“That’s Our Two Satoshis” - How to Make Money via Airdrops

Jeff Dorman, CFA
Dec 11, 2023

Thats Our 2 Satoshis Logo

Screenshot 2023-12-04 at 11.06.30 AM

Source: TradingView, CNBC, Bloomberg, Messari
Hindsight Capital is Killing It – but Foresight Capital Can Still Do Well
Frequent readers know that we called the bottom in December 2022, though, admittedly, we were less confident about what would take the market higher. Readers also know that we thoroughly debunked the nonsensical fears regarding both the sale of the FTX estate and the fears that Binance would implode taking the market down with it.  We even nailed a good amount of our 2023 predictions
Despite all these good calls, Hindsight Capital still outperformed us by a wide margin. Ideas are always a dime-a-dozen, whereas finding the best ways to express these ideas with the proper sizing and appropriate timing creates alpha.  In hindsight, owning a portfolio consisting solely of Solana (SOL) Grayscale’s GBTC and ETHE trusts, Coinbase (COIN), a few Bitcoin mining stocks, Nvidia, AI tokens and Thorchain (RUNE) was evident. Some of these were even obvious in real time.  But overall, investing in digital assets is still challenging, even when it seems like prices are going up every week.
Source: Trading View
However, it’s possible that Foresight Capital is about to give Hindsight Capital a run for its money because the playbook has already been perfectly executed once before.  “DeFi Summer” is the term used to explain the massive liquidity and infrastructure growth that led to the transformation of DeFi in 2020.   It was kicked off by Compound (COMP) and Uniswap (UNI) airdropping tokens to their user bases, creating instant wealth and turning each beneficiary into lifelong evangelists and power users of the platforms.  Yield farming followed after that, and an 18-month bonanza of higher usage and higher token prices led to more usage and higher token prices. 
DeFi summer was the closest that the industry has gotten to fully embracing the democratic vision of blockchain — namely, that early adopters of technologies and products could get rich for being early customers. This vastly differs from the traditional economy- early Amazon shoppers didn’t get rich from Amazon’s success.  Early iPhone users didn’t get rich from Apple’s success.  Early airline customers didn’t get rich from Delta and United’s success.  But in crypto, early users of certain DeFi, NFT and web3  protocols and applications are getting rich from their success. 
And it’s all happening again, most notably in the Solana ecosystem.  
How to Make Money In 3 Easy Steps - The JTO Way
Written by Kyle Doane, Trader at Arca
Enter Jito.  Jito is a dynamic liquid staking protocol built on Solana that recently launched its governance token (JTO) on December 7th. The initial circulating supply was airdropped to those who staked SOL on the platform and to validators that leveraged the Jito network’s on-chain programs. 
As background, the SOL token is tradeable, and the Solana network is integrated into all major centralized exchanges, making it relatively seamless to begin interacting with protocols on the network. It’s also very simple to download a digital wallet compatible with the Solana network (for example, Phantom). Once a user stakes SOL and earns tokens in their digital wallets, users can navigate to the Jito protocol, connect their wallet, and select “stake tokens.” The staking transaction is very simple and straightforward, helping users learn about new protocols (in this case how to help secure the network) and being heavily incentivized to do so. 
Airdrop recipients received a minimum of 4,941 JTO tokens for simply staking at least one SOL token on their platform. Initially, Jito gave out points for SOL staked on the platform, i.e. stake pools. The airdrop was based on the number of points a wallet had earned before a November 25th snapshot. At the current price of JTO, the minimum airdrop participant earned almost $15,000 worth of free tokens. 
Source: Jito 
Earning the airdrop was as simple as going to the Jito website, connecting your wallet, depositing at least one SOL token, and receiving one JitoSOL token in return. JitoSOL, its flagship asset, is basically a depository receipt for staked SOL. It generates yield from the Solana network's staking processes and extra revenue from Jito's MEV-style approach to auctioning blockspace. Over the time frame of the airdrop, the price of JitoSOL rose in value as well. 
Since this airdrop was on the Solana blockchain, which is fast and cheap, the fee to claim your airdrop was only around $.01.
The JTO token experienced a trading volume of $1.1 billion within its first day of trading. The token distributed to community members began trading at around $2, increasing by approximately 45% to $2.90, and hit a high of $4.21. Currently, the token is traded just above $3.00, resulting in a fully diluted market capitalization of $2.9 billion. The total supply of Jito tokens is capped at 1 billion, with 115 million currently in circulation. 
How to Farm Future Airdrops on Solana
Airdrops are quite possibly the easiest way to learn about the mechanisms driving the crypto ecosystem and earn rewards for participating, thereby increasing your wealth. For anyone even remotely intellectually curious about digital assets and blockchain, we recommend figuring out how to participate in airdrops.  Numerous other airdrops will happen in the coming months, and all you need to do is participate in the protocol to reap the benefits. 
So, what’s next for Solana?  It is rumored that MarginFi and Kamino will be the next Solana-based protocols to airdrop tokens.  However, as more people farm for an airdrop, typically the rewards will decrease. More people are going after the same pie. We have seen a massive inflow of users to Solana since the JTO airdrop, and therefore, we do not expect upcoming airdrops on Solana to reap the same level of rewards as the JTO airdrop. However, with a bit of research and poking around, there are dozens of other applications that will potentially do airdrops as well.  Can it be confusing?  Sure.  Is it worth it?  Probably. 
As indicated earlier, the concept of airdrops is not new.  There have been dozens of projects that airdropped tokens from 2020-2023. Even if the idea of essentially receiving “free money” from the airdrop feels uncomfortable,  receiving airdropped tokens can get users involved early in the token’s trading life.  Hats off to Arca’s newest portfolio team member, Joey Reinberg, who analyzed all prior airdrops.  
It’s important to note that while airdropped tokens generally perform pretty well in the immediate short-term, the tokens struggle a bit as air-dropees begin to monetize their newfound riches, resulting in only a few tokens achieving real sustainable growth.
Source: Arca internal calculations


And That’s Our Two Satoshis!
Thanks for reading everyone! Questions or comments, just let us know.

The Arca Portfolio Management Team
Jeff Dorman, CFA - Chief Investment Officer
Katie Talati - Director of Research
Sasha Fleyshman - Portfolio Manager
David Nage - Portfolio Manager
Wes Hansen - Director of Trading and Operations
Michal Benedykcinski - Senior Vice President, Research
Nick Hotz, CFA - Vice President, Research
Kyle Doane - Vice President, Trading
Alex Woodard - Associate, Research
Christopher Macpherson - Research Analyst
Andrew Masotti - Associate, Trading and Operations
To learn more or talk to us about investing in digital assets and cryptocurrency
call us now at (424) 289-8068.

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Statements in this communication may include forward-looking information and/or may be based on various assumptions. The forward-looking statements and other views or opinions expressed are those of the author, and are made as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated and there is no guarantee that any particular outcome will come to pass. The statements made herein are subject to change at any time. Arca disclaims any obligation to update or revise any statements or views expressed herein. Past performance is not a guarantee of future results and there can be no assurance that any future results will be realized. Some or all of the information provided herein may be or be based on statements of opinion. In addition, certain information provided herein may be based on third-party sources, which is believed to be accurate, but has not been independently verified. Arca and/or certain of its affiliates and/or clients may now, or in the future, hold a financial interest in investments that are the same as or substantially similar to the investments discussed in this commentary. No claims are made as to the profitability of such financial interests, now, in the past or in the future and Arca and/or its clients may sell such financial interests at any time. The information provided herein is not intended to be, nor should it be construed as an offer to sell or a solicitation of any offer to buy any securities, or a solicitation to provide investment advisory services.