A maturing airdrop (mdrop) is an airdrop with a decreasing claim penalty. In this article we explore the mechanism and its benefits.
The Token Distribution Dilemma
What’s the best way to launch and distribute a token? The market has tried everything: mining, ICOs, liquidity mining, airdrops, and more. Yet, there’s no perfect method — only iterations that keep improving.
Currently there are two challenges. The first is launching with a high float, as the market moves away from “low float, high FDV.” Advocates like Anatoly and Andrew Kang support high float since the uncertainty of looming unlocks from insiders is undesirable. The second challenge is balancing a high initial float with the risk of overwhelming sell pressure.
To address the second challenge, token launches are increasingly implementing mechanisms that encourage long-term commitment and discourage premature selling. This sets the stage for maturing airdrops, or mdrops — a new approach that builds on concepts pioneered by Zeta, Sanctum, and deBridge.
Mdrops empower projects to achieve broader token distribution while aligning incentives with long-term supporters.
Understanding Mdrops
A maturing airdrop (mdrop) is an airdrop with a decreasing claim penalty. If tokens are claimed immediately, the full penalty is paid. If tokens are claimed after maturity, no penalty is paid. The penalty is paid in another token, be it USDC or SUI (since we’re building on Sui).
The Case for Mdrops
Mdrops provide a couple of key benefits:
- Align incentives: They align long-term holders with the protocol while discouraging short-term speculators. This encourages beneficial behavior while still offering value to yield farmers, who can play a useful role.
- Predictability: Mdrops eliminate the uncertainty of unlock schedules. Tokens are fully unlocked upfront, with a clear, predictable maturation period.
- Reduced Sell Pressure: They spread out selling pressure over time. Selling below the penalty is unprofitable, theoretically setting a price floor.
Projects can choose what the penalty should be. If it’s set to 100% of the target price, users don’t get any benefit unless the project grows. Alternatively, setting penalties below 100% fosters a stronger community by offering value at launch.
The penalty can be denominated in any token, but SUI is a preference for two reasons:
- Correlation: SUI is more correlated to ecosystem tokens than USDC, reducing volatility.
- Ecosystem Impact: This drives SUI demand, benefiting the ecosystem. If widely adopted, it could mimic the high demand ETH experienced during the ICO and NFT minting booms.
Comparing Past Approaches
The first project to implement a similar approach was Zeta in April 2024, with their “Diamond Hand Claim,” offering a 100% airdrop allocation bonus after 7 days. Sanctum extended this to 14 days in July, and in October deBridge introduced a variation: users could either claim half at launch and the other half after 6 months or claim 80% at launch and lose 20%.
While these mechanisms are often framed as bonuses instead of penalties, the effect is the same. Note that the trend is clearly moving toward longer maturity periods, since short maturities have little impact.
Projects have also experimented with constraints on the largest recipients. For example, Drift allowed top airdrop recipients to claim a portion at launch, with the rest subject to 9-month vesting with a 3-month cliff. Blast imposed 6-month linear vesting for its top 0.1% of users. Meanwhile, deBridge required the top 10% of users to choose between a bonus or penalty, while the rest of users simply received an airdrop.
In my view, it’s best to treat all wallets equally. Otherwise, you incentivize Sybil attacks. It’s more effective to design robust incentives rather than play in a cat-and-mouse game.
The Road Ahead
Mdrops represent a significant evolution in token distribution strategies which could even become the new standard. They address key challenges of high float launches and immediate sell pressure, while achieving better community alignment.
Yours truly,
Rooter
