Who Let the Apes Out?
Market Meditations | March 22, 2022
Last week an airdrop tied to the Bored Ape Yacht Club (BAYC) ecosystem went live with ApeCoin ($APE). The coin has a fixed supply of 1 billion tokens, 150 million of which (15% of total supply) was released via an airdrop.
This was certainly one of the most anticipated and profitable airdrops to date. At the peak price of $17.17, a single BAYC would have received $173,313 (approximately 60 ETH) for free! To learn more about ApeCoin check out last week’s article which broke the news here.
@justintrimble discusses the history of airdrops in a recent thread here. From the data, it is clear to see airdrop tokens tend to have similar price action. Upon release prices tend to form a parabolic uptrend a short period after the token has initially been airdropped followed by a steep decline in price.
The only real cost when participating in reputable airdrops is your time spent researching. Receiving airdropped tokens is often seen as free money as you often get rewarded just for interacting with a platform. An easy way to identify airdrops is by referencing CoinMarketCap’s Airdrop page.
Like all investments, there are risks associated with participating in airdrops. These include but are not limited to:
- Sell-off Risk: a sudden high-volume sale, causing the price to crash, at least in the short term.
- Phishing Attacks: often taking the form of misleading emails, text messages, or social media posts to trick people into responding with private information or transferring funds to an attacker’s wallet.
- Dusting Attacks: this is when a trace amount of crypto is sent to thousands of wallet addresses. This attack is deployed with the hope of de-anonymizing the wallet owner, this is more of an annoyance than concern as your funds are safe.
Given these risks, many participants create and designate a separate wallet when participating in airdrops. Participants (particularly whales) sometimes create multiple wallets to receive more tokens than they are entitled to. However, DAOs now can keep these participants in check.
On March 16th JUNO was released via an airdrop with a cap of 50,000 tokens per one wallet or person. A whale had exploited the smart contract to receive more and attempted to hide its actions amongst 50 different wallets. They were discovered and the DAO voted to strip the participant of all but the 50,000 JUNO tokens they should have received.