ParaSwap, a decentralized exchange, has been added to the list of DeFi platforms which launch PSP (the native governance token) via airdrop. As users receive rewards for their support, most of these events create a lot if hype within the community.
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ParaSwap’s airdrop did not come without its fair share of users who jumped into the platform in order to receive funds in PSP. However, ParaSwap used new logic to distribute their native token.
ParaSwap chose a different strategy than Uniswap. Uniswap is a decentralized platform that gives every user who has interacted with their smart contracts a percentage of their governance token, UNI. ParaSwap was not like that. By making a tradeoff between more decentralization or allowing malicious actors to spoil the airdrop, according to an official post, the platform chose to “reward active users”.
Some people were therefore excluded of the PSP airdrop. This was mainly because they expressed dissatisfaction via social media. Some even accused the platform’s incompetence and malicious behaviour. User Davis (@basedkarbon) said:
Paraswap was the most shady company to ever execute an airdrop. They were so hyped that they excluded 99% of the community.
In a Medium post, the team behind the platform explained the airdrop’s logic. Therein, they claimed the event was designed to “target to the best of our ability genuine ParaSwap users that were not simply trying to game a potential token drop”.
Data provided by the DEX’s team claims that of the 1 million unique addresses that have ever used the platform, only 20,000 were eligible to receive PSP. In that sense, they added the following on the possibility of “genuine” users being left out of the process:
The ParaSwap team worked hard on the logic, yet we’ve received a significant amount of attention from airdrop hunters and had to make tradeoffs; and there might be genuine users left out, we’ve double checked our logic to make sure it’s minimized.
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ParaSwap protects PSP Distribution at the Cost Of Its Community
ParaSwap’s team claims ParaSwap was forced to take extra precautions regarding the airdrop due to ParaSwap’s token importance and role in creating private market players. For that reason, they claimed to have studied similar events from other platforms and ruled out a volume-based airdrop for “an engagement-based airdrop”.
The theory is that this would stop malicious actors from using the snapshot to determine which addresses are eligible for PSP. ParaSwap considered the following factors:
(…) the user first interacted with ParaSwap, if and how frequently he came back and how savvy the swaps were. There’s a lot that can be inferred from onchain data, and that’s precisely what we did. ParaSwap users that are not just here to make token swaps, was our goal.
The posting stated that addresses were designated into three categories according to which they would receive approximately 7% of total PSP supply. These levels were determined by each user’s level of activity with the platform, as explained above.
Although this airdrop logic was not popular, some people praise its effectiveness in excluding malicious actors and preventing Sybil attacks. If they feel the tradeoff was worth it, future platforms may be able to copy this strategy.
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