- Tapioca DAO is utilizing name choices for its upcoming airdrop.
- The thought was first floated by prolific DeFi dev Andre Cronje in 2021.
- The hope is the airdrop will deal with Sybil attackers and assist the protocol keep aggressive.
As crypto airdrops turn out to be extra mainstream, the initiatives behind them have encountered an enormous drawback: Sybil attackers.
These buccaneering DeFi gamers create a number of pockets addresses to spoof airdrops by pretending to execute reliable exercise, costing crypto initiatives millions.
They syphon rewards from reliable customers and compromise the integrity of the initiatives they aim.
Tapioca DAO, a fledgling cash market protocol constructed on LayerZero, says it has an answer. As an alternative of handing out free tokens, its airdrop will give customers the flexibility to purchase its native TAP token at a reduced worth.
“If somebody desires to Sybil, there’s a capital expenditure,” Tapioca DAO co-founder Matt Marino informed DL Information. “It’s sort of the identical final result. In case you airdrop 1,000 tokens at a 50% low cost that individual finally ends up with 500 free tokens.”
Marino says Tapioca’s method ensures that even when customers do Sybil assault, they received’t simply be extracting worth — they must give one thing again.
Tapioca DAO is constructing a DeFi cash market and stablecoin. It’s constructed on LayerZero, a cross-chain bridge.
This lets Tapioca join debtors and lenders throughout completely different blockchains.
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Inspiration from the DeFi godfather
The inspiration for the airdrop, Marino stated, got here from Andre Cronje, the so-called DeFi godfather behind protocols Yearn Finance, Keeper Community, and Solidly.
“He talked about name choices, and I used to be an enormous fan of Keeper Community,” he stated. “I simply actually agreed with the precept of what he was speaking about, and we simply ran with it.”
Cronje first floated the thought of incentivising utilizing calls, by-product bets that repay if a token worth rises, in 2021.
Nonetheless, Tapioca’s plan has dangers.
Marino stated Tapioca might be the primary protocol to try an choices airdrop. There’s an opportunity that Sybil attackers will discover a loophole to take advantage of the untested mechanism.
It wouldn’t be the primary time certainly one of Cronje’s concepts has gone awry. When he launched Solidly in 2022, customers gamed the protocol by voting on their very own token liquidity swimming pools.
The choices airdrop
Tapioca DAO says its choices airdrop will “create probably the most Sybil resistant, aligned, and worth maximised airdrop ever carried out.”
It’s scheduled to start out on June 14, and can give TAP token name choices to those that participated within the protocol’s launch public sale, Pearl Membership ONFT holders, and sure group members.
The primary spherical of the airdrop will distribute choices with a payoff worth 50% under the ultimate TAP launch public sale worth of $2.07, and can expire in a single week. Subsequent rounds will give out choices with a 25% to 50% low cost.
If the TAP worth falls under the payoff worth of the choices, they turn out to be nugatory, probably reducing off some customers.
Marino stated this case is intentional.
“We’ve created a safety mechanism the place if there’s not sufficient demand, and the token is falling, then inflation stops,” he stated.
Nonetheless, Marino added, the protocol was designed to incentivise holding TAP to keep away from this subject.
Holders who lock up TAP within the protocol will obtain the charges it generates. They’ll additionally be capable of use their locked tokens as collateral to borrow towards.
‘Corridor displays’
Marino criticised the favored method to airdrops, the place initiatives give out free tokens to customers who meet sure standards.
“You all the time find yourself dropping a large quantity of worth to people who find themselves Sybiling,” he stated.
Some initiatives have spent loads of time and effort figuring out and excluding Sybil attackers, with restricted success.
Some even put bounties on them, and promise to offer extra tokens to customers who can establish them.
This incentivises customers to misreport reliable customers to initiatives within the hopes of securing extra tokens for themselves.
“They’re placing corridor displays there to look,” Marino stated. “It simply doesn’t work.”
Tapioca’s endgame
In addition to thwarting Sybil attackers, the choices airdrop has one other perform.
Tapioca will use the cash raised by the choices airdrop to offer liquidity, a system often known as protocol-own liquidity — or PoL.
Marino stated many DeFi cash markets and stablecoins find yourself being very illiquid.
“The best way you make charges and revenue off of a CDP stablecoin as a platform is from leverage. And if in case you have no liquidity, no one can leverage it after which you haven’t any charges,” Marino stated.
CDP stands for collateralised debt place — in essence, creating dollar-valued tokens by locking up different tokens with a better worth as collateral.
MakerDAO’s DAI stablecoin makes use of a CDP mannequin.
The hope is that if Tapioca can generate sufficient PoL, it received’t be depending on mercenary liquidity suppliers and may provide aggressive charges.
Whether or not Tapioca can obtain that is unsure.
Different protocols that attempted to generate PoL, comparable to Olympus DAO and Tokemak, have struggled to remain related.
Tim Craig is a DeFi Correspondent at DL Information. Acquired a tip? Electronic mail him at tim@dlnews.com.
