The arbitrage community hits a wall Monad: "The logic of testing network arbitrage competitions has collapsed"

Author: Hu Tao, ChainCatcher

Yesterday, the highly anticipated Layer 1 public chain Monad’s token MON officially launched, once falling below the cost basis for public sale participants. Currently, the FDV remains in the $3-3.5 billion range, which is not only lower than the $8 billion mainstream market cap predicted on Polymarket but also far below the $15 billion valuation of the early Pre-TGE market.

And this is not only a heavy blow to the Layer 1 narrative but also a “tragic” milestone for the “grab and dump” community.

Previously, Monad was valued at $3 billion, making it the highest-valued unissued Layer 1 in the market, and was highly anticipated by the grab-and-dump crowd. Its testnet has accumulated over 300 million interaction addresses, with many studios registering Monad addresses using millions of addresses. At the end of October, Monad officially opened for airdrop queries, but unexpectedly excluded all testnet interaction addresses from the airdrop scope.

The logic of the grab-and-dump community is that “sunshine” is a common practice among many project teams; as long as there are frequent interactions, they can potentially earn tokens worth a few dollars to dozens of dollars. The accumulated token value across multiple addresses can still be significant. However, Monad’s official stance did not align with the expectations of the large grab-and-dump crowd, excluding all testnet addresses from the airdrop.

“Testnet interaction addresses are all anti-grab, and participating in various NFTs basically has no use. The only addresses that received the Monad airdrop are some old addresses that never interacted with Monad but traded on Hyperliquid,” said A Du, head of a grab-and-dump studio in Hangzhou, to ChainCatcher.

For a time, Monad became the target of fierce criticism from many grab-and-dump users, but the Monad team remained unmoved. According to well-known KOL Fengmi, the idea behind this airdrop was to bind contributors, identity, and potential people to Monad—focusing on identity + contribution, such as Monad ecosystem developers, heavy DeFi users, and high-quality NFT holders.

Famous alpha blogger Spark received a reward of 3 million MON in this airdrop, worth about $110k. This was not due to his interaction record but because he served as a moderator in the Monad community for three years and established the Monad Chinese community. The Monad team regarded this as a substantial contribution, which is also a common criterion for airdrops by most projects.

For project teams, the significance of an airdrop is twofold: on one hand, to reward long-term supporters and demonstrate their value for community users; on the other hand, to incentivize active participants and influencers in the surrounding ecosystem, attracting them into their ecosystem through airdrops. From Uniswap to Gitcoin, Arbitrum, Scroll, Berachain, Aster, and thousands of other projects, airdrops have become an essential method for attracting users.

During this period, the standards for airdrops have continuously forked and evolved. Some projects emphasize equal distribution and generosity, being quite accommodating to grab-and-dump communities participating in interactions. Others set strict rules for testnet/mainnet interactions, implementing rigorous “whale” screening based on a point system. This time, Monad completely abandoned testnet interaction users, or rather retail investors.

“If a network neglects retail investors for a long time, it will make the network overly elite in its early stages, losing a broad community base. In the early days of Bitcoin, Ethereum, Solana, and BSC, it was a small group of seemingly insignificant retail investors who brought network effects and community vitality,” Fengmi said on X. He believes Monad should allow grassroots retail investors some space to grow gradually, even if just a little, so more people can truly become part of the MON network community.

Zhuifeng believes that grab-and-dump participants contribute not only fees, data, and traffic but also serve as effective promoters. He personally thinks they should be incentivized. “Monad’s approach is really thoughtless, shaking the trust foundation of the entire industry,” said Bingwa on Twitter.

From the project perspective, they need to formulate airdrop strategies based on long-term development needs. “Grab-and-dump participants lack loyalty; they receive an airdrop and then sell, moving on to the next project. For the project, this only causes selling pressure without long-term benefits. Is it necessary to give them tokens?” said an anonymous KOL, describing grab-and-dumpers as “parasites” in the crypto ecosystem.

Australian master brother also believes that the industry’s airdrop logic is changing. “In the past, CEXs focused on on-chain data activity and active user metrics when evaluating a project’s fundamentals. During cold starts, projects needed popularity. For a long time, project teams tacitly or explicitly reached an understanding with grab-and-dump armies: you come to grab and dump, help me get listed on major exchanges, and I’ll give you airdrops, sharing the profits. But now, CEX listings no longer look at on-chain data or user metrics because everyone knows these numbers are heavily inflated,” he tweeted.

The business logic is ruthless. As on-chain data bubbles grow more severe and grab-and-dump selling pressure negatively impacts many projects’ token prices, Monad’s approach is reasonable. However, this will not be 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 it a large community of users. But for most projects, they are essentially marketing projects that must rely on airdrops to attract attention and market hype.

In the long run, airdrops remain one of the important sources of value in the crypto industry, but their logic and targets are undergoing profound changes. “The results of Monad’s airdrop basically mark the collapse of the testnet grab-and-dump track, and in the future, testnets are unlikely to be刷了,” said Australian master brother.

In fact, many KOLs predicted this “table-flip” by Monad. Like Master Brother, Bingwa, Zhuifeng, and others, many early on stated they would not participate in Monad interactions. It is understood that top KOLs will focus more on “mouth-lapping” and arbitrage markets, as well as on high-quality projects like Polymarket, to create premium content.

Additionally, several interviewed studios reported that their earnings are lower than last year and below expectations. “The key is to find areas where we have advantages—whether low labor costs, advanced technology, early project detection through sharp research, or influential KOLs for mouth-lapping. It’s quite difficult to just follow the crowd and grab and dump for substantial gains,” said A Du.

As the market cap of top projects like Monad has significantly fallen below expectations, and many projects lock user airdrop shares for long periods after TGE, grab-and-dump participants’ positions in project ecosystems have declined repeatedly, with token values continuously shrinking. The logic of winning through volume alone is no longer sustainable.

“So, the retail newcomers who entered the primary market by providing labor and enjoying cheap dividends have indeed come to an end. The door has long been closing; Monad’s airdrop just sealed the last crack,” sighed Master Brother.