Cryptocurrency retrodrops: everything you need to know

What is a retrodrop in cryptocurrency?

With the emergence of cryptocurrencies, users gained new ways to earn income, such as mining, staking, liquidity pool deposits, and many others.

One of these earning methods is cryptocurrency retrodrops.

What are cryptocurrency retrodrops?

A retrodrop is a way to earn income in which a project rewards users who were active before the official launch of its token.

A retrodrop is a form of an airdrop. That is why some members of the cryptocurrency community often use the term "retroactive airdrop" instead of "retrodrop".

The main difference between airdrops and retrodrops in cryptocurrency is that, in the first case, the conditions for reward distribution are usually known in advance, whereas in the second, they are not.

Another key difference between airdrops and retrodrops lies in their purpose. Airdrops are announced to promote projects and attract users, rewarding them for simple actions performed in the future.

In the case of cryptocurrency retrodrops, rewards are given to users who have actively interacted with the project's ecosystem in the past. Examples of activities that may qualify users for cryptocurrency retrodrops include:

Performing simple and complex transactions:

Transfers;
Swaps (on-chain exchanges);
Cross-chain transfers via bridges;
Buying and selling NFTs;
Lending;
Interacting with smart contracts;
Creating user assets, including both fungible and non-fungible assets.

Other qualifying activities:

Participating in project testing before the mainnet launch.
Providing liquidity in liquidity pools;
Voting within a DAO (Decentralized Autonomous Organization);
Participating in project funding and promotion;
Donations and development assistance;
Setting up and running validator nodes to support network functionality and security.

As an example of the first cryptocurrency retrodrop in history, many point to the distribution of the Stellar token. Back in 2016, the Stellar team, without prior announcement, distributed an equivalent amount of its native cryptocurrency XLM to Bitcoin holders, attracting significant attention to the project.

However, Uniswap, one of the first decentralized exchanges, is considered the true popularizer of cryptocurrency retrodrops. In September 2020, the Uniswap team unexpectedly distributed 400 UNI tokens to every wallet address that had interacted with the protocol's smart contract at least once.

The Uniswap retrodrop triggered a true DeFi (Decentralized Finance) boom. Other cryptocurrency projects, such as 1inch, Arbitrum, and OP Mainnet (formerly Optimism), followed Uniswap's example, while users began searching for new projects that did not yet have their own token (digital asset), even forming entire communities of professional "retrodrop hunters".

Types of cryptocurrency retrodrops

Cryptocurrency retrodrops come in two types: planned and unplanned.

In the first case, projects announce a future retrodrop at a certain stage but do not disclose the specific activities that will qualify users for rewards.

As an exception, a project team may announce the total amount allocated for the retrodrop and may even include it in its tokenomics, reserving part of the token supply for this purpose.

However, it is much more common for cryptocurrency retrodrops not to be announced in advance. On the one hand, this makes it more difficult to earn income from cryptocurrency retrodrops. On the other hand, if a retrodrop is officially confirmed, the number of participants increases significantly, thereby reducing the reward allocated to each participant.

A notable example is the highly publicized Hamster Kombat project, whose user base exceeded 300 million people — approximately 3.7% of the Earth's population. Due to the enormous number of participants, it was impossible to distribute large rewards during the retrodrop. As a result, most users who participated in the project for several months received less than $10 in HMSTR tokens through the retrodrop.

How do cryptocurrency retrodrops work?

As a rule, rewards distributed through a retrodrop are paid in the project's native cryptocurrency and credited to approved users before the asset is listed on exchanges.

When calculating rewards for cryptocurrency retrodrops, projects often consider the following factors:

Number and volume of completed transactions;
Types of transactions (transfers, swaps, lending, liquidity provision, purchases of non-fungible digital assets, voting);
Creation and deployment of smart contracts;
Launching and maintaining nodes;
Testing new features;
Wallet age;
Sponsorship amount.

However, eligibility criteria for retrodrop participants may vary from project to project. For example, LayerZero, which conducted a retrodrop in 2024, also considered the number of active days and weeks in the project and reduced rewards for users who did not use its official bridge.

When calculating retrodrop rewards, all transaction types selected by the team and completed before the snapshot (blockchain state capture) are taken into account. If users learn about an upcoming retrodrop but perform transactions after the snapshot, they will not receive rewards for those transactions.

Advantages and risks of cryptocurrency retrodrops

Cryptocurrency retrodrops benefit both projects, which attract attention and liquidity at launch, and ordinary users. This is the main advantage of cryptocurrency retrodrops.

Rewards from cryptocurrency retrodrops can significantly exceed the amount spent on qualifying activities. For example, participants in the Arbitrum retrodrop could receive between $1,000 and $2,000 while incurring only a few dollars in transaction fees.

However, in some cases, users may receive significantly less than expected and may even incur losses if the retrodrop is not conducted or if the project team excludes a participant for one reason or another.

This creates uncertainty and risks, as some eligibility criteria for cryptocurrency retrodrops are often unknown to participants.

In addition, participating in cryptocurrency retrodrops carries the risk of encountering projects associated with exit scams.

Examples of major retrodrops

Note: All estimates are based on the maximum token price at which retrodrop participants could have sold their assets.

Uniswap. The record holder is distributing approximately $6.4 billion worth of UNI tokens to retrodrop participants. The average reward per user was about $27,000.
Apecoin. Approximately $3.5 billion was distributed among retrodrop participants.
dYdX. Distributed around $2 billion. Some users received rewards worth up to $100,000 due to the appreciation of the DYDX token.
Arbitrum. Allocated nearly $2 billion worth of ARB, its native cryptocurrency, for a retrodrop.
ENS (Ethereum Name Service). This project conducted a retroactive drop worth nearly $1.9 billion.

Conclusion

It should be noted that the retrodrop sector has experienced a noticeable decline following a series of controversial cryptocurrency retrodrops conducted by Starknet, LayerZero, and zkSync.

The weakening performance of retrodrops may be linked to stricter anti-sybil measures and the massive influx of sybil users (participants operating multiple accounts). As a result, genuine users receive fewer rewards and become less interested in participating in cryptocurrency retrodrops.