New tokens tend to disappoint

Free money is cascading around all about us on the internet, and it's been... quite disappointing.

Why it matters: Cryptocurrency projects need a way to find users as fast as possible in order to have adequate liquidity for whatever their funky financial scheme is.

• Through the magic of blockchains, they can just spin up a bespoke kind of money specific to their project and give it to the people who actually use it. That's called an airdrop.

The latest: There have been (or there are — some are ongoing) some big airdrops lately: such as Layer-2 blockchains ZKsync and Blast and chain bridger LayerZero.

Yes, but: There are so many rules and so much work required around earning airdrops these days that pretty much everyone is frustrated about them.

The big picture: Another reason to be disappointed by most new tokens is that they don't tend to hold onto their value anyway, according to a study of new projects by Coin Metrics.

What they're saying: "While airdrops provide a nice windfall, most airdropped tokens lose their long-term value," the report notes.

• However, rank-and-file fans of new initiatives have been demanding that as much of the supply of a new cryptocurrency as possible go to its early fans.
• "There's kind of this idea that the more tokens you release to the public, the more likely that the token will retain its value," Victor Ramirez, from Coin Metrics' data team, tells Axios.
• But their research doesn't back it up, he notes.

Community distributions have shrunk, in fact. Bitcoin was designed 15 years ago to give 100% of its supply to users. Not too long ago, 40% to 50% of new tokens were going to users.

• These days, it's dropped to more like 5 % to 15%.

Friction point: In theory, this should be good for believers in a project. If the team behind it holds onto more, and the token goes up in value, they can use the supply held back to pay for more work going forward.

• That said, most people would rather get a bigger windfall now.

The bottom line: Setting airdrops aside, though, the simple fact is that most new tokens peak right after launch and never grow meaningfully again after that, which suggests that worrying about new tokens might not be the best use of time.