Airdrop campaigns on crypto exchange Binance are fuelling a surge in activity on its affiliated blockchain, BNB Chain.
BNB Chain has consistently been the top blockchain by decentralised exchange trading volume since early May. In the past 24 hours, decentralised exchange trading volume on BNB Chain reached almost $10 billion, far above Solana, the next highest, at $2.5 billion.
Lending activity on the blockchain also spiked last month as traders rushed to borrow BNB. Borrowing of BNB surged on May 22, briefly pushing rates sharply higher. On lending protocol Aave, the borrow rate spiked from about 2% to a high of almost 6%. And on Venus, another lending protocol, borrow rates went from about 1.5% to a high of over 10%.
The increase in BNB Chain activity appears to be linked to two airdrop campaigns run by Binance that offer the chance to receive tokens for fulfilling certain conditions.
Airdrops are distributions of tokens meant to reward a project’s earliest users and to lure in new users with the promise of free money.
But two Binance programs allow users to earn a slice of upcoming airdrops without directly interacting with nascent crypto projects.
Binance’s campaigns
Binance’s longest-running airdrop campaign is the Binance Launchpool. Launched in 2020, it lets users lock BNB tokens or stablecoins to receive a share of an airdrop. BNB held in various Binance Earn products also entitle users to airdrops.
To date, 108 projects have launched through the Binance Launchpool with over 6 million unique participants. In total, those projects have raised almost $200 million. There are currently over $2.5 billion in BNB tokens locked on the exchange.
The recent spike in lending activity coincided with the highly anticipated Spark airdrop, which users were able to access via Binance Launchpad.
Users borrowed BNB tokens on BNB Chain to lock them on Binance before the Spark airdrop’s June 10 cutoff date.
Binance Alpha, launched in 2024, rewards users with airdrops for using the Binance Wallet. Traders earn “Alpha Points” based on the number of transactions and amount of volume traded using the Binance Wallet.
That campaign has proved highly successful for the wallet, bringing it to the top spot by trading volume market share. On Monday, Binance Wallet accounted for over 94% of all crypto wallet trading volume, reaching over $6.5 billion with almost 200,000 active users.
But some of this volume is caused by washtrading, or the buying and selling of the same asset over and over to create the false appearance of significant volume and activity.
Binance addressed the complaints of unfair trading activity in June, eliminating points earned by any transactions involving unsupported or manipulated tokens.
But the change didn’t eliminate all wash trading used to game Binance’s airdrop programs.
In this example, the user conducted 17 different swaps using BNB and two other highly liquid and low-fee tokens. Ultimately the trader swapped back to BNB while incurring minimal losses from slippage and fees.
In May, eight airdrops were distributed to Binance Alpha participants, with the average value equaling over $1,000 per user, according to its first day’s closing price.
