Critics question EtherFi airdrop campaign, saying it favors large whales

Summary

•EtherFi has sparked controversy over its recent unfair token airdrop distribution.

•Community members expressed concerns about potential exploitation by large players and early adopters.

•Ether.Fi is the largest liquidity staking protocol, with nearly $3 billion worth of assets on the platform.

Recently, Etherfi’s liquidity re-collateralization platform has encountered fierce criticism, mainly due to reports that Tron Network founder Justin Sun will receive a large airdrop allocation of tokens.

EtherFi revealed that the first airdrop phase will release 6% of the total token supply. The project’s total token supply is 1 billion, with an initial circulating supply of 115.2 million.

EtherFi airdrop allocation sparks criticism

Ether.Fi outlined several of its criteria for determining eligibility for an air investment, including holding eETH, recommending a friend to use the protocol, or participating in an early adopter program.

After careful review, community members soon discovered that Tron Network founder Justin Sun would receive approximately 3.5 million ETHFI, equivalent to 2% of the 60 million initial allocation tokens.

Community members speculate that the tokens could be worth as much as $20 million. The allocation will serve as a reward for his recent deposit of 20,000 ETH into the protocol. Some have criticized this, pointing to the potential exploitation of whales.

Some people have criticized this, pointing out that large investors may receive huge rewards by staking large amounts, while early project participants can only receive meager rewards.

Well-known airdrop hunter Abraham Chase wrote: “The airdrop allocation rule is that 85% is allocated to the first 500 wallets, and the remaining 15% is allocated to more than 70,000 wallets (we are all in trouble). This points system looks like Like a game designed for big players. I think there should probably be other ways to achieve a more balanced and diverse token distribution strategy. I'm not sure what's going on here or why it's happening, but other staking platforms should definitely take it from Lessons learned.”

EtherFi Token Economics | Source: Ether.Fi

However, proponents of the Ether.Fi distribution model argue that it incentivizes user engagement behaviors, such as large amounts of staking. They believe that protocols have the power to incentivize participants based on their own judgment, with staking being crucial. They also noted that Sun’s large amount of staking may have generated significant revenue for the protocol.

Still, the debate continues, with some arguing that all airdrop distribution models are flawed. While some prioritize active participation, others favor mobility. In the case of EtherFi, supporters argue that their model enhances transparency by preventing actors from manipulating the system using multiple addresses.

According to reports, in response to community concerns, Ether.Fi founder Mike Silagadze said that the project will revise the token distribution plan to better serve the community. The founders also stressed the importance of adhering to established rules while expressing gratitude for the support of major donors such as Sun.

Ether.Fi is the largest liquidity staking protocol. According to DeFillama, the total value of assets on the protocol is approximately $3 billion.

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