The Mao Party Fails Monad: "The logic of the testnet Mao Mao race has collapsed"

Author: Hu Tao, ChainCatcher

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

This is not only a heavy blow to the Layer 1 narrative but also a “bittersweet” milestone for the retail community.

Previously, Monad was valued at $3 billion, making it the highest-valued unlaunched Layer 1 in the market. It was highly anticipated by retail investors, with over 300 million addresses interacting with its testnet. Many studios registered millions of Monad addresses. At the end of October, Monad officially opened airdrop queries, but unexpectedly excluded all testnet interaction addresses from the airdrop scope.

The logic among retail investors was that “sunshine” is a common approach for many projects—by maintaining frequent interactions, they could earn tokens worth a few dollars to dozens of dollars. The accumulated value across multiple addresses could still be significant. However, Monad’s official stance did not align with the retail community’s wishes, excluding all testnet addresses from the airdrop.

A representative from a Hangzhou retail studio, A Du (pseudonym), told ChainCatcher, “Testnet interaction addresses are all anti-airdrop, and participating in various NFTs is basically useless. The only addresses that received Monad airdrops are old addresses that never interacted with Monad but traded on Hyperliquid.”

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

Alpha influencer Spark received a reward of 3 million MON tokens in this airdrop, worth about $110,000. This was not due to his interaction history but because he served as a moderator in the Monad community for three years and established the Chinese community for Monad. The Monad team regarded this as a substantial contribution, which is a common criterion for airdrops by most projects.

For project teams, airdrops serve to reward long-term supporters and demonstrate their value for community users. They also aim to incentivize active participants and influencers in the surrounding ecosystem, attracting them into their own ecosystems through rewards. From Uniswap to Gitcoin, Arbitrum, Scroll, Berachain, Aster, and thousands of other projects, airdrops have become an essential method for attracting users.

Over time, the standards for airdrops have evolved and diverged. Some projects emphasize fairness and generosity, rewarding retail participants generously. Others impose strict rules on testnet/mainnet interactions, implementing rigorous vetting based on points or other criteria. This time, Monad completely excluded retail users and testnet participants.

Fengmi commented on X, “If a network neglects retail users for too long, it risks becoming overly elitist early on, losing the broad community foundation. Early Bitcoin, Ethereum, Solana, and BSC relied on seemingly insignificant retail users who brought network effects and community vitality.” He believes Monad should allow grassroots retail users to grow gradually—any small step can help more people become part of the MON community.

Chasing trends, some believe retail participants contribute not only transaction fees, data, and traffic but also serve as effective promoters. They argue that some incentives should be given to these users. IceFrog also expressed on Twitter, “Monad’s approach is too thoughtless, shaking the trust foundation of the entire industry.”

From the project perspective, long-term development considerations should guide airdrop strategies. “Retailers lack loyalty; they sell immediately after receiving airdrops and move on to the next project. This only adds selling pressure without long-term benefits. Is it necessary to give them tokens?” said an anonymous KOL, describing retail participants as “parasites” in the crypto ecosystem.

Australian veteran Tao also believes the industry’s airdrop logic is changing. “In the past, CEXs focused on on-chain data activity and active user metrics when evaluating projects. During cold starts, projects needed popularity. For a long time, project teams tacitly or explicitly agreed with retail ‘grabbers’—you come to my project to farm tokens, and I’ll give you airdrops in return. Everyone shares the gains. But now, CEX listings no longer consider on-chain data or user metrics because everyone knows these numbers are heavily inflated,” he tweeted.

Business logic is ruthless. As on-chain data bubbles grow and retail sell pressure negatively impacts token prices, Monad’s approach is understandable. However, most projects will not follow suit because Monad, as a heavily capital-backed public chain project, has many options. Its technical strength and potential ecosystem explosion could attract a large community. But for most projects, which are primarily marketing efforts, airdrops are essential to attract attention and market hype.

In the long run, airdrops remain a vital source of value in the crypto industry, but their logic and targets are undergoing profound changes. “The results of Monad’s airdrop essentially mark the collapse of the testnet ‘grab-and-raid’ logic. In the future, testnet farming will likely disappear,” Tao said.

In fact, many KOLs predicted Monad’s “table-flipping” move early on. Influencers like Tao, IceFrog, and Fengmi openly stated they did not participate in Monad interactions. It is understood that top KOLs will focus more on “mouth farming,” arbitrage, and other diverse markets, while also concentrating on high-quality projects like Polymarket to create premium content.

Additionally, several studios interviewed reported that their earnings this year are lower than last year and below expectations. “The key is to find areas where we have advantages—low labor costs, advanced technology, early project insights, or influential KOLs for mouth farming. It’s hard to get substantial returns just by following the crowd,” A Du said.

As the market cap of top projects like Monad significantly falls below expectations, and many projects lock up user airdrop shares for long periods after TGE, retail participants’ position in project ecosystems continues to decline, with token values shrinking. The retail “grab-and-raid” approach, based on volume, is becoming unsustainable.

“So, retail investors relying on labor to enter the primary market for cheap gains is indeed over. The door has long been closing; Monad’s airdrop just sealed the last crack,” Tao lamented.