Sanctum airdrop ended in backlash
Plus, other stories you may have missed from Solanaland this week
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Welcome back to the forty-fourth edition of Lightspeed, where we can’t airdrop you tokens, but we will airdrop you knowledge, insight and generally good vibes.
Oh, and your allocation is always 100%. Anyways:
Sanctum airdrop backlash
Over the past several months, crypto — and Solana in particular — has seen a series of high-profile airdrops, as buzzy projects debuted native tokens. These tokens are often distributed to users based on ‘points’, which are doled out for using the protocol.
The vibes were mostly good after Jito’s JTO airdrop, which went off as the crypto bull market was still gathering steam, but in recent times, the distributions have increasingly led to grumpiness, “farming” for bigger allocations, and social media essays about the scourge of “low float, high FDV [fully diluted value] tokens.”
Sanctum’s CLOUD airdrop was supposed to be different.
The Solana-based liquid staking project centered its airdrop around “earnestness” — that is, rewarding long-term alignment with Sanctum’s success, rather than mercenary airdrop farming. Sanctum co-founder FP Lee spilled a lot of ink outlining the project’s thinking and intentions for rewarding good behavior instead of bad. Half of the airdrop was to be allocated based on Sanctum points. The other half would be allocated based on earnestness, which the Sanctum team would measure according to a given user’s social contribution. This was intended to combat the crypto-cynicism that can come from seeing bad behavior go unpunished.
And despite it all, some CLOUD recipients were angry.
“Really disappointed,” one wrote. “Can’t believe how badly this team fucked up,” said another. Some started tracking users who were dumping their CLOUD after receiving it — and speculating whether those sellers were earnestness recipients. Lee ended up issuing a mea culpa on X.
When I got Lee on the phone following the airdrop, he said he felt Sanctum’s airdrop execution — from incentivizing long-termism by giving a better price to those who let their tokens vest to not paying listing fees on exchanges — had been “almost perfect.”
Lee felt that Sanctum had fallen short, though, in its attempt to reward earnestness, because while the allocation scheme was meant to rally the project’s community around good behavior, it ended up creating some “resentment” from those who didn’t receive allocations, he said.
Sanctum isn’t alone in catching heat for a novel airdrop strategy: Bridging platform LayerZero faced backlash after forcing users to donate to Ethereum development to claim their ZRO tokens.
The “recipients complain their highly-anticipated airdrop allocation isn’t big enough” trope is becoming played out to the point of melodrama.
I asked Lee if he still felt like airdrops were worth doing.
He laughed and said “I don’t know” before eventually concluding: “I am of the opinion that probably doing some sort of fair sale is better than doing an airdrop just because people have to put their money where their mouth is.”
Still, as DL News laid out well yesterday, VC investors really like crypto projects having tokens to create returns in a space where IPOs have so far been few and far between. Sanctum has raised over $6 million in venture funding to date. Lee told me investors and founding teams “want the TGE [token generation event].”
So while there are obvious downsides to doing a token airdrop, it seems to be “damned if you do, damned if you don’t” for venture-backed crypto founders.
— Jack Kubinec
Zero In
There’s been a shakeup near the top of the Solana validator rankings:
Helius passed Coinbase to become the second-largest validator by stake, accruing nearly 13 million SOL in the network’s delegated stake system.
Part of the intrigue here is that — as Blockworks Research analyst Hayden Tsutsui has pointed out — Coinbase’s place near the top of the pile is less about an efficient market outcome and more about the weight of the major exchange’s brand.
In a win for efficient markets, Helius offers stakers a higher APY than Coinbase, according to StakeWiz. However, Helius CEO Mert Mumtaz’ colorful online persona likely helped things along as well.
— Jack Kubinec
The Pulse
ICYMI — Stories you may have missed from Solana land this week:
- Claynosaurz won 14 awards at the Collision Awards, including Gold in Character Design and Lighting for both Film and Marketing, beating out Pixar, Disney, Sony, and more.
- Allium Labs secured $16.5 million in Series A funding led by Theory Ventures, boosting total funding for its Blockchain data platform to $21.5 million.
- Moonshot’s new app launched to simplify buying Solana-based memecoins using Apple Pay, PayPal, and Google Pay, aiming to make crypto more accessible to newcomers.
- Cypherpunk Holdings increased its Solana bag to over 63,000 tokens and will run its own Solana validator, staking a majority of its tokens using its own node.
- SkyTrade raised a pre-seed round to create a marketplace where property owners and real estate companies can monetize and trade air rights, enabling the monetization of unused vertical space for drone operations and other uses.
- Jambo partnered with Solana and Tether to offer blockchain-based financial services on its JamboPhone, aiming to empower the unbanked in Southeast Asia, Africa, and Latin America.
- A bullish pennant pattern has formed on Solana’s price chart, with some traders anticipating a price rally. SOL is up more than 21% over the past seven days, trading now near $169.
— Jeffrey Albus
One Good DM
A message from J, an anonymous co-founder of Sanctum:
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