Max Wayld 福

Late to this, but as a VC, here’s my perspective on airdrop farming: Farmers are obviously not useful to projects. @Cobie is right that as a VC, I ignore farming activity. I’m extremely skeptical of easily farmed metrics, and we always dig into the data to try to identify farming. Wherever we see it, we heavily discount it. Farming is, by definition, people who pretend to use a product and pretend they will be long-term users, in order to get paid via an airdrop. Let that sink in for a second. Crypto has broken all of our brains on this. If a normal consumer startup paid people to pretend to use their product and pretend to retain, that’d be considered fraud. Airdrops started as an idealistic and egalitarian practice, but the rise of industrial farming has evolved it into something straightforwardly toxic. Farmers try to emulate real users and make it hard for teams (and investors) to identify the difference. So, no. Farming is obviously bad for startups. If it weren’t bad, farmers wouldn’t try to hide that they're farmers. But farmers will reply: the value of farming is that farmers pump up metrics of successful projects, and therefore, it’s good for the projects. This is so wrong it’s hard to even know where to start. First, if farmers are “pumping up metrics,” who are they pumping them up to? Who is being fooled here by inflated metrics? Is it the VCs? If so, farmers are claiming that founders are conspiring with farmers to dupe their VCs. (And on many heavily farmed projects, VCs are underwater.) Note: this is incompatible with the theory that VCs are the primary culprit of bad token launches. Either the VCs are dastardly villains conspiring with founders to dump on retail, or they’re stupid fools being duped by founders with farmer-inflated metrics. But it can't be both at the same time. The other option is that it’s not the VCs who are fooled--VCs see through it--it’s retail who’s being fooled. So maybe farmers are conspiring with founders to dump on retail, and that’s why it’s good for founders. The problem with this theory is that founders don’t get to dump day 1, only farmers do. So by the time the chickens come home to roost, the metrics have already plummeted, the farmers got out by selling their airdrops, and the founder is left holding the bag. Only the farmers profited from retail, not the founder. But even if we rationally agree with this analysis, to most people, it doesn’t matter. Because we all know that despite this, all good projects get farmed. So if nobody shows up to farm your project, that must imply your project is not good, and therefore you’ll do poorly in the market. Don’t you want to be like all the other good projects? So you need farmers to show up, whether you think they're parasitic or not. This sounds convincing. But it’s totally wrong, for the age-old reason: correlation is not causation. Yes, good projects get farmed. But the project being good causes the farming, the farming doesn’t cause the project to be good. All big cities have crime, but that doesn’t mean crime is causes cities to get big. The causation is backward. You can have a good project that isn't farmed. To tell you the truth, I think the actual dumb money here is the exchanges. Exchange listing teams reward farmed metrics more than VCs do. But the market is already correcting on this, and norms are changing. It’s just exchanges tend to be the last to notice, as they’re furthest back in the capital stack. Now all that being said, there’s nothing morally wrong with airdrop farming. No more than there being anything wrong with running MEV bots or sniping token launches. The game is the game. As long as you’re following the rules, all is fair. So there's no reason to look down on airdrop farmers. They're strategically trying to make money with the resources they have. But are farmers providing value to founders? No, obviously not. (Caveat: “Linear” farming is an exception--if you’re being paid to provide liquidity or an insurance backstop, or some other clear assumption of risk, I’d call that more classic liquidity mining, which is totally valuable. Or if you’re being paid to market make or provide tight spreads, that’s also valuable. This kind of farming is pay-for-performance that contributes to a product moat. But that’s not like the vibes based “pretend to be a user and touch everything" type farming I’m talking about above, which tends to be more common for L1/L2s or for consumer products.)