The Midcurve Airdrop Fallacy

The mental hurdle that prevents people from picking up money on the floor

It feels like all everyone’s talking about is airdrop farming. And how can you blame them? Instead of paying $50 gas fees to swap assets on ETH mainnet, we’ve seen people turn $50 into $10,000 by staking $SOL with Jito. This incentivizes newer participants to learn about self-custody and DeFi on-chain, which can be seen as the trojan horse for crypto adoption.

We should be celebrating this! Small fish finally have a way of 10-100x their accounts without having to gamble on memecoins, trading on leverage, or engaging in pump and dumps. However, it seems like after every single large airdrop, we have angry anons on CT complaining about how airdrop distributions are flawed and that it’s not worth airdrop farming anymore because “those damn influencers like Taiki Maeda is diluting everything!!!”

As a result, we seem to have two population types on Crypto Twitter (CT):

• Airdrop farmers euphoric, making a lot of money on airdrops

• Non-farmers complaining about airdrop distribution and how it’s not worth farming anymore because future airdrops will be diluted

But if you think about the psychographic of the second batch of people, they were never going to airdrop farm anyways. They are comfortable in their own sphere, trading internet coins on CEXes, telling themselves that they don’t need to learn how to use the chain. They complain and tweet about airdrop farmers, get engagement for those tweets, and feel comfort that strangers on the internet agree with their views.

I have decided to coin this term as, “The Midcurve Airdrop Fallacy”

The Midcurve Airdrop Fallacy: There are far more people that complain about airdrop farmers than there are airdrop farmers. As a result, people psyop themselves into thinking airdrops are diluted and choose not to farm, which does not dilute the same airdrops they complain about.

This does not mean that future airdrops are not being diluted at all. In fact, we can see that the number of Celestia stakers is going up only. Similarly, we are also seeing the number of wallets on Solana farming airdrop go up only. However, I do believe that people overexaggerate the extent of the dilution and underestimate the size of the sum of all the future airdrops. What makes an airdrop “diluted?” If we stake $500 of $TIA and receive a $500 airdrop, was it diluted? It definitely can be, because it could have been an $1000 airdrop if it weren’t for those new stakers!

Cognitive Bias = Midcurving

First things first, I proudly admit that I am a midcurve myself. In fact, I consider myself to be an expert on this subject matter. So I have some credibility when identifying when people exhibit midcurve behavior. There’s actually a simple explanation for everything: cognitive dissonance.

In the field of psychology, cognitive dissonance is the mental discomfort - psychological stress - experienced by an individual who simultaneously holds two contrarian beliefs or ideas in their head. When confronted with facts that contradict beliefs, ideals, and values, people will often find a way to resolve the contradiction to reduce their discomfort.

Subconsciously, we make suboptimal decisions in the markets because we do not want to feel uncomfortable. You’re up 2x on a token? Let’s sell half. You’re down 50% on a token? Let’s wait until breakeven to sell. The reality is, the market doesn’t care about your cost basis. We decide to cut our winners because we FEAR roundtripping gains and hold onto losers because we FEAR admitting that we were wrong.

Wanting to avoid pain leads to midcurve behavior.

People don’t want to start airdrop farming because they don’t want to buy the top of $TIA. People don’t want to use Solana because they’re overexposed to ETH. “Airdrops are diluted” is just something people say to justify being lazy.

Summary

I believe airdrop farming is going to be lucrative for the next couple of months. I am also open to being wrong on this. I am not saying that you should ape a significant amount of money into ANYTHING, but I highly encourage people AT LEAST try it out.

Why not stake TIA with 1% of your portfolio? Why not bridge 1% of your portfolio to the Solana ecosystem and see what the hype is about? I guarantee that you will learn a lot more about Solana by using the chain instead of listening to ETH maxis whose already “made it” from all the private deals they’re all in.

I’d bet that 90% of people reading this will broadly agree with my argument. Unfortunately only a few will act on this because they’re too lazy to download a new wallet and educate themselves about a new ecosystem.

That’s why I am not even worried about my airdrops being diluted. Because 90% of people will be trapped in the EVM & The Midcurve Airdrop Fallacy.

Disclaimer: I am airdrop farming on Solana and Celestia.