5 Most Controversial Crypto Airdrops Ever
Key Takeaways
- Crypto airdrops distribute tokens to attract users, but poorly managed events can harm trust, reduce token value, and alienate communities.
- Hamster Kombat, EigenLayer, and Catizen faced backlash for delayed schedules, unfair distribution, and unrealistic expectations, causing significant drops in token prices and trust.
- Grass Protocol and Smog Token struggled with technical errors and participant exclusion, further highlighting the importance of transparency and proper planning in token launches.
- To succeed, projects must ensure clear communication, test systems thoroughly, and create fair and inclusive distribution strategies to build lasting community trust.
Cryptocurrency airdrops are one of the most talked-about Web3 strategies for drawing users to a project. According to CoinGecko, between 2020 and 2023, airdrops distributed $26.6 billion worth of tokens. In theory, airdrops should reward early supporters, kickstart a token’s market presence, and spark interest among crypto enthusiasts. When executed well, they can help a project gain traction quickly. But when things go south, the impact can be disastrous.
In this article, we’ll examine five controversial airdrops and the valuable lessons they offer for developers and users.
Hamster Kombat – September 2024
Hamster Kombat sought to blend blockchain gaming with meme culture, using its native token, HMSTR, to power in-game purchases, rewards, and governance. Playing as virtual CEOs of their own cryptocurrency exchange, players could earn HMSTR tokens, adding a fun element to the play-to-earn model. The project promised an engaging experience and aimed to build a strong community through its airdrop.
What Went Wrong?
Originally scheduled for July 2024, the airdrop faced delays due to technical issues and was rescheduled for September. Even then, only 88.75% of the tokens were distributed, with the remainder delayed until July 2025. The sudden change frustrated participants and led to calls for a boycott.
The token debuted at $0.01—far below the community’s expectations, as influencers and YouTubers had speculated a price of $0.10 to $0.50. Within days, the price dropped by 50-60%, sparking widespread criticism. Many users also struggled to sell their tokens due to minimum trade thresholds on centralized exchanges like Binance, where transactions required at least $5 in value. Allegations of favoritism added to the controversy, with claims that a significant portion of the airdropped tokens went to influencers and YouTubers for referrals.
Trust depends on transparency. Clear timelines, honest pricing expectations, and equitable token distribution are essential for maintaining community support.
EigenLayer – May 2024 (First season), September 2024 (Second season)
EigenLayer positioned itself as an alternative platform for staking, enabling Ethereum users to re-stake assets to support new projects. The platform’s native token, EIGEN, was designed to reward liquidity providers while ensuring platform security.
What Went Wrong?
EigenLayer’s airdrop had various controversies. The airdrop set aside 15% of 1.67 billion EIGEN tokens for the community, but only 5% of these were allocated to early users. EigenLayer tokens were initially made non-transferable, disappointing participants expecting immediate rewards. Additionally, 55% of tokens were reserved for Eigen Labs investors and contributors, raising concerns over potential sell-offs once tokens vest. The exclusion of users from the U.S., Canada, and China compounded frustrations, as these participants had risked staking funds without eligibility for rewards.
Eigenlayer’s controversy led to widespread backlash. When the tokens became tradable in September, EIGEN’s price dropped sharply, from $4 to $3 in less than a week. The decision to exclude smaller contributors undermined trust, casting a shadow over future development plans.
Consistency builds trust. Sudden rule changes can alienate your core supporters and create long-term reputational damage.
Catizen – July 2024
Catizen, a Telegram-based blockchain game, caters to casual gamers with its fun, community-centric ecosystem. Its native token, CATZ, rewards players for achievements and facilitates in-game transactions.
What Went Wrong?
The project initially marketed its airdrop as an exclusive reward for beta testers, promising a generous allocation of CATZ tokens. However, the final distribution fell short. The Catizen airdrop allocation, initially set at 43% of the 1 billion CATI supply, was reduced to 34% and split across two seasons due to botting activity. The decision, made by Catizen’s developers, sparked controversy within the community. Many testers received significantly fewer tokens than expected, with the project citing budget constraints. The misstep frustrated the community, resulting in a drop in active players.
The CATZ token’s value mirrored the fallout, falling from $0.9 to $0.4 within days. The team’s lack of upfront communication about the reduced token allocation eroded trust, with users accusing it of misleading advertising.
Clear communication is essential. Projects must manage user expectations by being transparent about potential changes or limitations.
Grass Protocol – October 2024
Grass Protocol sought to improve decentralized lending through its borrowing mechanisms. The project designed its GRASS token to incentivize liquidity providers and drive user engagement. The token’s initial airdrop was meant to attract early adopters and establish a strong foothold in the competitive DeFi landscape.
What Went Wrong?
A major technical issue prevented Phantom Wallet from handling the increased demand to disrupt the airdrop, leading to incorrect wallets receiving tokens. Over 5,000 users did not receive their promised GRASS tokens, while others saw unexpected surges in their wallets. The team’s efforts to resolve the issue caused further delays, leaving many users dissatisfied.
Within a week, the GRASS token’s value fell from its initial $0.10 to $0.06. The technical failure undermined confidence in the protocol’s infrastructure, raising questions about its readiness for a broader launch.
Thorough testing is critical. Projects should rigorously test their distribution systems to prevent technical mishaps that could damage their credibility.
Smog Token – September 2024
Smog Token sought to capitalize on the growing memecoin trend, positioning itself as a community-driven token with viral potential. Its airdrop aimed to reward early supporters while boosting visibility in the congested market.
What Went Wrong?
The airdrop was capped at 1,000 participants, significantly lower than the 15,000 users who had completed the required tasks. This decision sparked widespread discontent, with excluded users expressing frustration over their wasted efforts.
Smog Token’s price initially rose to $0.3, driven by excitement from the airdrop. However, the backlash overshadowed the launch, and the token’s value fell back to $0.002 within days. The limited participation undermined the project’s goal of building a broad, engaged community.
Inclusivity drives success. Setting realistic participant caps and aligning them with demand ensures community satisfaction and long-term growth.
Challenges of Crypto Airdrops
While crypto airdrops promise to be a tool for driving adoption, several challenges can turn them into PR disasters.
Below are common issues airdrops face
- Technical glitches
- Unclear policies
- Unfair distribution
- Overpromising
- Market saturation
Technical Glitches
The technical complexity of smart contracts often makes them prone to errors. Grass Protocol is a cautionary tale of what happens when glitches go unchecked. Before launching an airdrop, projects must rigorously test their systems to ensure smooth execution.
Unclear Policies
Changing the rules at the last minute, as EigenLayer did, is one of the fastest ways to lose credibility. Users expect transparency, and sudden shifts breed suspicion. A well-defined roadmap, shared publicly, can help keep participants on board.
Unfair Distribution
Favoritism—whether real or perceived—can destroy trust in a project. Hamster Kombat’s uneven distribution sparked widespread dissatisfaction and hurt its reputation. Creating clear, auditable processes ensures participants feel the system is fair.
Overpromising
Many projects overestimate their ability to deliver. Catizen promised more tokens than it could distribute, eroding its user base. Setting realistic expectations and communicating openly about limitations can mitigate disappointment.
Market Saturation
The sheer number of projects offering airdrops has made users more selective. Smog Token’s capped distribution alienated potential participants who were already comparing it to other, more generous launches. Projects need to align their airdrops with clear value propositions to stand out.
Closing Thoughts
Crypto airdrops are more than a marketing gimmick. They directly link new projects and their communities. When done right, airdrops can accelerate a project’s growth by attracting users, building engagement, and creating excitement. But as we’ve seen, they’re also fraught with challenges that can sink even the most promising ventures.
Future projects can learn from the missteps of Hamster Kombat, EigenLayer, Catizen, Grass Protocol, and Smog Token to approach airdrops with better strategies. Airdrops are a tool worth understanding for anyone involved in Web3 – whether as a developer, investor, or user. They’re more about building lasting relationships between projects and their communities than distributing free tokens.
