During late 2023 and early 2024, we witnessed the rise of airdrops as a way to incentivize early contributors. As some airdrops resulted in huge profits thanks to being under-farmed, this new trend attracted huge interest among CT. As a result, several protocols adopted this trend quickly.

For protocols, it is a good solution because it empowers protocols against users. It creates hype and speculation which surely attracts attention. In the end, founders can show VCs that they have traction and found PMF.

For sybils/mercenary capital, they can easily extract value and leave the protocol at the end.

For retail, it was good hopium because it offered hype and speculation, and the chance to get rich quickly. However, in the end, most farmers were farmed even though they took the risk of being early.

With the latest EigenLayer and LayerZero dramas, we saw that we are coming to the end of airdrops as there are several flaws in the existing models.

Why is the airdrop model unsustainable?

To understand why the expectations are not met with the airdrops that are dependent on the points system, there are things we should consider:

• Total fundraising is a major factor in determining the total allocation for the airdrop.

• Founders may not be willing to allocate a big portion of the token supply to the community.

• Most airdrops are overfarmed because they invite sybils and mercenary capital.

• There is no deadline and the airdrop amount is not clear.

• The protocols are keen to farm the farmers without launching the tokens as the fees are juicy and they do not need to distribute them.

• Airdrops are financially negative for the protocols as they bear significant costs by distributing their tokens for free.

So, the basic answer to your question: There are limited resources while the demand is infinite, and the airdrop game is arbitrarily rugged by teams and VCs.

As a result of this status quo, while the mercenary capitals/sybils and protocols benefit from airdrops, retail users who took the risk of being early are not rewarded properly.

However, we find it necessary to highlight that the issues with airdrops are not caused by the points system, but rather by uncertainties and a lack of clarity in terms of the timeline and reward allocation of airdrops. Any solution that does not aim to solve these issues is going to fail in our opinion.

The Solution: Discount Tickets

It’s time for retail to invest in a protocol like VCs do.

We have a solution to the disappointing low float and high FDV airdrops, and it is called Discount Tickets.

A Discount Ticket is the right to buy the governance tokens at a discount compared to their market price. This right is given to those who contributed to the protocol financially. This allows you to buy the token at a profit and you can either cash out or drive your gains more.

To be eligible for this right, the protocol expects certain actions to be taken by the user, including:

• Liquidity provision

• Product usage

• Referral

• and many more which can be tailored based on the project’s needs.

Some features of Discount Tickets models include:

• The deadline for the campaign is pre-determined.

• The total amount that is allocated as rewards is pre-determined.

• An individual allocation will be determined by the percentage of one’s Discount Tickets compared to total Discount Tickets, while the discount will be determined according to one’s tier. A user’s tier will depend on the total amount of Discount Tickets the user has collected.

TL;DR for how Discount Tickets Work:

• Do some actions that the protocol asks you to do.

• Collect points and claim your Discount Tickets.

• Use these Discount Tickets to buy the governance token at a discount.

• You can hold it, or you can sell it. Either way, you are in profit.

• You win, the protocol wins.

We believe that the loyal community members will be happy to bear the cost of the discount and receive an outsized reward since this will prevent sybils and mercenary capital from extracting value from the loyal community members.

Comparison: Discount Tickets vs Airdrops?

1. The main difference between Discount Tickets and Airdrops is that the Discount Ticket model incentivizes long-term supporters by preventing overfarming and reducing sell pressure while the airdrop model distributes the token free to everyone without considering whether the user’s benefits align with the protocol’s benefits or whether the “user” is sybil/mercenary capital.

2. Discount Tickets are similar to airdrops. If you provide liquidity to the protocol in any way, you will be receiving Discount Tickets like you earn points. These Discount Tickets will turn into Discount and Allocation based on your ranking in the leaderboard and your total contribution compared to the whole contribution of the participants.

3. The Discount Ticket model allows protocols to amass Protocol Owned Liquidity which can be used to boost the protocol and the token.

4. The Discount Ticket model can’t be overfarmed as it discourages the sybils and mercenary capital. This allows outstanding rewards for loyal contributors.

5. The Discount Ticket model has clear goals, reward allocation, and timeline compared to airdrops with no clarity.

Yes, it is not a regular airdrop. The ecosystem is full of protocols giving out airdrops to the community to reward early contributors to the protocol. Some of the examples are LayerZero, EigenLayer, Renzo, and Parcl. These examples have shown that the airdrop system is broken. A value (token) can’t be given for free, and if a protocol does so, it invites sybils and industrial farmers who are ready to dump all the tokens to the long-term holders and retail.

After an airdrop campaign ends, mercenary capital and sybils leave, liquidity drains and the protocol is left with nothing. This means that the token will lose its value eventually, and it is a lose-lose situation for everyone involved, especially for those who are loyal supporters of the protocol, unless you are a whale who luckily dumped all your bags into the retail.

TL;DR: Airdrops encourage sybils, mercenary capital, and users who don’t have long-term alignment, while the Discount Ticket system rewards loyal and long-term supporters by allowing them to invest in projects like VCs.

Conclusion

The Discount Ticket model is designed to eliminate the problems plaguing the airdrop system. In this sense, the Discount Ticket system will benefit long-term holders over mercenary capital and sybils. It is financially positive for the protocol and this means that incentive programs can continue longer which is a net positive for the users. In addition to this, unlike the airdrop system, it doesn’t create a selling pressure that puts the protocol’s future at risk.

The airdrop system was a successful method of rewarding early users in the early cycle of the crypto ecosystem. However, the market is over-saturated, and there are many protocols launching airdrop programs hoping it will attract liquidity, users and help them to find PMF. However, with recent airdrops, we have seen that this method is no longer sustainable and should be put to an end.

Stable Jack is here to innovate. We believe that the airdrop system is a rug game for retail and early contributors, and we won’t play that game.

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