Opinion: Nanak Nihal Khalsa, co-founder of the Holonym Foundation

For much of the last cycle, crypto teams have been telling themselves that airdrops build community. In practice, they became something entirely different: a large-scale training program that taught people how to most effectively extract value and exit.

This result was not a coincidence. This was a predictable result of the way the 2021-2024 token launches were designed. Low floating prices, high fully diluted valuations, and points programs that rewarded activity rather than intent and eligibility rules that anyone with enough time and scripts could recreate. We built systems in which rational behavior was to raise portfolios, simulate commitment and sell at the first opportunity.

The industry likes to talk about trust as an abstract concept. In fact, trust has declined as token launches have stopped aligning incentives with beliefs. Participation has become transactional.

Loyalty has become fleeting. Management has become theater. When users are rewarded for number of actions rather than belief, you don’t get a community – you get mercenaries.

Airdrops built extraction manuals

Points programs have accelerated this lively. They were often presented as a more equitable way of distributing tokens, but in practice they turned participation into work. The more time, capital and automation you have, the more points you can collect. Real users with narrow bandwidth were pushed out by people who treated point dashboards like crop farms.

Everyone knew it was happening when it happened. Teams observed the development of portfolio clusters. Analysts have published post-mortems showing how a diminutive number of entities have taken overshare of the supply. Yet the model endured, largely because it looked good on growth charts and attracted attention in the tiny term.

As a result, drops lost credibility as the mechanics became predictable and playable. By the time the token reached the market, a significant portion of the supply was already earmarked for immediate exit. The post-launch price action began to feel less like a discovery and more like a clean-up.

Token sales are back as airdrops have lost credibility

In this context, token sales and ICO-style launches are back. Not as a nostalgic play and not as a rejection of decentralization, but as a response to structural failure. Teams are looking for ways to reintroduce selections into distribution. Who gets access, under what conditions and with what restrictions has become as vital as the amount of capital raised.

This time the difference is not in the idea of ​​selling tokens, but in the way of shaping participation. Early coin offerings (ICOs) were available to anyone with a wallet and quick fingers. This openness had obvious drawbacks, such as whale dominance, regulatory blind spots, and zero accountability.

The recent generation of the token launches experiments with filters that have not existed before. Identity and reputation signals, supply chain behavior analysis, jurisdiction-aware participation and enforced allocation limits are increasingly part of the design. The goal is not exclusion per se; this is to ensure that the distribution reaches people who are likely to stick around.

This change exposes a deeper fault line in the industry. Crypto has positioned itself as a permissionless entity for years, but many of its most valuable moments now depend on some form of access control. Without this, capital leaks into automation. This leaves teams at risk of recreating the same surveillance-intensive systems they claim to be replacing. The tension between openness and protection is no longer theoretical; comes up in every sedate launch discussion.

Who enters now matters more than how much money can be raised

The inconvenient truth is that we can’t solve this problem by pretending identity doesn’t matter. We already live in a world where identity exists everywhere. The question is whether it is implemented in a way that respects user freedom or extracts data and concentrates power. Most of the first wave of cryptographic infrastructure avoided identity altogether, not because it was a principles-based position, but because the tools to do it securely did not exist. As each launch increases in scale and control increases, avoiding it is no longer possible.

Related: Solana WET pre-sale taken over by Sybil wallets as HumidiFi resets launch

This is where privacy-preserving identity becomes infrastructure, not ideology. If teams want to limit one human to a single assignment, prevent automated clusters from dominating management, or demonstrate basic compliance without collecting user records, they need systems that can demonstrate participant characteristics without revealing their identities. The alternative is a binary choice between naive openness and the brutal “Know Your Customer” principle. Neither scales well.

At the same time, the industry is also facing the limitations of its wallet layer. Many of the problems that plague token launches stem from the design and embedding of wallets. Fragmented accounts, impoverished recovery, blind signing, and browser-based attack surfaces make it complex to build lasting relationships between users and protocols. When participation occurs through tools that are straightforward to spoof and tough to trust, distribution mechanisms inherit these weaknesses. It’s no coincidence that the same launches that fall victim to Sybil attacks also struggle with user confusion, loss of access, and data loss after launch.

Some teams are starting to connect these dots. Instead of treating identity, wallets, and token launches as separate problems, they approach them as one system – a system where the user can prove uniqueness without doxing, interact between applications with a consistent account, and maintain control without having to manage sensitive secrets. When these pieces fit together, distribution stops being a one-time event and begins to feel more like an ongoing relationship.

This isn’t about making the launches smaller or more exclusive; the idea is to make them more intentional. Fewer participants who care is often better than many participants who don’t.

Projects that optimize for people’s needs tend to have higher retention, healthier governance participation, and more resilient markets. This is not an ideology; this is observable behavior.

The teams that will succeed are the ones that stop treating distribution as marketing and start treating it as infrastructure. They will default to adversarial terms. They will design for automation resilience from day one. They will see identity not as a checkbox, but as a tool that protects both users and ecosystems. They will accept that some friction, if applied thoughtfully, is a feature rather than a bug.

Airdrops failed because users were greedy. Airdrops failed because the system rewarded greed and punished commitment. If cryptocurrency wants to expand beyond its current audience, it needs to stop training people to mine and start giving them reasons to belong.

Token launches occur where this change becomes perceptible. It remains an open question whether the industry will want to continue this.

Opinion: Nanak Nihal Khalsa, co-founder of the Holonym Foundation.