Why Free Equity and Token Airdrops Don't Work
Andrew Wilkinson tweeted something last week that every founder already knows: give an advisor free equity and they’ll say “thanks for the free shares” then mostly ghost you. Maybe they’ll respond to an email once in a while. Maybe.
I’ve seen this play out dozens of times. You meet someone impressive, they seem genuinely excited about your startup, you riff over 2-3 meetings, and their value-add seems unique and tangible. So you offer them advisor shares. They accept, docs are signed.
Then… crickets.
The equity becomes a lottery ticket they check on once a year.
The same thing happens in crypto, just faster. Projects airdrop millions in tokens to “bootstrap the community.” The data is brutal: 66% of recipients immediately dump. Users claim their tokens, sell, vanish. The project burns through treasury for vanity metrics and a price crash.
The Problem: No Skin in the Game
Nassim Taleb has long championed this concept in Skin in the Game: without skin in the game, advice is cheap and engagement is cheaper. When someone gets pure upside with zero downside, they act accordingly.
This means both free equity advisors and token holders, when they do engage, are actually more incentivized to give risky advice: they could get more upside without consequences.
Charlie Munger put it best: “Show me the incentives, and I’ll show you the outcome.”
The missing piece isn’t just financial risk—it’s social risk too.
When a VC invests, they wire real money AND attach their reputation to your company. They tweet about it, add your logo to their portfolio page, brag at dinner parties. Research shows that just displaying a top-tier investor’s badge on AngelList meaningfully increases candidate interest. The investor’s name alone adds value.
Compare that to your typical advisor agreement—a back-channel handshake that never sees daylight. If you fail, nobody knows they were involved. If you succeed, they still win.
Airdrops are even worse. Wallet 0xABC dumps tokens without ever linking to Alice Paperhands on LinkedIn. Zero social cost. The zkSync Era, Arbitrum, Optimism, and so many other drops showed this same pattern: massive spike, then collapse once the free money dried up.
Building Real Stakes
Here’s what actually works.
For startups:
- Make advisors invest even $5k via SAFE—filters out the tourists
- Announce every advisor publicly—social proof = skin in the game
- Vest equity quarterly against specific KPIs, not time
And specific for crypto:
- Link token grants to verified identities (ENS, GitHub, X)
- Vest tokens based on actual platform usage, not just holding
The formula is simple: financial risk + reputational risk = real engagement.
Free lottery tickets create fake engagement. Real stakes create real value.
Engineer your incentives accordingly.