mechanisms. Whether this transition will stop the "curse of L2s" remains to be seen.
Final Thoughts
The story of L2 rollups is still unfolding. While airdrops have helped these networks gain visibility, their true potential lies in their ability to create meaningful and sustainable user ecosystems. Without addressing the underlying flaws in reward systems, many L2 projects risk becoming short-lived experiments rather than game-changing innovations.