Author: Hu Tao, ChainCatcher

Yesterday, the highly anticipated Layer 1 public chain Monad token MON was officially launched. It briefly fell below the cost price for public offering users, and its FDV is currently hovering in the range of $3-3.5 billion. This is not only lower than the mainstream market capitalization prediction of $8 billion on Polymarket, but also far lower than the valuation of $15 billion in the earliest Pre-TGE market.

This is not only a heavy blow to the Layer 1 narrative, but also a tragic milestone for the "plucking" group.

Previously, Monad, valued at $3 billion, became the highest-valued unissued Layer 1 cryptocurrency on the market, and was highly anticipated by airdrop hunters. Its testnet had accumulated over 300 million interactive addresses, and many studios were using millions of addresses to register Monad addresses. At the end of October, Monad officially opened airdrop queries, but unexpectedly excluded all testnet interactive addresses from the airdrop.

The logic of those who exploit this loophole is that "sunshine distribution" is a common practice among many projects, and as long as they maintain a high frequency of interaction, they may be able to obtain token rewards ranging from a few dollars to tens of dollars, and the accumulated value of tokens from multiple addresses is still considerable. However, Monad's official team did not do what the massive group of loophole exploiters hoped for by excluding all testnet addresses from the airdrop.

"All the addresses that interacted with the testnet were reverse-engineered, and participating in various NFTs was basically useless. The only ones who received Monad airdrops were some old addresses that had never interacted with Monads but had traded on Hyperliquid," Adu (pseudonym), the head of a Hangzhou-based arbitrage studio, told ChainCatcher.

Monad quickly became the target of fierce criticism from many users who wanted to exploit freebies, but Modad officials remained unmoved. According to well-known KOL Feng Mi, the idea behind Monad's airdrop was to bind people with contributions, status, and potential to Monad, focusing on their identity and contributions, such as Monad ecosystem developers, heavy DeFi users, and high-quality NFT holders.

The well-known alpha blogger Spark received 3 million Monad tokens in this airdrop, currently worth approximately $110,000. This wasn't due to his activity logs, but rather because he served as a modder for the Monad community for three years and established the Monad Chinese community. This was considered a substantial contribution by the Monad team, making it a key target for most project airdrops.

For project teams, airdrops are significant in two ways: firstly, they reward long-term supporters, demonstrating their commitment to the community; secondly, they reward active participants and influencers in the surrounding ecosystem, attracting them to their own ecosystem through airdrop rewards. From Uniswap in its early days to thousands of projects such as Gitcoin, Arbitrum, Scroll, Berachain, and Aster, airdrops have become an essential way for project teams to attract users.

During this period, the standards for airdrops have been constantly forking and evolving. Some projects emphasize a equitable approach, being quite generous to those who participate in the interaction and exploit the airdrops. Other projects, however, have established strict rules for interaction on the testnet/mainnet, implementing rigorous witch screening based on a points system. This time, Monad has completely abandoned testnet interaction users, or rather, retail users.

“If retail investors are neglected for a long time, the network will become too elitist in its early stages, losing a broad community base. Bitcoin, Ethereum, Solana, and BSC all relied on a group of seemingly insignificant small retail investors in their early days; they brought network effects and community vitality,” Feng Mi said on X. He believes that Monad should provide grassroots retail investors with a space to grow gradually, even if only a little, so that more people can truly become part of the MON network community.

Zhui Feng believes that those who exploit loopholes not only contribute transaction fees, data, and traffic to the project, but also serve a significant promotional purpose. He thinks these individuals deserve some incentive. "Monad's actions were extremely ill-considered, shaking the very foundation of trust in the industry," IceFrog also tweeted.

However, from the perspective of the project team, they need to formulate the airdrop strategy based on the long-term development needs of the project. "Airdrop hunters have no loyalty. They will sell the airdrops as soon as they receive them and then run to the next project to collect airdrops. For the project, this only creates selling pressure and has no long-term benefits. Is it necessary to send airdrops to them in this situation?" An anonymous KOL described airdrop hunters as "parasites" in the crypto ecosystem.

The author, "Master Tu'ao," also believes that the industry's airdrop logic is changing. "Previously, when CEXs assessed a project's fundamentals, they focused heavily on the activity level of on-chain data and active user metrics. Projects needed popularity during their initial launch. So for a long time, project teams tacitly approved of, and even reached an agreement with, the 'you come here to collect 'freebies' to help me get listed on major exchanges, and I'll airdrop some to you in return; we'd all share the profits. But now, CEX listings no longer look at on-chain data and users, because everyone knows these figures are heavily inflated," Master Tu'ao tweeted.

The logic of business is ruthless. With the on-chain data bubble becoming increasingly severe and the selling pressure from airdrop hunters negatively impacting the price trends of many projects, Monad's choice has its rationale. However, this is destined not to be the choice of most projects. As a public chain project heavily invested in by capital, Monad still has many cards to play. Its technical strength and the potential explosive power of its ecosystem applications could bring it a large number of community users. But for most projects, they are essentially marketing projects and must rely on airdrops to gain attention and market popularity.

In the long run, airdrops remain a significant source of value for the crypto industry, but the logic and targets of airdrops are undergoing profound changes. "The Monad airdrop results essentially signal the collapse of the 'black market' logic for exploiting cryptocurrencies on the testnet; it's highly likely that no one will be farming on the testnet anymore in the future," said the "Master Brother from Australia."

In fact, many KOLs had anticipated Monad's "table-flipping" move. KOLs like Tu'ao Master, Icefrog, and Chasing Wind had already openly stated they wouldn't participate in Monad interactions. It's understood that top KOLs will focus more on more diverse markets such as "talking and arbitrage," while also concentrating on selecting high-quality projects like Polymarket to build premium accounts.

Furthermore, several studios interviewed indicated that their revenue was lower than last year and also below expectations. "The key is to find an area where you have an advantage, such as low labor costs, advanced technology, keen investment research to discover early-stage projects, or influential KOLs to talk to. It's quite difficult to obtain substantial profits by simply following the crowd and trying to make money," A-Du said.

With the market capitalization of leading projects like Monad falling significantly below market expectations, and many projects locking up airdropped tokens for extended periods after TGE, the status of "freebie hunters" in the project's profit-sharing ecosystem has declined further, and the value of their acquired tokens has continued to shrink. The logic of winning through sheer volume of freebies is no longer sustainable.

"So, the golden age for novice retail investors to profit by providing labor to enter the primary market at low prices is indeed over. The door had actually been closing for a long time, and Monad's airdrop was just closing the last crack," sighed the senior member from Australia.

Monad's on-chain transaction fee revenue has been below $5,000 for five consecutive days.

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