ParaSwap Launches Token Amid Controversy, Why Some Users Were Excluded
November 15 2021 - 4:10PM
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Decentralized exchange ParaSwap has joined the ranks of DeFi
platforms that launch their native governance token, PSP, via an
airdrop. In most cases, these events cause a lot of hype in the
community, as users are rewarded for supporting the platform.
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Ethereum The ParaSwap airdrop was not an exemption with many users
jumping into the platform to qualify and receive the funds in PSP.
However, the platform employed a new logic to distribute its native
token. Unlike Uniswap, a decentralized exchange that sends every
user that ever interacted with their smart contract a portion of
their governance token, UNI, ParaSwap took a different approach. By
making a tradeoff between more decentralization or allowing
malicious actors to spoil the airdrop, according to an official
post, the platform chose to “reward active users”. This resulted in
some users being excluded from the PSP airdrop. These users mainly
expressed their nonconformity with the event via social media. Some
went as far as accusing the platform of incompetence or malicious
behavior. User Davis (@basedkarbon) said: Never seen a company
execute an airdrop in more bad faith than the Paraswap one. Heavily
hyped only to exclude 99% of their community. In a Medium post, the
team behind the platform explained the airdrop’s logic. Therein,
they claimed the event was designed to “target to the best of our
ability genuine ParaSwap users that were not simply trying to game
a potential token drop”. Data provided by the DEX’s team claims
that of the 1 million unique addresses that have ever used the
platform, only 20,000 were eligible to receive PSP. In that sense,
they added the following on the possibility of “genuine” users
being left out of the process: The ParaSwap team worked hard on the
logic, yet we’ve received a significant amount of attention from
airdrop hunters and had to make tradeoffs; and there might be
genuine users left out, we’ve double checked our logic to make sure
it’s minimized. Related Reading | Over 100k Ethereum Exits
Exchanges, What Does It Mean For The Price? ParaSwap Protects PSP
Distribution At Expense Of Its Community? Furthermore, the team
behind ParaSwap claims that due to the importance of the token and
its role in the creation of private market makers, it was necessary
to be extra cautious about the airdrop. For that reason, they
claimed to have studied similar events from other platforms and
ruled out a volume-based airdrop for “an engagement-based airdrop”.
In theory, this would prevent malicious actors and deep-pocket
investors from taking advantage of the snapshot that determined the
addresses eligible to receive PSP. For that reason, the ParaSwap
team considered other factors, such as: (…) the user first
interacted with ParaSwap, if and how frequently he came back and
how savvy the swaps were. There’s a lot that can be inferred from
onchain data, and that’s precisely what we did. The goal was to
find out our most engaged users: users of ParaSwap that were not
here just to game a drop, but actually making sensible token swaps.
According to the post, the addresses that were to receive around 7%
of PSP total supply were classified into three tiers. These levels
were determined by each user’s level of activity with the platform,
as explained above. This new airdrop logic had many detractors, but
others praise its ability to exclude malicious actors and prevent
Sybil attacks. In the future, other platforms could imitate this
approach, if they determined that the tradeoff is worth it. Related
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loss in the daily chart.
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