Manias are never born in a vacuum. They always follow the triumphs of the past, stories of incredible victories that grow more captivating with each retelling. Like precious gems, these tales are polished by time, becoming ever more brilliant and alluring.
The L2 fever and subsequent airdrop mania rose from the ashes of the 2022 crypto winter. But the seeds were planted much earlier, back in the third cycle. That September 2020, I, like thousands of other Uniswap users, sat before my screen and, unable to believe my luck, claimed my first ever airdrop with slightly trembling hands.
The 400 UNI reward patiently waited while my transaction made its way into a block. All of Ethereum was gridlocked, and everyone rushed to push through despite the astronomically high gas fees. The feeling was like winning the lottery, but joy easily gave way to anxiety, then came the creeping fear that something would go wrong and the drop would be lost. But in the end, everyone got their airdrop, and those who didn't sell in the first minutes received many times more.
And this became a turning point not just for me, but for the entire industry. Before Uniswap, protocols launched quietly, tokens went to investors and the team. After, every new project hinted at a future airdrop. Random Web3 explorers transformed into professional airdrop hunters. And airdrop hunting became its own industry within crypto, which in just a few years reached the peak of universal attention and glory. Then, under the weight of unsolved problems, it collapsed into an abyss of rejection and devoured itself.
There's a concept in economic theory that perfectly captures what happened to the airdrop hunting industry. In 1968, economist Garrett Hardin published an essay 'The Tragedy of the Commons,' where he showed through a simple example how rational behavior by each individual participant leads to collective catastrophe.
Yes, my dear reader, there's nothing new under the sun. Although blockchain is cutting-edge financial technology, what happens here can easily be described through theory laid out in the previous century.
Imagine a pasture used by all the village shepherds. Each shepherd gains direct benefit from increasing their flock, but the costs of depleting the pasture are distributed among everyone. Of course, the smart shepherd will increase their flock and lead them to the green meadows earlier than their neighbor, prompting a predictable reaction from other shepherds, and this will continue until the blooming meadows turn to desert.
This parallel didn't hit me right away. I remember early 2023: the entire cryptosphere buzzed with two questions. When will altseason begin? And how many accounts should I create for future airdrops? The logic seemed flawless: make the same transactions from a dozen wallets every morning, receive ten times the reward in a couple of months.
Then it dawned on me. We were all calculating the same profit. Thousands of people with calculators, dreaming that one token pool would somehow magically enrich everyone. We'd become Hardin's shepherds. Except instead of sheep, we were herding bots onto the pasture.
In the world of airdrop hunting, the "pasture" was the shared token pool for community rewards. No matter how generous the team, this pool was always limited. Limited by the token supply itself and the price the team could sustain after the mass dump.
The math is simple and ruthless. If everyone runs 100 wallets while the pool remains the same, the reward shrinks by hundreds of times. Especially for those falling behind in the arms race. We were killing the pasture that fed us.
Tens of thousands of airdrop hunters calculated the expected profits and entered the game. The arms race began. First, hunters ran 10 wallets, then 100, until industrial farms pushed it to tens of thousands. Now the shared token pool was divided not among 50,000 real users, but 5 million, of which 95% were Sybils with half controlled by just a few major players.
The reality was sobering: where the average drop once yielded $2,000 per user, after the Sybil invasion it fell to $100-200. Meanwhile, farm operating costs kept rising: gas for transactions, management software, time spent bypassing filters. The break-even point for an honest single-wallet participant became unreachable.
The tragedy was that this process couldn't be stopped. Even if everyone agreed to limit themselves to one wallet, the first defector would gain a huge advantage. A classic prisoner's dilemma on an industry scale. Like any tragedy of the commons, this one ended predictably: with a depleted pasture where nothing was left to harvest.
But in early 2023, few understood that the pasture was already beginning to wither. On the contrary, it seemed the golden age was just beginning. After all, the catalyst for this entire future tragedy was a project that genuinely tried to reward its users more fairly than anyone else. Arbitrum had the best intentions, established a rating system to fight Sybils, distributed a generous drop. But it was precisely its success that launched a flywheel that no one could stop. The pasture was still green, but the first signs of erosion were already visible to those willing to look.
Two and a half years passed since the Uniswap drop. During that time, the industry had experienced the euphoria of DeFi summer, the Terra Luna collapse, the FTX bankruptcy.
By spring 2023, the market was just beginning to thaw after the harshest crypto winter. Precisely at this moment of maximum pessimism came the Arbitrum drop. A lifeline for a drowning market.
Arbitrum didn't just distribute tokens; it introduced a new model: a rating system. All wallets that scored three points or more and avoided the blacklist received the drop. Transparent, clear, fair. At least, that's how it seemed. The average drop size didn't reach the legendary $50,000 from dYdX, but even $2,000-3,000 per wallet shone against the backdrop of complete market apathy. Crypto Twitter exploded with screenshots and congratulations. But between the joyful shouts, messages were already slipping through about farms with thousands of wallets that had received millions.
Yes, even then industrial farms with thousands of bots literally struck gold. Not everyone got lucky, of course, but those who managed to disguise their accounts as regular users earned hundreds of thousands. Some made millions.
This outcome stunned everyone. Forget the golden era drops of 2021: here you could become a millionaire. And who cared that the price was a reduced share for everyone else, including honest participants. Airdrop hunting finally transformed from hobby to industry.
But the Arbitrum drop also handed airdrop hunters a complete blueprint for drop preparation. The rating system became the de facto industry standard, and everyone adopted it as their foundation. Meanwhile, drops loomed ahead from projects with hundreds of millions in funding: zkSync, StarkNet, LayerZero, Scroll, Linea, and about a dozen smaller ones. In total, over 15 major L2 solutions launched during 2023-2024, and each promised its own airdrop.
With so many potential gold mines, the market reacted predictably. Resources immediately popped up that kindly calculated wallet ratings and gave recommendations on which metrics still needed work: pump up transactions, lock more liquidity in network pools, or simply trade empty volume on DEXs. Airdrop calculators became more popular than ever. Everyone calculated how much they could earn and how much ETH they'd need to burn for it.
YouTube was flooded with guides screaming "How I Made $100K on Airdrops," Twitter was peppered with threads listing activities, and Telegram spawned paid groups with the very best schemes for pumping network activity and "insider information" about upcoming snapshots. This entire information avalanche created the illusion that anyone could earn from drops, you just had to follow instructions. Back then I often caught myself feeling irritated and regretful: the romance of Web3 was dying, replaced by mechanical checklist completion.
Fresh blood absorbed all the key points and rushed into battle. Everyone joined the game: from experienced veterans managing server clusters to schoolkids completing tasks on their home PC. They all dreamed of future profits. After all, if Arbitrum gave $2,000 per wallet and ten projects lay ahead, that's a guaranteed $20,000. And if you run a dozen accounts at once, or better yet a hundred, then profits in the millions were a conservative estimate.
And so began the era of Sybils.
You might think the term Sybil refers to ancient Greek myths and the cult of prophetic priestesses. Instead, the name came to crypto from the IT world, where it was used to describe attacks within peer-to-peer networks. Computer scientist John Douceur introduced the term1 taking it from Flora Rheta Schreiber's novel "Sybil" about a woman suffering from multiple personality disorder.
While hackers used armies of bots for network attacks, Sybils created thousands of virtual personality copies that conducted coordinated airdrop hunts. How ironic: the multiple personalities from the novel, which were a tragedy requiring treatment, became a business model in crypto.
The Sybil ecosystem quickly stratified. At the bottom level were solo enthusiasts with a dozen accounts. Every day they manually performed the required tasks: token swaps, providing liquidity, bridging between networks. Excel spreadsheets with hundreds of rows, calendar reminders, constant fear of missing something. Tedious, exhausting work with breaks only for food and sleep.
Semi-professionals occupied the middle tier. They already used basic automation, bought proxy servers in bulk, mastered scripts. A typical farm of 100-500 wallets required $5,000-10,000 in investment and, assuming a minimum drop of $500 per wallet, promised profits of $50,000-250,000. Returns that drove them to expand farms, adding new wallets every month.
And at the top of the pyramid reigned the whales with industrial farms. They didn't bother with small stuff, instead immediately hiring contractors to create and manage armies of thousands of addresses. These farms didn't just pump activity in a few projects, they created complex activity across all promising networks and projects simultaneously. This approach required major resources, but whales were willing to pay, since even a few randomly received drops from Tier 2/3 projects could recoup the entire enterprise.
As happens with any serious gold rush, shovel sellers immediately entered the market. Garage cooperatives offered everyone specialized software for automating airdrop hunting. A ready-made application with a user-friendly interface allowed easy automation of transaction routines and highly realistic emulation of on-chain activity of real users. There were also those offering turnkey farms: just pay a small management fee and a 30% success fee upon receiving the drop.
This entire bacchanalia inevitably provoked a response. Project teams first quietly, then increasingly openly, began hunting Sybils. Entire departments were created to find and identify bots. They searched for repeating patterns: identical transaction times, matching amounts, scheduled waves of operations. They also analyzed IP addresses and performed numerous other checks to link multiple addresses into unified clusters and blacklist them.
This game instantly became a contest of sword and shield. Sybil software constantly upgraded, following best practices for security and stealth. Each farm account received its own proxy IP address, conducted transactions at random times for random amounts, and interacted with project websites through different browsers, thus emulating real user behavior. Centralized exchange accounts were chained together to hide the fact that all farm addresses were funded from a single source.
And here I must digress and reveal a secret that people prefer not to discuss at conferences or write about in respectable publications. But anyone involved in crypto project development understands what I'm talking about.
This terrible secret is simple: Sybils fed the projects. They didn't hinder or harm them; they fed them. Throughout the entire journey from testnet to token, it was farms that created 90% of transactions, generated fees, pumped up metrics. Every fake address improved statistics. Every empty transaction brought revenue.
This let founders show potential investors beautiful growth charts at presentations. "Look, we already have 500,000 unique users!" The fact that real users were hundreds of times fewer? They preferred not to mention that. Future projections soared to the heavens. Investors easily wrote checks for tens of millions, after which projects could launch a new development cycle and collaboration with Sybils. New quests started and new point campaigns were announced for future drops, with the same main goal: pump the metrics even more.
Without Sybils, projects would have hundreds, if not thousands of times fewer users. And with such numbers in reports, closing $100 million rounds would be impossible.
This symbiosis lasted on average one to two years. That's how long it took a project to go from testnet to token launch readiness. During this time, Sybils managed to rack up millions of transactions, create the appearance of bustling activity, and help the project close another round or two of funding. But the closer the TGE (Token Generation Event) approached, the sharper the dilemma became: how to distribute tokens so investors stayed happy with the metrics while the real community didn't revolt seeing obvious farms among recipients. The choice was made in favor of total war. A war with no winners.
Of course there was no specific date when this war began. Simply, the closer a project got to token launch, the harsher the rhetoric became. Those departments within projects that previously just collected data now actively blacklisted addresses. On-chain analysts compiled lists of all suspicious wallets. The atmosphere heated up.
Shovel sellers found their niche here too. Companies specializing in on-chain analysis sold Sybil lists. They helped analyze data collected by projects, maintained public blacklists where teams dumped discovered clusters, and served as consultants for detection strategies. Other projects used these lists as their baseline defense.
Landing on a public blacklist meant death for a wallet. It became toxic for all future drops. Industrial Sybils lost dozens of addresses out of thousands and simply wrote off the costs. New bots immediately replaced the fallen.
Yet for ordinary airdrop hunters who actually used projects for their intended purpose rather than metric pumping, landing on such a blacklist was a true catastrophe. Their single account, years of work, all efforts zeroed out due to imperfect filters or simple error.
These people with a couple of honest addresses formed the backbone of the community. They helped in Discord, wrote guides, promoted projects, unlike industrial Sybils who operated in the shadows. This detail would prove important later.
The industry desperately searched for a solution that wouldn't alienate real users while fighting Sybils. Every attempt had failed: the filters were either too weak, letting farms through, or too strict, catching honest participants. Until Blast entered the scene with what seemed like a brilliant compromise.
Their approach seemed brilliant: a points system where farming from multiple accounts was pointless. Points were awarded proportionally to locked liquidity. Want more points? Lock more money. It didn't matter if it was in one wallet or a hundred. Points then converted to tokens using a fixed formula. Win-win for everyone, including Sybils who found it easier to work with a few large wallets instead of thousands of small ones.
In practice, however, this approach led to hyperinflation and complete devaluation of point value. The longer the accumulation program ran, the more diluted the pie became for each participant. Only whales capable of locking millions of dollars in Blast network for months came out ahead. But even they faced disappointment: first from point hyperinflation and the sharp drop in expected profits, then from the BLAST token price collapse immediately after trading began. This, of course, was the standard fate for most L2 family tokens.
Blast's story is also notable for its backstory. The project's founder Pacman (Tieshun Roquerre) had previously created the NFT marketplace Blur and made it number one among all NFT marketplaces. He achieved this through an extremely successful drop that enriched the community of early platform users. This success immediately attracted attention from L2 networks, followed by partnership and integration offers. But Pacman decided to create his own network and make it exclusive for his NFT marketplace.
This decision proved fatal. Blast showed activity only during the airdrop program, and after the sharp devaluation of rewards disappointed all participants, they abandoned the network and Blast began to die. But worse, it hit the main Blur project. As is typical in crypto, the project's core metrics fell by 90%, then by that much again. Where daily commissions once reached hundreds of thousands of dollars, sometimes even a million, after the Blast fiasco even on the best days commission income didn't rise above a couple thousand dollars.
If Blast's story was a tragedy with a predictable ending, LayerZero decided to turn the fight against Sybils into a full-blown thriller with unexpected twists. And the finale pleased no one.
LayerZero chose a smart strategy. While every second crypto entrepreneur was launching their own L2 on top of Ethereum, they went a different route: they built universal bridges connecting all L2s with shared liquidity. Fast and cheap transfers between networks. Real utility instead of another L2 clone.
The idea really worked, and the project quickly attracted hundreds of millions in investments. For two years the project looked favorably on spam transactions. Every operation generated a fee, the project generated profit, and farms with thousands of accounts were a useful asset. Investors were happy: beautiful charts in reports, insane activity growth, and all ambitious plans being met.
But the closer the token launch moment approached, the more intense the Sybil debate became. And then Bryan Pellegrino, CEO of LayerZero, made an unprecedented move. He issued an ultimatum: Sybils who voluntarily turned themselves in and revealed all their wallets would receive 15% of the expected reward. Those who hid and got caught would receive nothing. "If you think you are a sybil, you are most likely a sybil," the official LayerZero post stated.
May 4, 2024. It was the first day after the ultimatum. Telegram chats buzzed with bravado. "Another bluff," "Bryan just wants to scare the small fish," "They don't have the technical capability to track all farms." Those using advanced masking methods sounded especially confident. Someone even calculated that analyzing all addresses would take the team at least six months.
But by the end of the first week, the tone began to shift. Someone noticed that LayerZero had hired additional blockchain analysts. Repositories with telling names like "sybil-report" appeared in the project's GitHub. But most still held firm. "Poker bluff," they repeated, remembering Bryan's past at the card table.
Gradually the tone in chats began changing, and tensions split the community. The first panickers appeared: "Better to get 15% than zero." Of course they were met with contempt: "Weaklings have no place in airdrop hunting." Dozens of polls showed a confident 80% result for "hold the line." But these were public statements. How many were secretly preparing self-reports, nobody knew.
The final 72 hours turned into psychological torture. Every hour someone wrote: "X hours left, last chance!" Nerves cracked even among veterans. Rumors spread about a major farmer with 2000+ addresses turning himself in. The message was quickly deleted, but screenshots circulated in chats for a long time.
May 17, the deadline arrived. As unofficial sources later revealed, less than 2% of addresses voluntarily surrendered. The community celebrated victory. "We didn't break!" "Bryan lost!" But this was only the first act. It was too early to celebrate.
The next day Bryan struck back and presented a bounty system rewarding 10% of confiscated drops. This time anyone could write reports, and if they successfully identified a Sybil, the report author would receive 10% of the airdrop owed to that Sybil.
The storm turned into a hurricane. The universal Sybil hunt quickly became a massacre. Even an insurance deposit system to confirm serious intentions didn't stop the madness. Suspicion fell on literally everyone: industrial farms, professional airdrop hunters, regular users with a couple of transactions.
First, self-appointed on-chain detectives sent reports on large clusters. Then they moved on to smaller participants. But when ordinary users' wallets came under fire, they began sending counter-reports. Doing so was quite simple: even in this matter, Bryan embodied blockchain's main principles of transparency and open access. The accused could see exactly who was trying to accuse them and could file a counter-claim.
More and more Sybils were drawn into the game, since they knew well how farms worked and how to find them. Trying to sink competitors, they received counter-reports. Duels and personal vendettas began. An amusing game that many entered just to feel like on-chain detectives quickly devolved into ugly chaos where everyone lost.
And amid this universal madness, a legend was born, one that symbolized the collapse of this entire absurdity. A Sybil with the nickname Ruslan, who didn't even try to hide. He created a collection of wallets with names: Ruslan001, Ruslan002, Ruslan003... up to Ruslan0992. Everyone wrote about them, everyone laughed, even Bryan, and everyone supposedly added Ruslan to blacklists. But something amazing happened: a significant portion of projects calmly gave Ruslan drops on all his wallets. The filtering system failed so obviously that it became a meme. Ruslan didn't hide, didn't mask himself, just numbered wallets in order and won. A perfect metaphor for the entire theater of the absurd that was happening then.
As for LayerZero itself, it ended up distributing laughable amounts. Even purging address lists of Sybils and the universal bounty system didn't help make the drop even somewhat substantial. The spoils weren't worth the blood spilled. The project symbolically closed the airdrop hunting season, becoming the last of the big four and yet another major disappointment.
Regular participants as always quietly cried in front of their monitors, tightened their belts, and the next day went to their 9-to-5 jobs. Dreams of financial freedom through Web3 shattered against the reality where a reliable salary proved more attractive than the endless chase for elusive drops.
But months later, LayerZero distributed another drop to everyone who made at least one transaction on the network after receiving the first one. Of course, when farms were shut down and bots disconnected, only real users made such transactions. The amount wasn't life-changing as in 2021, but still more than the first drop, and this at least somewhat restored shattered justice. But overall trust was gone for good.
Airdrops revealed yet another ugly side, after which restoring trust between projects and users became virtually impossible. After every major airdrop, Twitter filled with investigations from on-chain detectives showing suspicious wallets with abnormal rewards. These addresses shared a strange pattern: minimal protocol activity, created just days before the snapshot, yet received rewards tens of times greater than what active users with year-long histories received.
One notable case occurred with zkSync in June 2024. A wallet created 3 days before the snapshot with just 5 transactions received 100,000 ZK tokens, worth about $25,000. For comparison: the average active user with hundreds of transactions over a year received 1,200 tokens ($300). In another case, dozens of linked wallets received over 500,000 tokens, and according to on-chain researchers, these wallets were connected to team members3. The drop's math was so obviously broken that even the project team couldn't provide a coherent explanation.
The scheme was simple and effective. Insiders, knowing the exact selection criteria and snapshot date, created wallets at the last moment, performed the minimum necessary actions, and received maximum rewards. Unlike team tokens with lengthy vesting, these tokens could be sold on day one.
StarkNet became a glaring example of how insider information turned into millions. While active users with year-long histories received crumbs, one cluster of 1,361 wallets consolidated 1.4 million STRK ($3 million) to a single address. Another farm collected 1.2 million tokens from 1,800 addresses4. Most suspicious: many of these wallets were created just days before the snapshot and contained exactly 0.005 ETH, the minimum amount to pass the filter. How did Sybils know this specific criterion in advance?
Meanwhile, Yearn Finance developer Banteg had warned about 700,000 suspicious addresses before the drop, but the team ignored the warnings. Instead of clear explanations came only vague phrases about "imperfect metrics" and the impossibility of fighting Sybils.
By the fourth cycle, airdrops had transformed into a corrupt instrument through which insiders extracted millions of dollars to controlled wallets under the guise of community rewards. And while industrial Sybils at least invested resources into projects by paying fees for their activity, insiders got everything practically for free, simply through access to information.
This cocktail of Sybil greed, war of all against all, and corruption from within led to a predictable result. The system built on promises of rewards for supporting projects collapsed under the weight of its own contradictions.
When the smoke of battle cleared, everyone had lost. The idea of drops had finally degenerated from a way to thank early users into a carrot dangling before a donkey that would never reach it.
Ordinary users lost the most. After all, they were the ones who supported projects for years, tested networks, paid exorbitant fees, helped the community on Discord servers, and genuinely cared about project success. Their work was devalued, their role reduced to a cog in the beta-testing machine. Faith in the possibility of honest drops died.
Projects lost their users and at first didn't even realize how fatal this was. For a long time they'd grown accustomed to treating them as assets, metrics, and numbers in reports they sent to investors. As if each project existed not to solve community problems, but to satisfy investors and future token buyers.
But having gone through the ordeal, the crypto community realized its own value. It then displayed the full power of community, showing what would happen to every project that chose the path of dishonest play. Airdrop hunters learned their bitter lesson and forever abandoned the networks and protocols they'd labored in for so long. Then they launched a campaign of public fury, filling social media for weeks with hashtags #scam and #boycott.
The movements became effective, the exodus massive. Users withdrew their funds from networks and protocols they once farmed. Drops were sold, Discord channels deleted, and nobody remembered these projects anymore. Network activity collapsed to laughable levels, with only a handful of users making a dozen transactions. Projects that raised tens or even hundreds of millions in investments now showed monthly profits of a few hundred dollars. You couldn't imagine a more epic failure.
The scale of the catastrophe is best illustrated by numbers. TVL of most L2s fell by 80-90% within months of the drop. And project tokens showed the worst performance in history: average drawdown from listing was at least 80%. Of the 15 launched networks, only a few remained active, while the rest turned into digital graveyards with a handful of transactions per day. The beautiful metrics washed away like sea foam, revealing the ugly picture of empty networks.
Only a small number of projects managed to avoid this fate. One of them, Arbitrum, survived because it launched earlier, having only one competitor. Few felt cheated by its drop, creating a loyal user base. But when L2 networks accumulated by the dozen, users had no need for each one. The favorite had already been chosen.
The market then changed once more, and new projects faced an insurmountable problem. They understood that promises of drops would attract armies of Sybils who would shut down farms immediately upon receiving the drop. But attracting real users would no longer be so easy. And if the drop didn't meet community expectations, the project was guaranteed to face public boycott. Even hundreds of millions in investments couldn't save them from such a fate.
By mid-2024, projects emerged from the war with Sybils with a full set of problems. Collapsed metrics. User loss and complete community rejection. The only thing missing from the complete package was the final blow. It didn't take long to arrive. It was the collapse of the project tokens' own prices.
Prices fell faster than users could get them to exchanges. Most dropped by half, then by half again. And that was just the beginning. Even those who received drops ended up in the red after paying gas for all those months of farming. Prices collapsed immediately after trading began and only found temporary support months later. There were no exceptions to this universal phenomenon, regardless of the project's sector or how much investment it received. L2 tokens with their empty promises and inflated valuations finally lost the community's trust.
Airdrop hunting as an industry died, taking with it faith in honest launches from venture-backed projects. But nature abhors a vacuum, and the crypto community began searching for an alternative.
The alternative was already emerging from the ruins of the old system. The new trend gave people the hope they'd lost in the meat grinder of airdrop hunting. The symbol of this new hope: memecoins. Tokens without a product, without a development team, without venture investments. Just pictures of dogs, frogs, and other internet memes. I understand, it sounds absurd. But this very absurdity proved more honest than all the technological promises.
Venture capital greed collided with a popular revolt in the form of memes of every variety. The crypto community chose honest stupidity over dishonest genius.
1 John Douceur introduced the concept of Sybil attacks in his 2002 paper, describing how a single entity could subvert a peer-to-peer network by creating multiple identities. Microsoft Research, 2002
2 The story of "Ruslan" became legendary when he sequentially named his ENS domains from ruslan001.eth to ruslan099.eth, making his Sybil farming operation obvious to everyone. Despite being reported during LayerZero's "Sybil Bounty" phase, he still managed to receive airdrops from other projects. Cryptonomist, June 2024
3 zkSync's airdrop allocation raised concerns when suspicious wallets with minimal activity received disproportionate rewards while active users were undercompensated. CryptoRank, June 2024
4 On-chain analysis revealed massive consolidation: one wallet received 1.4M STRK ($3M) from 1,361 addresses, another collected 1.2M STRK from 1,800 wallets. Many wallets contained exactly 0.005 ETH, the minimum eligibility requirement. Cointelegraph, February 2024