The Maoist faction has fallen: Monad says, "The logic behind the testnet grab race has collapsed."

Author: Hu Tao, ChainCatcher

Yesterday, the Layer1 public chain Monad’s token MON officially launched, briefly dropping below the public offering cost for users. Currently, its fully diluted valuation (FDV) remains in the range of $3-3.5 billion, which not only falls short of Polymarket’s mainstream predicted market cap of $8 billion but also significantly lower than the early Pre-TGE market valuation of $15 billion.

This is not only a heavy blow to the Layer1 narrative but also a milestone “tragedy” for the “yield farming” community.

Previously, Monad was valued at $3 billion, making it the highest-valued unissued Layer1 in the market, with the yield farming community holding high hopes for it. Its testnet accumulated over 300 million interactive addresses, with many studios using millions of addresses to register Monad addresses. At the end of October, Monad officially opened airdrop inquiries but unexpectedly excluded all testnet interactive addresses from the airdrop.

The logic of the yield farming community is that “widespread benefits” is a common practice among many projects, and as long as they maintain a high frequency of interactions, they might receive token rewards ranging from a few dollars to several tens of dollars. The cumulative token value from multiple addresses still appears considerable. However, Monad officials did not act as the large yield farming community wished, excluding all testnet addresses from the airdrop.

“All interactive addresses on the testnet were completely excluded from the airdrop, and participating in various NFTs was basically useless. The only ones who received the Monad airdrop were some addresses that had never interacted with Monad but had traded on Hyperliquid,” said Adu (pseudonym), head of a yield farming studio in Hangzhou, to ChainCatcher.

In an instant, Monad became the target of fierce criticism from many yield farming users, but the Monad officials remained unmoved. According to well-known KOL Feng Mi, the airdrop strategy this time was to bind individuals with contributions, identities, and potential to Monad, focusing on identity + contribution, such as Monad ecosystem developers, heavy DeFi users, and quality NFT holders.

Notable alpha blogger spark received a reward of 3 million MON in this airdrop, currently valued at about $110,000. This was not due to his interaction history but because he served as a moderator in the Monad community for three years and established the Monad Chinese community. This was recognized by Monad officials as a substantial contribution, which is also a key target for airdrops from most project teams.

For project teams, the significance of airdrops lies in rewarding the long-term supporters of the project, reflecting their attention to community users. It also rewards active participants and influencers within the surrounding ecosystem, using airdrop incentives to attract them into their ecosystem. From the early days of Uniswap to thousands of projects like Gitcoin, Arbitrum, Scroll, Berachain, and Aster, airdrops have been seen as an essential path for project teams to attract users.

During this time, the standards for airdrops have continuously diverged and evolved. Some projects focus on equitable distribution and are quite generous to participating yield farmers, while others set strict rules for interactions on testnets/mainnets, implementing rigorous witch hunts based on a points system. This time, Monad completely abandoned users who interacted on the testnet, or in other words, retail investors.

“If a network consistently ignores retail investors, it will lead to an overly elitist atmosphere in the early stages, losing a broad community base. Bitcoin, Ethereum, Solana, and BSC all relied on a group of seemingly insignificant small retail investors in their early days, bringing network effects and community vitality,” Feng Mi stated on X. He believes that Monad should allow grassroots retail investors to have space to grow gradually, even if just a little, which could enable more people to genuinely become part of the MON network community.

Chasing Wind believes that yield farmers not only contribute transaction fees, data, and traffic to project teams but also serve as good promoters. “I personally think these individuals need to be incentivized.” The operation of Monad is indeed thoughtless and undermines the trust foundation of the entire industry. “Ice Frog also expressed on Twitter.”

However, from the project team’s perspective, they need to formulate airdrop strategies based on the long-term development needs of the project. “Yield farmers have no loyalty; they will sell off once they receive airdrops and then rush to the next project to yield farm, which only creates selling pressure for the project without long-term benefits. Is it necessary to allocate to them?” an anonymous KOL described, stating that yield farmers are like “parasites” in the crypto ecosystem.

Master Brother from Down Under also believes that the logic of airdrops in the industry is changing. “In the past, when CEX evaluated a project’s fundamentals, they paid great attention to the level of on-chain activity and active user metrics. Project teams needed popularity during cold starts. For a long time, project teams tacitly allowed, even colluded with yield farming armies, saying, ‘You come here to yield farm, help me get listed on major exchanges, and I’ll airdrop to you in return, and we’ll share the profits.’ But now, CEX listings no longer look at on-chain data and users because everyone knows these data are heavily inflated,” Master Brother from Down Under said on Twitter.

The logic of business is ruthless. As the on-chain data bubble becomes increasingly severe, and the selling pressure from yield farmers negatively impacts the price trends of many projects, Monad’s choice is reasonable. However, this will not become the choice for most projects because Monad, as a capital-heavy public chain project, still has many cards to play. Its technical strength and potential explosive power of ecological applications could bring in a large number of community users. But for most projects, they essentially belong to the marketing category and must use airdrops to garner attention and market heat.

In the long run, airdrops remain one of the important sources of value in the crypto industry, but the logic and targets of airdrops are undergoing profound changes. “The outcome of the Monad airdrop basically heralds the collapse of the logic surrounding testnet black slave interactions and yield farming. In the future, it is highly likely that no one will brush testnets anymore,” Master Brother from Down Under said.

In fact, many KOLs, such as Master Brother from Down Under, Ice Frog, and Chasing Wind, had already anticipated this “table-flipping” from Monad. Many top KOLs have indicated early on that they did not participate in Monad interactions. It is understood that more attention from leading KOLs will be directed towards “mouth yield farming,” arbitrage, and other more diverse markets, while also focusing on quality projects like Polymarket to create premium accounts.

In addition, multiple interviewed studios have stated that their returns are less than last year and below expectations. “The key is still to find areas where you have advantages, whether it’s low labor costs, advanced technology, the ability to discover early projects with keen research, or having influential KOLs to mouth yield farm. It has become quite difficult to achieve substantial profits by simply following the crowd to yield farm,” Adu stated.

As the market value of top projects like Monad significantly falls below market expectations, and many projects have lengthy lock-up periods for user airdrop shares post-TGE, the position of yield farmers in the project’s interest distribution ecosystem continues to decline, with the value of received tokens continuously shrinking. The logic of winning by volume in yield farming has become unsustainable.

“Therefore, the era when retail investors could enter the primary market to obtain cheap dividends has indeed ended. The door has actually been closing for a while, and Monad’s airdrop only shut the last remaining gap,” Master Brother from Down Under lamented.