Just 1 in 3 users of Arbitrum, a second layer running on the ethereum blockchain, have received 1,000 tokens or more according to Nansen, a blockchain analytics startup that was part of designing the airdrop.
Close to 70% have instead received nothing, amounting to almost two million addresses in one of the most tight airdrop devised so far.
“Out of ~2.3 million wallets having bridged on Arbitrum One before February 6, 2023, 625,143 or ~28% obtained more than 3 cumulative points and were eligible to receive the newly issued Arbitrum Token,” says Aurelie Barthere, Principal Research Analyst at Nansen.
This exclusion had little to do with preventing sybil, that being catching people or bots that use more than one account, because just 135k out of this circa two million, or 5%, were identified as sybils and were excluded.
Instead the focus appears to have been on punishing the casuals while disproportionately rewarding what are probably mostly trading bots as they tend to be highly active.
That’s based on arbitrary criteria, like requiring four transactions over many months, instead of two for example, even though Nansen identifies a fairly simple way of establishing what is a real account and what is more an airdrop sybil account.
That criteria is what they call aggregate volumes on-chain, a self explanatory measure that totals up the value of on-chain transfers, so if you send 1 eth from A to B, then the aggregate is circa $2,000.
Here though they require at least $10,000 in on-chain movements, and even then you get one point out of the needed 3 points.
One point is for depositing to Arbitrum, and then to meet the minimum you need four transactions or if you have not transferred at least $10,000 on-chain, you need to have transacted over many months.
“The Arbitrum Foundation aims at the optimal distribution of governance of the Arbitrum protocol. One way of doing this is trying to understand patterns that indicate organic activity,” Barthere says.
“‘Organic’ activities include finding utility in transacting on Arbitrum, helping develop Dapps and protocols available on-chain, or contributing to the economic and technological governance of the protocol.”
Their criteria does not have any extra points for developers however, individuals that launch smart contracts on Arbitrum, despite their encouragement being one of their stated aim.
Their criteria instead seemingly almost exclusively focuses on volumes and not to ascertain how organic an address is, but to establish how active an address is regardless of whether it is likely a sybil address.
Numerous ethereans for example have publicly stated they received the airdrop in three or more addresses, despite public blockchains allowing for proximity analysis.
Some therefore received a lot and most received nothing, but even those that have received this token, have received only about 10% of the total token supply.
43% is to be held by the Arbitrum DAO, and another 44% will go to the team and investors behind Arbitrum, the Offchain Labs.
Contrast this with the ethereum distribution itself where some 72 million tokens were part of the initial token supply, and only 12 million went to the Ethereum Foundation to distribute to devs and all else.
That’s almost an inverse of Arbitrum’s distribution, 80/20 versus 10/90 here; and yet still ethereum gets accused of a pre-mine.
One can argue however that these are free tokens, so those that got them should be happy and those that don’t shouldn’t complain, but without community buy-in, a project like Arbitrum risks backlash because ultimately their ARB token might ‘compete’ with eth.
They do not state in their announcement just what this token is for exactly, but presumably if it is to have any value it will be to pay some sort of fees.
Those fees are currently mostly paid in eth, but if value moves to L2s and in this case to Arbitrum, they would be paid in Arb, creating a tension of sorts.
Arb would still settle on-chain, so eth itself would still get a fee share, but in extremes if say all value is on Arb, then the vast majority would be priced out of onchain transactions, making the relationship one of tradeoffs.
In that sort of situation they should have been far more generous, and their focus should have been on excluding sybil, not on fairly arbitrary criteria covering a very short span of time of just two years regarding who is a user.
The complexity of the criteria in addition raises questions about insiders as much of this about four transactions and over months, etc, was obviously leaked in some corners long before today’s announcement.
That can be fair as you want buy in from those that involved, but the design is stingy and arbitrary, not least because some fairly organic casuals, and looking by the numbers many of them, did not qualify.
On the other hand, keeping on the airdrops is to be commended, but such airdrops should aim for inclusiveness and wide distribution as we want the highest level of decentralization, especially for second layers.
Airdrop designers moreover need to bear in mind this space is global. You can buy a whole house in some countries with $10,000, and even in developed nations that’s a fairly big amount for anyone under 40.
The casuals therefore should be rewarded in our view, not punished, not least because the level of support for this space depends on them and arguably even the future itself of this entire space.
Incentivizing them, and moving them from casuals to above, is a key objective of any business. Here though Arbitrum has disincentivized because leaving out some 70% of your users obviously has a cost.
Now, are they users? A distinction between that and bots is fair, although if your criteria is activity then it might be close to impossible.
Are they users in a different sense, in regards to did they just deposit to get the airdrop and nothing more?
Well, considering the number is two million and let us assume they are all singular humans, just in crypto itself the estimates are about 200 million users, and some in this industry hope to get it to one billion.
With just 1% of the current crypto users showing an interest in you, why would you risk even one such user let alone 70% of them, especially if your aim is to be the conduit of the vast majority of eth transfers to the point, in extremes, of replacing eth itself.
Greed, that’s why, presumably, considering their total token distribution, because in regards to objective criteria, bot or not or sybil and that’s that, in our view.
Let the rest hunt as long as they’re distinct individuals because if they’re bothering that much, then obviously they’re users and if not today, tomorrow if the dapp takes off.
The other view, the one expressed here, is that they want to incentivize those most likely to participate in the DAO, hence the focus on activity but the distinction between traders and activity, or trading bots, is pretty much nil and neither is going to bother with your DAO.
The DAO in fact is a whole different aspect, and subject, and if you really want to incentivize DAO participation then you reward DAO participants as they do here with just 1% of the total tokens, rather than mingling that with the airdrop which, presumably, has as chief aim the decentralization of ownership.
That’s why these airdrops attract public support. They’re a new model and not just in words but in actuality, at least envisionably, whereby we own, the public owns our platforms.
A dapp or project diverges from that at their own risk, especially when the space for second layers is fiercely competitive and might get even more competitive still.
