In recent years, it has become a standard practice for crypto projects to distribute airdrops before the token issuance (TGE). Through the lure of free tokens, project owners hope to accumulate enough popularity and user attention before going online. However, the reality is often that projects peak as soon as they go online, and the popularity and price quickly fall in a short period of time. Users tend to sell their airdrops immediately after receiving them, causing pressure on the token market, cooling of community enthusiasm, and the collapse of the user base that the project owners have just built.
Although the traffic brought by airdrops is considerable in the short term, it is difficult to truly settle into community assets or product users. Since most projects lack real business scenario support, they can only rely on continuing to issue coins to maintain user activity after airdrops. This incentive mechanism is essentially overdrawing future value. In the end, most of these tokens and user traffic flowed into the arbitrage cycle of wool parties, and the resources that truly supported the development of the project were wasted. The means originally designed to start the ecosystem have become a burden that weakens the vitality of the project.
To get out of this vicious circle, the conclusion is: the project must become a project that pays for itself. The benefits that will be given to users are actually borne by third parties who are willing to pay. As the saying goes, the wool comes from the pig, it means that the platform provides products or services to users for free, and other market players pay for it. In the context of Web3, this means that the project party does not profit directly from the user side, but instead gives users benefits first, and other stakeholders pay for it, and all three parties win : users benefit for free, the project expands its influence, and the payer gets users, data or brand exposure in return.
Implement the three-step approach: Building an ecological closed loop
If you are a project owner, you may be thinking: I also want others to pay for my users, what should I do? I suggest thinking in three steps:
1. Define the core user group: Please define who are the most important users for the project at this stage. Are they veterans who mainly trade on your platform? Or are they daily users who use your product? Or are they investors who hold your tokens? In other words, you must first answer the question what kind of user behavior is considered successful. Only by locking in the core user group that can really bring results, the subsequent strategy will not deviate from the goal.
2. Explore unique competitive advantages: Analyze the moat of the project and find out the advantages that others cannot easily copy. It may be cutting-edge technical strength (such as strong infrastructure), a large and active user community, unique data assets, etc. Ask yourself: What unique skills do other projects not have, but they really need? Only by clarifying your core value can you have the confidence to let others pay.
3. Find paid “pigs”: Find partners who need your resources the most and are willing to pay. For example, if an exchange or public chain project has strong liquidity, you can cooperate with new projects, and the other party will use tokens or funds to purchase the opportunity to enter your platform; if you operate a DApp with a large number of active users, then other project parties who want users may be willing to pay to do airdrops or promotions through your channels. In short, whoever lacks your advantages is the “pig” willing to pay.
Through the above three steps, you will find that others give you resources to benefit your users is not a fantasy, but a designable business model. In essence, you use your core resources to help partners achieve their goals, and partners invest to benefit your users, forming an ecological closed loop. This not only allows users to continue to enjoy dividends, but also consolidates your ecological stickiness.
Typical case: Binance’s liquidity strategy
Take Binance, the worlds largest exchange, as an example. Its core advantages are strong liquidity and a large user base. Binances target users mainly include traders and BNB token holders. It proposes to new projects: willing to use tokens or funds in exchange for liquidity and exposure opportunities. Through activities such as Alpha airdrops , Binance distributes new project tokens for free to users who hold BNB or participate in mining. This method helps new projects quickly gain user attention and liquidity, while bringing additional benefits to Binances loyal users, thereby enhancing the stickiness of BNB holders. Alpha airdrops distribute new project tokens to active users who participate in lock-up, trading, and providing liquidity, achieving a win-win situation of users get dividends and new projects get exposure.
By the way, a common question is: Why doesnt Binance do airdrops for ordinary spot trading users? The answer is that the trading volume of the main site is provided by market makers (MM), and these market makers themselves make profits by liquidity. Binance needs to retain these core market makers, so it is more willing to leave the airdrop bonus to more small and medium-sized retail users and promote new projects by expanding a wider user base. This approach is in line with the spirit of the wool comes from the pig: it scratches the retail sheep for free, while the real money is the project parties who need liquidity and the market makers who maintain the market.
Another case worth noting is the social incentive platform Kaito. Its operating mechanism is essentially to use the users behavioral data and content participation on social media (mainly Twitter) as an asset to attract traffic, and then cooperate with other crypto projects to distribute the tokens of these projects as rewards to content contributors. Under this structure, users accumulate points or obtain airdrops by outputting attention and voice, and those who actually pay the incentive cost are those new project parties who hope to expand their influence with the help of social voice before TGE.
On the surface, this is a typical getting the wool out of the pig business model: users benefit for free, the Kaito platform undertakes the demand, and the project party pays for the volume. However, there are obvious structural risks in the sustainability of this model. Its core reliance lies in whether Kaito has the ability to occupy the entrance of social attention for a long time. If the project party has a more efficient or cost-effective way to acquire customers in the future, Kaitos value as a middleman will decline significantly.
Win-win cooperation: core values determine the ecological lifeline
Whether it is a technical project or a community project, the premise is to always maintain your core competitiveness. Once you lose the unique value that makes others willing to pay, this model will not work. Wool is ultimately based on the pigs seeing the value and being willing to pay. If you find it difficult to identify your own advantages, you should consider adjusting your direction or focusing on deepening your expertise in the areas you are best at.
For project owners, instead of just investing money to boost the market, it is better to think about which of their own resources can be exchanged with others. Find the right partners and introduce external forces into your own ecosystem. For example, your strong user community can bring traffic to other new projects, or your unique data resources can help projects make decisions. These are the values that others are willing to pay with funds or tokens. Once successful, your users enjoy real benefits, you also strengthen the stickiness of the ecosystem, and your partners achieve their goals - all parties are happy.
Investor perspective: more emphasis on sustainable empowerment
Today, the hype in the crypto market has subsided and investors have become more rational, which is a sign of the maturity of the industry. As an industry observer, I believe that projects that can survive in the long run will either have breakthroughs in technology or products (providing long-term value) or innovate in business models (providing a virtuous cycle). Projects that can combine both will naturally have more advantages.
For investors, next time you encounter a project that is boasting about itself, first ask whether it has the ability to generate revenue from third-party payments: Can the project really make “pigs fly all the time?” After all, only those cooperation models that can make “pigs place orders every day and sheep never starve to death” can have the last laugh in this market.
The idea of the wool comes from the pig is not a slogan, but a feasible strategy to guide project operations. It requires project parties to clarify their own value, design an ecological subsidy mechanism, and build growth together with partners.
