The arbitrage community hits a wall: Monad says, "The logic of the testnet arbitrage race has collapsed."

Author: Hu Tao, ChainCatcher

Yesterday, the highly anticipated Layer 1 public chain Monad’s token MON officially launched, once dropping below the cost price for public sale users. Currently, the FDV remains in the $3-3.5 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.

And this is not only a heavy blow to the Layer 1 narrative but also a “tragedy” for the grab-and-moo crowd.

Previously, Monad was valued at $3 billion, making it the highest-valued unissued Layer 1 token in the market, and was highly anticipated by the mooing community. Its testnet has accumulated over 300 million interaction addresses, with many studios registering Monad addresses using millions of addresses. At the end of October, Monad officially opened an airdrop query, but unexpectedly excluded all testnet interaction addresses from the airdrop scope.

The logic of the mooing crowd is that “sunshine” is a common practice among many project teams; as long as there are frequent interactions, they can potentially earn token rewards ranging from a few dollars to dozens of dollars. The accumulated token value across multiple addresses can still be considerable. However, Monad’s official team did not follow the wishes of the large mooing crowd by excluding all testnet addresses from the airdrop.

“All testnet interaction addresses are anti-mooing, and participating in various NFTs basically has no use. The only addresses that received the Monad airdrop are some old addresses that never interacted with Monad but traded on Hyperliquid,” said A Du (pseudonym), head of a mooing studio in Hangzhou, to ChainCatcher.

For a time, Monad became the target of fierce criticism from many mooing users, but the Monad official team remained unmoved. According to well-known KOL Fengmi, the idea behind this airdrop was to bind contributors, identity, and potential people into Monad, focusing on identity + contribution, such as Monad ecosystem developers, heavy DeFi users, and high-quality NFT holders.

Famous alpha blogger Spark received a reward of 3 million MON in this airdrop, worth about $110,000. This was not due to his interaction record but because he served as a moderator in the Monad community for three years and established the Monad Chinese community. The Monad team considers this a substantial contribution, which is also a key criterion for airdrops by most projects.

For project teams, the significance of airdrops is twofold: on one hand, to reward long-term supporters and demonstrate their value for community users; on the other hand, to incentivize active participants and influencers in the surrounding ecosystem, attracting them into their own ecosystem through airdrop rewards. From Uniswap to Gitcoin, Arbitrum, Scroll, Berachain, Aster, and thousands of other projects, airdrops have become an essential way for project teams to attract users.

During this period, the standards for airdrops have continued to diverge and evolve. Some projects emphasize equal distribution and broad happiness, being generous to mooing participants, while others set strict rules for testnet/mainnet interactions, implementing rigorous witch-hunting based on a point system. This time, Monad completely abandoned testnet interaction users, or retail investors.

“If a network neglects retail investors for a long time, it will make the network overly elite in its early stages, losing a broad community base. In the early days of Bitcoin, Ethereum, Solana, and BSC, it was all about a group of seemingly insignificant retail investors—they brought network effects and community vitality,” Fengmi said on X. He believes Monad should give grassroots retail investors a chance to grow gradually, even a little, so more people can truly become part of the MON network community.

Zhuifeng believes that mooing people contribute not only transaction fees, data, and traffic to project teams but also serve as excellent publicity. He personally thinks they should be given some incentives. “Monad’s approach is really thoughtless, shaking the trust foundation of the entire industry,” said Bingwa on Twitter.

From the project perspective, they need to formulate airdrop strategies based on long-term development needs. “Mooing people have no loyalty; they sell immediately after receiving an airdrop and then go to the next project to moo. For projects, this only causes selling pressure and no long-term benefits. Is it necessary to give them tokens?” said an anonymous KOL, describing mooing crowds as “parasites” in the crypto ecosystem.

Australian master brother also believes that the industry’s airdrop logic is changing. “In the past, CEXs focused on on-chain data activity and active user metrics when evaluating a project’s fundamentals. During cold starts, projects needed popularity. For a long time, project teams tacitly or even reached an understanding with mooing armies: you come moo here, help me get listed on big exchanges, and I’ll give you airdrops in return, sharing the profits. But now, CEX listings no longer look at on-chain data and user metrics because everyone knows these data are heavily inflated,” he tweeted.

The business logic is ruthless. As on-chain data bubbles grow more severe and mooing pressure negatively impacts many projects’ token prices, Monad’s choice is reasonable. However, this will not become the norm for most projects, because Monad, as a heavily capitalized public chain project, still has many cards to play. Its technical strength and potential explosive power of ecological applications could bring it a large community of users. But for most projects, they are essentially marketing projects that must rely on airdrops to attract attention and market hype.

In the long run, airdrops remain one of the important sources of value in the crypto industry, but their logic and targets are undergoing profound changes. “The results of Monad’s airdrop basically mark the collapse of the testnet mooing race, and in the future, testnets are unlikely to be spammed again,” said Australian master brother.

In fact, many KOLs predicted this “table-flip” by Monad. Like Australian master brother, Bingwa, Zhuifeng, and others, many early on stated they would not participate in Monad interactions. It is understood that top KOLs will focus more on “mouth mooing,” arbitrage, and other diverse markets, while also concentrating on high-quality projects like Polymarket to create premium content.

Additionally, several interviewed studios said their earnings are lower than last year and below expectations. “The key is to find areas where you have advantages, such as low labor costs, advanced technology, keen investment research to spot early projects, or influential KOLs for mouth mooing. It’s quite difficult to just follow the crowd and moo for substantial gains,” A Du said.

As the market cap of top projects like Monad has significantly fallen below expectations, and many projects lock user airdrop shares for long periods after TGE, mooing’s position in the project benefit distribution ecosystem continues to decline, with token values shrinking. The mooing logic of winning through volume is no longer sustainable.

“So, the era of retail newcomers entering the primary market for cheap dividends with labor is truly over. The door has already been closing for a long time; Monad’s airdrop just sealed the last crack,” sighed Australian master brother.