What are retrodrops and how to capitalize on them 

The cryptocurrency industry has undergone a significant number of transformations since its emergence. Users have witnessed the birth of a huge number of trends: ICOs, NFTs, DeFi, airdrops and, of course, retrodrops.

Initially, ICOs, IDOs and IEOs were the ideal way to distribute tokens, initial allocations and attract a dedicated audience to a project. However, things changed with the arrival of official regulation in the form of the U.S. Securities and Exchange Commission (SEC). SEC stated that token sales can be considered directly as a sale of securities.

Thus, in case of a positive decision, large projects on the market would suffer significant losses and pay huge fines. This was the starting point of the search for new strategies that would allow to properly realize the potential of the project and distribute tokens to the most involved users.

To avoid legal delays and other financial and legal complexities, retrodrops, airdrops, testnets and other activities were invented.

In this article, we will tell you what retrodrops are, how you can make money on them in modern cryptocurrencies, and also give examples of the most successful retrodrops in history.

What are retrodrops. What is the difference between retrodrop and airdrop?

Retrodrop is the distribution of tokens among active users of the project at early stages (usually before the official announcement of the distribution). Airdrop differs from retrodrop in the way that it is usually aimed at a wider audience and should generally attract attention to the token or the project. Retrodrop, on the other hand, is aimed at a narrower circle of the most interested users who have brought tangible benefits to the project. Retrodrop also requires proof of previous interactions with the platform.

Another key feature of retrodrop is that the team may intentionally not report potential token giveaways. In addition, the project's funders may not reveal all the secrets and do not tell you what actions you need to perform to get the reward. This way, only the most interested users remain participants. For example, you can conduct transactions, participate in testing, provide feedback, test breeches, and perform other actions useful for the project without even realizing that this is what you will get a reward for. After the team analyzes the activity data, your candidacy may be approved or rejected.

Retrodrop benefits

Projects choose retrodrops because of several good reasons:

Hype. Notorious retrodrops such as Uniswap, Arbitrum, Aptos and many others have become a powerful motivation for all users of the crypto market to participate in such activities.

Legality. Many token giveaways are recognized as securities by the SEC and that's a given. Therefore, a regular airdrop can become a rather risky event for a user, while a retrodrop is not considered a sale of tokens and does not lead to their recognition as securities.

Audience loyalty. Successful retrodrops don't get past the audience. Early users are usually grateful for the attention given to their efforts. That's why they stay with the project for a long time and continue to use the product, attracting new users.

Large reward amounts. Often the actual reward can be ten times the cost of the activity. The most successful retrodrops have awarded their users amounts equivalent to hundreds and thousands of dollars.

Getting tokens without investment. If you find a gold mine like Optimism, which gave away over 200 million OP tokens to users in 2022, your capital can increase tenfold. The market capitalization of the project's token has reached billions of dollars, significantly increasing the profits of Optimism's early users.

What actions are retrodrops awarded for?

Often the main criterion for getting a retrodrop is the financial expenditure of users and the number of useful actions performed by them during a certain time of using the platform.

Funding an account on the network or app: The amount of liquidity on the network positively impacts any ecosystem. This includes useful liquidity based on the experience of interacting with specific apps, such as blockchain assets for steak projects, farming, lending, and liquidity pools.

Network IDs and domains: identifying ID addresses and registering domains or obtaining special identifiers to gain identity.

Voting in DAOs (decentralized autonomous organizations): In this case, users do not sell their tokens, holding them on their balance in order to have the right to vote on innovations within the ecosystem, including proposing their own development ideas.

Creating and deploying smart contracts: Experimentation and new useful developments within the ecosystem often contribute to the development of a project. This is why companies pay so much attention to attracting and motivating developers.

Creating multi-sig addresses: So-called multi-sig addresses are created by professional teams, foundations and investor groups. These participants are considered valuable contributors to the ecosystem.

Dollar volume of transactions: The higher this figure, the better for everyone in terms of statistics and other network metrics.

Total number of transactions: The number of user transactions is directly proportional to the total volume of commissions paid. This serves as a source of revenue for validators and individual projects on the network.

Time spent in the network or app: The longer, more frequently and more efficiently a user interacts with the ecosystem, the more valuable a contributor they become.

Interaction with a large number of apps: Projects value users who are fundamentally passionate about the web3 field and often reward interaction with apps even outside of their own network.

Donations: Projects support voluntary donations in the early stages of development, where teams turn to community donations rather than venture capital rounds.

How much can you earn from retrodrops?

User earnings from retrodrops depend on the level of the project and the number of tokens distributed. Amounts in dollar equivalent can range from a few dollars to thousands if the project becomes very popular and its tokens grow in value. In a moment, a token can yield tens of X's (as was the case with Uniswap, for example) and users can make tens of thousands of dollars from scratch - at its peak, UNI ouncers could make $18,000.

Strategies in retrodrop

To maximize profits, users create multiple blockchain addresses known as sybil accounts, a practice known as multi-accounting. This method involves one person or group managing a network of supposedly independent addresses capable of claiming future airdrops. For example, in 2023, an unknown user created 21,877 addresses in the second layer of the Ethereum network, zkSync.

Many projects struggle with multi-accounting as they consider it quite malicious to the project. Projects like Optimism carefully analyze the activity of such accounts and may subsequently deny them rewards.

To increase the chance of retrodrop, experienced drophunters use special software that allows them to create countless addresses that potentially fit the retrodrop criteria. For example, users have accumulated $3.3 million worth of ARB tokens from 1496 wallets. It is extremely difficult to achieve such a result manually. However, there are enthusiasts who gather groups of people regularly engaged in the creation and support of activities on such addresses. This is a much more complex, but also a safer method.

How retrodrops are obtained

After a retrodrop is announced, the project team analyzes user activity on the platform and selects candidates who will receive a retrodrop.

Once all candidates are selected, the team launches the retrodrop and distributes the tokens. The size of the reward usually depends on the volume or frequency of the user's interactions with the platform.

Once the retrodrop is complete, the project usually announces a listing on cryptocurrency exchanges. In this way, the tokens enter the market and can grow in value. The user, on the other hand, gets the option to either sell the reward or hold in anticipation of more profit or for internal use on the project's platform.

Retrodrop notification usually comes in the mail or through the platform. To receive the tokens, you may be required to confirm account ownership or go through a short activation process.

Most famous retrodrops

Uniswap

The UNI token giveaway in September 2020 was one of the most famous airdrops in history. In order to get 400 UNI users had to make at least one transaction before a certain date. The creators also took into account the invested liquidity and trading volume.

The growth of the UNI cryptocurrency between November 2020 and May 2021 was almost 2000%. And the dollar valuation of this retrodrop is $6.4 billion with an average allocation of $27,000. The Uniswap exchange retrodrop was historic and contributed to the growth of general interest in the field of decentralized finance (DeFi).

Arbitrum

This project has become one of the most breakthrough Layer-2 solutions. The community had long heard rumors about the upcoming retrodrop, and such whales as 1inch, Aave, Balancer and other dApps entered the project.

Users started to actively use Arbitrum crosschain infrastructures and make transactions online. The minimum amount on a wallet in the Arbitrum blockchain was 0.0002 ETH.

Going to the Arbitrum Bridge it was possible, for example, to swap ETH from the Ethereum blockchain to Arbitrum, paying a rather high commission (about 10 -30$).

The retrodrop did take place in March 2023, for which 12.75% of the total ARB supply was allocated, which at peak price was $12.6 billion. The estimated profit per wallet was about $2,200.

dYdX

Decentralized exchange dYdX, known as one of the most user-friendly platforms for margin trading, held one of the most famous retrodrops in history in September 2021. The founders decided to reward all users who made trades on the platform before the token launch.

The reward amount depended on the total trading volume and ranged from $4,000 to $135,000. In total, traders received more than $2 billion in DYDX tokens when measured at its peak. The average amount per wallet was $23,630.

Where to look for retrodrops?

Retrodrops are usually searched for on specialized platforms where a huge number of upcoming and active retrodrops are published. You can start your search with Dune Analytics, a platform with analytics covering active projects in quite a bit of detail.

It's also worth keeping the social media accounts of prospective projects in focus, especially Reddit, X, and Telegram. Specialized sites for retrodrop search take information from here, so monitoring social networks will allow you to find a good retrodrop before others. In addition, there are special threads on Reddit and Discord, where users exchange information about possible retrodropes.

It is also worthwhile to constantly test new and gaining popularity dApps, especially in popular ecosystems, and participate in testing and beta versions of projects.

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Conclusion

Retrodrops can be a great opportunity to get rewarded without making a large investment while testing new blockchain technologies. And all-round activity and regular contribution to the project, performing complex labor-intensive tasks will help to increase profits.

However, before deciding to participate, you should study the project in detail, evaluate all available information about developers and investors in order to screen out fraudsters.

It is also worth remembering that the company may decide not to retrodrop, and all your efforts and investments will not bring financial results. So always be prepared for increased risks in this type of giveaway.