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

For most of the last cycle, crypto teams convinced themselves that airdrops were community building. In practice, they became something else entirely: a large-scale training program that taught people how to extract value as efficiently as possible and leave.

That outcome was not an accident. It was a predictable result of how token launches were designed between 2021 and 2024. Low float, high fully diluted valuations and points programs that rewarded activity over intent and eligibility rules that could be reverse-engineered by anyone with enough time and scripts. We built systems where the rational behavior was to spin up wallets, simulate engagement and sell at the first opportunity.

The industry likes to talk about trust as an abstract concept. In reality, trust eroded because token launches stopped aligning incentives with belief. Participation became transactional.

Loyalty became temporary. Governance became theater. When users are rewarded for volume rather than conviction, you do not get communities — you get mercenaries.

Airdrops built extraction playbooks

Points programs accelerated this dynamic. They were often framed as a fairer way to distribute tokens, but in practice, they turned participation into a job. The more time, capital and automation you had, the more points you could farm. Real users with limited bandwidth were crowded out by people who treated points dashboards like yield farms.

Everyone knew this was happening while it was happening. Teams watched wallet clusters grow. Analysts published postmortems showing how a small number of entities captured outsized shares of supply. Still, the model persisted, largely because it looked good in growth charts and bought short-term attention.

The result is that airdrops lost credibility because the mechanism became predictable and gameable. By the time a token reached the market, a meaningful portion of supply was already earmarked for immediate exit. Price action after a launch started to feel less like discovery and more like cleanup.

Token sales are back because airdrops lost credibility

This is the context in which token sales and ICO-style launches are returning. Not as a nostalgia play, and not as a rejection of decentralization, but as a response to a structural failure. Teams are looking for ways to reintroduce selection into distribution. Who gets access, under what conditions and with what constraints has become just as important as how much capital is raised.

What is different this time is not the idea of selling tokens, but the way participation is being shaped. Early initial coin offerings (ICOs) were open to anyone with a wallet and fast fingers. That openness came with obvious downsides, including whale dominance, regulatory blind spots and zero accountability.

The new generation of token launches experiments with filters that did not exist before. Identity and reputation signals, onchain behavior analysis, jurisdiction-aware participation and enforced allocation limits are increasingly part of the design. The goal is not exclusion for its own sake; it is to ensure that distribution reaches humans who are likely to stick around.

This shift exposes a deeper fault line in the industry. Crypto has spent years positioning itself as permissionless, yet many of its most valuable moments now depend on some form of admission control. Without it, capital leaks to automation. With it, teams risk recreating the same surveillance-heavy systems they claim to be replacing. The tension between openness and protection is no longer theoretical; it shows up in every serious launch discussion.

Who gets in now matters more than how much is raised

The uncomfortable truth is that we cannot solve this problem by pretending identity does not matter. We already live in a world where identity exists everywhere. The question is whether it is implemented in ways that respect user agency or in ways that extract data and concentrate power. Most of the first wave of crypto infrastructure avoided identity entirely, not because it was a principled stance, but because the tools to do it safely did not exist. As every launch scales and scrutiny increases, that avoidance is no longer tenable.

Related: Solana WET presale hijacked by Sybil wallets as HumidiFi resets launch

This is where privacy-preserving identity becomes infrastructure rather than ideology. If teams want to limit one human to one allocation or prevent automated clusters from dominating governance or demonstrate basic compliance without collecting dossiers on their users, they need systems that can prove properties about participants without exposing who they are. The alternative is a binary choice between naive openness and heavy-handed Know Your Customer. Neither scales well.

In parallel, the industry is also confronting the limits of its wallet layer. Many of the issues that plague token launches are downstream of how wallets are designed and embedded. Fragmented accounts, weak recovery, blind signing and browser-based attack surfaces all make it harder to build durable relationships between users and protocols. When participation is mediated through tools that are easy to spoof and hard to trust, distribution mechanisms inherit those weaknesses. It is not a coincidence that the same launches suffering from Sybil attacks are also dealing with user confusion, lost access and post-launch attrition.

Some teams are starting to connect these dots. Instead of treating identity, wallets and token launches as separate concerns, they are approaching them as a single system — a system where a user can prove uniqueness without doxing, interact across applications with a consistent account and retain control without being asked to manage fragile secrets. When these pieces fit together, distribution stops being a one-time event and starts to look more like an ongoing relationship.

This is not about making launches smaller or more exclusive; it is about making them more intentional. Fewer participants who care is often better than many participants who do not.

Projects that optimize for human alignment tend to see stronger retention, healthier governance participation and more resilient markets. That is not ideology; it is observable behavior.

The teams that succeed will be the ones that stop treating distribution as marketing and start treating it as infrastructure. They will assume adversarial conditions by default. They will design for automation resistance from day one. They will view identity not as a checkbox, but as a tool to protect both users and ecosystems. They will accept that some friction, when applied thoughtfully, is a feature rather than a bug.

Airdrops did not fail because users are greedy. Airdrops failed because the system rewarded greed and punished commitment. If crypto wants to grow beyond its current audience, it needs to stop training people to extract and start giving them reasons to belong.

Token launches are where that shift becomes visible. Whether the industry is willing to follow through remains an open question.

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