What Are Retrodrops?
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What Are Retrodrops?

Basics

In the fast-paced world of cryptocurrencies, retroactive airdrops have become a valuable tool for encouraging early participation and promoting community engagement in blockchain projects. This article examines the concept of retroactive airdrops, discussing their importance, the requirements for receiving them, and the tactics used by participants in this changing environment.

What Are Retroactive Airdrops?

Retroactive airdrops, often referred to as "retrodrops," are distributed in a project's native tokens. They serve as a reward for early engagement with a crypto application, such as testing or other activities related to the project's development.

A notable retroactive airdrop occurred in September 2020, when the decentralized exchange (DEX) Uniswap awarded 400 UNI tokens(about 4500 USD as of today)to each blockchain address that had previously interacted with its smart contracts.

Tokens from popular Layer 2 solutions, Optimism and Arbitrum, have also been distributed as retroactive rewards, acknowledging past contributions deemed valuable by the projects.

Criteria for Earning Retrodrops

Retrodrops are typically awarded based on user actions that incur financial costs within a specific timeframe, known as multipliers. Here are the most common multipliers:

  • Deposits in Networks or Applications: Assets in circulation benefit the entire ecosystem, including staking, farming, lending, and liquidity pools.
  • Network IDs and Domains: Personalizing addresses through domain registration or obtaining special IDs.
  • DAO Voting: Crucial activity where users retain tokens to vote on ecosystem innovations or propose new ideas.
  • Creating and Launching Smart Contracts: Encouraging developers through experimentation and new developments.
  • Creating Multisig Addresses: Typically undertaken by professional teams, funds, and investor groups, these participants are valuable to the ecosystem.
  • Transaction Volume in USD: Higher dollar transaction volumes improve network metrics and statistics.
  • Number of Transactions: Increased transaction counts generate more fees, benefiting validators and projects.
  • Network or Application Usage Time: Longer and more frequent user engagement enhances project value.
  • Interaction With Multiple Applications: Projects value explorers and engaged users, such as Optimism rewarding interactions outside its network.
  • Donations: Early-stage donations are rewarded as they support project development instead of venture rounds.

Exploring Drop Hunters and Multiaccounting

Drop hunters, also known as airdrop hunters, are individuals who anticipate which projects will reward their active community in the future through the distribution of native tokens. In the context of retrodrops, these participants aim to predict potential multipliers for retroactive airdrops by actively using specific applications within ecosystems like Base, Linea, zkSync, and Starknet.

To maximize profit, users resort to creating numerous blockchain addresses, known as sybil accounts, a practice referred to as multiaccounting. This involves managing a network of seemingly unrelated addresses, which may qualify for future airdrops. In 2023, an unidentified individual created 21,877 addresses in the zkSync Layer 2 Ethereum network.

Projects distributing airdrops view multiaccounting as harmful. In efforts to combat sybil accounts, projects analyze network activity and deny rewards to such users. For instance, Optimism developers excluded approximately 17,000 ETH addresses from the OP token retrodrop list.

Strategies Employed by Airdrop Hunters

Major retrodrops from platforms like Uniswap, Optimism, and Arbitrum have elevated airdrop hunting into a specialized field within the crypto market, geared toward profit generation. Similar to trading and investments, there are various strategies within retrohunting:

  1. Utilization of Specialized Software: Referred to as airdrop farming in the Binance report, this involves automated actions in blockchain networks and decentralized applications to increase airdrop chances. Such software ranges from installed applications to Web2-based resources and even Telegram bots. This approach enables the creation of numerous addresses potentially eligible for retrodrops, such as two market participants consolidating ARB tokens worth $3.3 million from 1,496 wallets.
  2. Manual Airdrop Farming Strategy: Limited by human resources, this approach involves manually creating addresses, which is time-consuming but relatively safe due to the difficulty in detecting such accounts.
  3. Combined Approach: This method diversifies risks by combining manual and automated strategies. Hunters concurrently employ both manual and automatic actions across their accounts, potentially reducing risks while maximizing returns through account quantity and time efficiency.

Conclusion

Retroactive airdrops are a vital incentive in the cryptocurrency world, encouraging early participation and community engagement in blockchain projects. As retrodrops evolve, they continue to shape the crypto landscape, fostering innovation and collaboration.

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