Gas DAO Token Struggles to Maintain Momentum After Airdrop

The latest in an increasingly absurd trend has already found 26,000 claimants.

Dec 29, 2021 at 4:55 p.m. UTC
Updated Dec 29, 2021 at 6:03 p.m. UTC

Following the shooting-star success of SOS, another airdropped token, GAS, is now on offer to Ethereum wallets everywhere.

With no product, no plans for a product and no utility, the freshly minted GAS token’s run may be even more short-lived, however.

On Tuesday night, Gas DAO announced the launch of GAS, the project’s governance token, in a series of tweets.

The token was distributed to nearly 650,000 Ethereum users who had fulfilled certain on-chain parameters, including having spent over $1,559 in gas fees. So far, some 26,000 users have claimed the token, which had a peak market capitalization in excess of $50 million earlier today.

Unlike its spiritual predecessor, SOS, which airdropped its token to NFT marketplace OpenSea users on Christmas day, GAS has failed to enjoy an initial price surge and may already be trapped in a death spiral, however.

Utility

Neither SOS or GAS currently has a working product, and Gas DAO doesn’t have a stated plan for one, either.

While SOS’ early promotional materials floated use cases such as “support art preservation” and “support NFT communities,” in a blog post the Gas DAO team simply wrote, “In the coming days Gas DAO will publish another post outlining the governance structure for Gas DAO.”

Because of crypto’s open-source nature and the speed with which new concepts can proliferate, exciting new verticals are often copied and manage to attract investors despite a lack of innovation, ultimately creating sector bubbles. One example is the trend of yield farms and “vampire attacks” devolving into “food farms” during the DeFi Summer period of 2020.

However, this latest trend of targeted airdrops stands out both for the absence of an interesting initial idea and for the speed with which it has reached unsustainable absurdity.

Liquidity providers delight

So far, the token has managed to attract an active market – though not necessarily a healthy one.

The Uniswap decentralized exchange pool for GAS/ETH is listed among blockchain analytics firm Nansen’s “hot contracts,” and multiple Ethereum addresses with the “smart money” label are providing liquidity to the pool.

Providing liquidity to airdropped tokens is a popular strategy among advanced users, as airdrops often feature high volatility and volumes, and therefore allowing them to harvest a greater amount of trading fees.

Per CoinGecko, GAS is one of the top 100 cryptocurrencies by trading volume despite only barely reaching the top 1,000 by market capitalization on a 24-hour basis. Nonetheless, the price of GAS has also been stuck in a near-continuous downtrend since its listing early Wednesday morning. Likewise, SOS is tanking: the token is down 33% in the past day, per CoinGecko.

Jumping the shark

While casual users have delighted at the “free” money and liquidity providers at the tantalizing volume, multiple developers and other observers have expressed disappointment with what has seemingly already devolved into an absurd trend.

While some have compared SOS and GAS to the recent Ethereum Name Service (ENS) token airdrop, others note that ENS had a working product for a number of years prior to tokenization and forced claimants to vote in a founding governance constitution.

As ENS contributor Brantly Millegan pointed out, this is a stark contrast to SOS and GAS, which have no product (and, in GAS’ case, currently no stated plans for a product), and had to target other communities in order to form their user base.

Likewise, prolific DeFi developer Andre Cronje called on users to “stop voting with your attention span” and to instead focus on tokens with working products.

“I get that [Crypto Twitter] has the attention span of a gnat, but seriously, in crypto, you vote with your money, if you keep voting for low energy scams, you will keep getting low energy scams,” Cronje wrote.

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Andrew Thurman is a tech reporter at CoinDesk with a focus on DeFi.