Compilation of the original text: The Way of DeFi

Original source: Bankless

Compilation of the original text: The Way of DeFi

In order to fight inflation, the Federal Reserve chose to raise interest rates, which caused the stock and crypto markets to plummet. The S&P and Nasdaq both erased more than a year of gains, falling 17% and 27%, respectively.

Both BTC and ETH were also sent to Goblin Town.

The crypto market lost 12% of its value in the past 24 hours and 20% in the past 7 days.

Of course, the rapid loss of $250 billion in market cap has knock-on effects for the rest of the crypto market. Crypto is no stranger to cascading liquidations, where leveraged liquidations trigger further liquidations.

But this time, something is different...

This time, we have algorithmic stablecoins!

Has UST crashed?

UST, the algorithmic stablecoin of the Terra ecosystem, is currently fighting for its life. UST has been trading below $1.00 for the past 7 days, and this morning, it dropped to a low of $0.92. (Translator's Note: The lowest fell to 0.66)

At the time of writing, the current price of UST is $0.86, its total supply is 18 billion UST, and UST has lost over $900 million in market cap due to the peg failure.

In response, LFG (Luna Foundation Guard) is drawing billions from its BTC reserves to defend the UST peg.

It is unclear whether this strategy is effective, and selling BTC to protect UST may end up destroying the entire ecology.

LFG only has $1.4 billion in ammo left to sell 🙈

Meanwhile, Do Kwon was forced to show confidence to the market, hoping to quell fears of further UST de-anchoring.

Repairing the damage done by this crisis will take time. As the macro headwinds and UST crisis continue, the light at the end of the tunnel has faded.

opportunity in a bear market

Bear markets hurt, and no one likes losing money. If you're experiencing stress and pain, understand that you're not alone.

This is a bear market, and it hurts a lot of people. "Depressed" prices come from depressed market participants, and the market is a collection of market participants' emotions, and depressed prices come from depressed people.

And those who make it through are the ones who channel emotional conflict into positive, opportunity-seeking behavior.

Falling prices does not mean there are no opportunities, opportunities exist independently of secondary market prices.

Some will tuck their tails between their legs and ignore the knock of opportunity.

While others will bite the bullet, cut the fat, and take advantage of the bear market.

In the market, there are indeed many opportunities.

airdrop season

It appears that we are about to usher in a new season of airdrops.

This may be the best opportunity to capitalize on while we wait for the market to pick up.

Two weeks ago, Optimism announced the OP token, which will be the first top L2 project to issue a token.

Last week, the Hop Protocol announced the HOP token, the governance token for the L2 cross-chain bridge.

But the current airdrop standard is different from the past. If Optimism and Hop represent a trend, then the days of blind airdrops are gone forever.

Airdrop designers are getting smarter, finding ways to identify value-add users while filtering out airdrop farmers.

So things have changed for those trying to get a lot of airdrops.

The bar for airdrops is being raised to ensure only consistent community members are rewarded with tokens.

Are you hoping to get some airdrops this season?

We need to explore how the rules have changed since the last airdrop season.

Let’s examine two recent airdrops as examples.

Optimism

OP's first round of airdrops:

• Optimism users: 109K addresses (Any address that used the Optimism network before March 25th.)

• Active Optimism users: 20,000 addresses (addresses that have used Optimism for 4 consecutive weeks);

• DAO voters: 82,000 addresses (addresses that participated in at least one on-chain proposal, or two Snapshot proposal votes);

• Multi-signatures: 19,000 addresses (Gnosis multi-signature addresses with at least 10 transactions);

• Gitcoin donors: 24,000 addresses (addresses participating in Gitcoin public product funding);

• Ethereum Pricing Users: 74K addresses (addresses participating in other chains, but also continuing to use Ethereum applications);

overlapping rewards

For addresses that meet multiple conditions above, Optimism will give a reward multiplier!

In order to optimize the distribution of airdrops, Optimism must strictly adhere to the standards. Overlapping rewards is a great mechanism to skew airdrop distribution towards addresses that have proven to be good users rather than airdrop hunters.

A good airdrop should allow the tokens to be allocated to the part of the DAO community with the most consistent values!

Hop protocol

Next is the airdrop plan of the Hop protocol.

• Bridgooors: 3.35% (addresses with at least 2 transactions totaling $1000);

• Liquidity Provider (LP): the address that provides liquidity for the Hop protocol (allocated according to the amount of funds and time ratio);

• Bonder；

• Discord & Twitter users: 0.1% (Top 500 Hop Discord participants and 79 early Hop evangelists);

• External Contributors: 0.05% (3rd party contributors to the Hop Ecosystem section)

• Authereum users: 0.5% (Authereum users are early Hop supporters);

Reporting mechanism

The most notable thing about Hop is that it introduces a clever reporting mechanism that reduces the rewards flowing to airdrop hunters.

The rule is that as long as the whistleblower is verified, the whistleblower can take away 25% of the token reward of the whistleblower's address.

The relevant standards are:

• Each report must have at least 20 relevant addresses;

• Reports must demonstrate high-quality research and be easily verifiable by the Hop lab team;

• Reports against legitimate users will not be considered;

I spoke with Chris Winfrey from Hop last Friday and we discussed the dynamics of the Hop airdrop, and their idea is that the 25% of the airdrop that is saved from the airdrop hunters goes to a segment that aligns with the community.

Airdrop Summary: 2 New Mechanisms

Both Optimism and Hop utilize a novel mechanism to ensure their airdrops go to the people they want.

1. Overlapping rewards

Both Optimism and Hop created specific selection criteria for finding the most authentic community members. These unique criteria provide new ways for airdrop issuers to learn more about their community members.

Optimism's "overlapping rewards" create a multiplier for users who match multiple criteria.

From a protocol perspective, users who satisfy multiple criteria provide the protocol with stronger assurance that they are long-term consistent community members. Overlapping rewards tilts the token towards real users.

2. Report Sybil attack address

This is the game-theoretic approach taken by the Hop protocol.

Here's the announcement from Hop:

“If you are a sybil attacker who used Hop airdrops with a large number of addresses, you are welcome to surrender yourself before others report you. Those who self-report and have not yet been reported will be included in the proposal to receive 25% of the token reward.”

If someone reports you first, you will get nothing.

Basically, this is for the airdrop hunters to turn themselves in so they can get 25% of the token rewards, otherwise their rewards will go to 0 if reported by the bounty hunters.

New Meta

There is an arms race going on between droppers and drop hunters.

Airdrop hunters are inherently inconsistent with the protocol, as their goal is to maximize profits by any means possible. And it’s in every DAO’s best interest to weed out these hunters and instead send their token shares to more consistent community members.

But how?

In October last year, we published an ultimate airdrop guide for Bankless premium members, which listed 25 applications and protocols that may issue airdrop rewards.

After 6 months, this is the situation:

1. Element Finance (airdrop confirmation)

2. Hop protocol (airdrop confirmation)

3. DeFi Saver (airdrop not yet confirmed)

4. Ondo Finance (airdrop not yet confirmed)

5. Saddle Finance (airdrop confirmation)

6-9 not determined yet!

10. Cowswap (airdrop confirmation)

11-15 (airdrop not yet confirmed)

16. ENS (airdrop confirmation)

17-24 (airdrop not yet confirmed!)

25. OpenSea (may never issue a token)

Honorable Mention: MetaMask (token may never be issued)

We have to ask ourselves: How do you secure an airdrop now that industry trends have changed?

The answer is simple: act like a normal user.

• In order to get an airdrop, you need to use the app like a user, not act like an airdrop hunter.

• Use meaningful amounts.

• Don't just do the bare minimum, explore and interact with every aspect of the protocol;

• use these apps frequently;

As my wise colleague said, "Give an agreement what it wants, and it will give you back."

So what does the protocol want before the airdrop?

They want users and community members, not hunters or farmers. Now, they are equipped with tools to target users and exclude hunters.

So how do you take advantage of this airdrop season?

The answer is to become a real user.

Explore the frontier! Try something new! Try out the new app!

But always remember: you can lose what you put in, we're at the front, we're going west, and that's not for everyone.

But we're so excited to have you on this journey with us.

Don't let the numbers put you under too much pressure, the market rewards long-term players.

For those who missed the 2021 airdrop season...

For those who need something to distract them from falling cryptocurrency prices...

Let's explore!