In recent years, it has become standard practice for crypto projects to distribute airdrops just before the token generation event (TGE). By enticing users with free tokens, project parties hope to build enough hype and user attention before launch. However, the reality is often that projects 'peak upon launch,' with hype and prices rapidly falling in a short time. Users often immediately sell off their tokens after receiving airdrops, leading to pressure on the token market, cooling community enthusiasm, and the user base that the project party just built collapsing.
Although the traffic brought by airdrops is considerable in the short term, it is difficult to truly solidify into community assets or product users. Due to the lack of real commercial scenarios supporting most projects, after airdrops, they often have to rely on continuing to issue tokens to maintain user activity, and this incentive mechanism essentially overdrafts future value. Ultimately, most of these tokens and user traffic flow into the arbitrage cycle of 'wool party,' and resources that truly support project development are wasted instead. What was originally designed to kickstart the ecology has instead become a burden that weakens the project's vitality.
To break out of this vicious cycle, the conclusion is: projects must become 'projects where the wool comes from the pig.' The benefits given to users are really borne by third parties willing to pay. As the saying goes, 'the wool comes from the pig,' referring to platforms providing products or services for free to users while other market entities foot the bill. In the context of Web3, this means that project parties do not profit directly from users, but rather first provide benefits to users, with other stakeholders covering the costs, achieving a win-win-win situation: users benefit for free, projects expand their influence, and the paying parties gain users, data, or brand exposure.
Implement a three-step method: build an ecological closed loop.
If you are a project party, you might think: 'I also want others to pay for my users, how do I do it?' I suggest thinking in three steps:
Clearly define the core user group.: Please specifically define who the most important users for the project at the current stage are. Are they the veterans who mainly trade on your platform? Or are they the everyday users of your product? Or perhaps the investors holding your tokens? In other words, first answer 'what kind of user behavior counts as success.' Only by locking onto the core user group that can truly bring results can subsequent strategies stay on target.
Uncover unique competitive advantages.: Analyze the project's moat and identify advantages that others cannot easily replicate. This could be cutting-edge technological strength (such as strong infrastructure), a large and active user community, or unique data assets. Ask yourself: 'What unique skill do you have that other projects lack but desperately need?' Only by clarifying your core value can you confidently charge others.
Look for paying 'pigs'.: Find the partners that need your type of resource the most and are willing to pay for it. For example, if an exchange or public chain project has strong liquidity, you can collaborate with new projects, and they can use tokens or funds to purchase opportunities to enter your platform; if you operate a DApp with a large number of active users, then other projects wanting users may be willing to pay to airdrop or offer discounts through your channels. In short,whoever lacks your advantage is the 'pig' willing to pay..
Through the above three steps, you will find that 'others provide you with resources to benefit your users' is not a fantasy, but a designable business model. Essentially, you help your partners achieve their goals with your own core resources, while partners invest to benefit your users, forming an ecological closed loop. This allows users to continue enjoying dividends while also strengthening your ecological stickiness.
Typical case: Binance's liquidity strategy.
Taking the world's largest exchange, Binance, as an example, its core advantages are strong liquidity and a large user base. The target users of Binance mainly include traders and BNB token holders. It proposes to new projects: willing to exchange tokens or funds for liquidity and exposure opportunities. Binance distributes new project tokens for free to users holding BNB or participating in mining through activities like Alpha airdrops. This method helps new projects quickly gain user attention and liquidity, while also bringing additional benefits to Binance's loyal users, thereby enhancing the stickiness of BNB holders. The Alpha airdrop distributes new project tokens to active users who participate in locking, trading, and providing liquidity, achieving a win-win situation of 'users gaining dividends, new projects gaining exposure.'
By the way, a common question is: 'Why doesn't Binance airdrop to ordinary spot trading users?' The answer is that the trading volume on the main site is mostly provided by market makers (MM), who profit from liquidity. Binance needs to retain these core market makers, so it is more willing to give airdrop benefits to more small and medium retail users, promoting new projects by expanding a wider user base. This approach aligns with the spirit of 'the wool comes from the pig': giving retail users free scratching, while those truly paying are the project parties that need liquidity and the market-maintaining market makers.
Another noteworthy case is the social incentive platform Kaito. Its operational mechanism essentially uses user behavior data and content participation on social media (mainly Twitter) as the 'assets' to attract traffic, and then collaborates with other crypto project parties to distribute their tokens as rewards to content contributors. In this structure, users accumulate points or obtain airdrops by 'outputting attention and voice,' while those really paying the incentive costs are the new project parties that hope to expand their influence through social volume before TGE.
On the surface, this is a typical 'wool comes from the pig' business model: users benefit for free, the Kaito platform takes on demand, and the project party pays for exposure. However, this model has obvious structural risks regarding sustainability. Its core reliance is whether Kaito has the ability to maintain long-term social attention entry. If in the future project parties have more efficient or cost-effective customer acquisition methods, Kaito's value as an 'intermediary' will significantly decline.
Cooperation for win-win: core value determines ecological lifeline.
Whether it's a technology-driven project or a community-driven project, the premise is to always hold onto your core competitive advantage. Once you lose the unique value that makes others willing to pay, this model will not work. The 'wool' ultimately rests on the 'pig' seeing value and being willing to pay. If you find it difficult to position your own advantages, then you should consider adjusting direction or focusing on areas where you excel.
For project parties, instead of blindly investing money to drive up prices, it is better to think about what resources can be exchanged with others. Find suitable partners and bring external power into your ecosystem. For instance, your strong user community can bring traffic to other new projects, or your unique data resources can help projects make decisions. These are all values that others are willing to pay with funds or tokens. Once successful, your users enjoy real benefits, you also strengthen ecological stickiness, and partners achieve their goals—everyone wins.
Investor perspective: Focus more on sustainable empowerment.
Today, as speculation in the crypto market subsides and investors become more rational, this is a sign of industry maturity. As an industry observer, I believe that projects able to survive long-term either have breakthroughs at the technical or product level (providing long-term value) or innovate in their business model (providing a positive cycle). Projects that can combine both naturally have a greater advantage.
For investors, the next time you encounter a project boasting, first ask if it has the ability to generate revenue from third-party payers: can the project truly allow 'pigs to keep flying'? After all, only those cooperative models that allow 'pigs to trade daily and sheep to never go hungry' can laugh until the end in this market.
The idea of 'the wool comes from the pig' is not just a slogan, but a feasible strategy guiding project operations. It requires project parties to clarify their own value, design ecological subsidy mechanisms, and jointly build growth with partners.