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From High Expectations to Controversial Turnaround, Genius Airdrop Triggers Community Backlash
Original Article Title: "Genius Launches Airdrop Rules: TGE Means Either Receive 70% Immediately, or Lockup for One Year to Get the Full Amount"
Original Article Author: Asher, Odaily Planet Daily
Yet another anti-rug project has emerged...
Following the last update on the token airdrop with a total token supply of 21% (divided into three seasons: Season 1, Season 2, Season 3, each season accounting for 7%), yesterday, YZi Labs, with "tens of millions of dollars" invested, and with CZ joining as an advisor, Genius updated its Season 1 airdrop document. According to the latest content, a total of 70 million GENIUS tokens will be distributed during TGE, and early users have two ways to claim:
· Choose to Claim Immediately at TGE: The deadline for immediate claiming is 7 days after TGE. If a user chooses to claim immediately, 70% of the tokens will be automatically burned. For example, if a user's total claim amount is 100 GENIUS tokens and they choose to claim immediately, they will lose 70 GENIUS tokens, ultimately receiving only 30 GENIUS, while the remaining 70 GENIUS will be permanently destroyed;
· Choose to Lock for One Year and Claim later: This claiming method will not be subject to any penalties. Users do not need to take any action but wait for the airdrop claiming window to close. After that, the user's token allocation will be locked in the smart contract for one year. For example, if a user's total claim amount is 100 GENIUS tokens and they choose to lock up for one year before claiming, they will receive 100 GENIUS after one year.
According to the latest information from the official Telegram, Genius explains that this airdrop distribution scheme aims to provide an exit path for users who are not concerned about the project's long-term development while also rewarding those who stay and truly believe in the product.
Genius Official Explanation of Airdrop Rules
Even more interestingly, the official document includes a section on the airdrop featuring a past tweet from CZ (Tweet content: "If you ever envied those who bought crypto at a low price and endured through the cycles, think about what they did at moments like this.")
This airdrop claiming rule has ignited strong dissatisfaction in the rug pull community.
YZi Labs Invests “Tens of Millions of Dollars” with CZ as Advisor: Genius
Genius is a privacy-centric decentralized trading platform that offers spot, perpetual, and copy trading, supporting over 10 blockchains including BNB Chain and Solana. Its goal is to become Binance's on-chain alternative - bringing CEX-like speed, liquidity, and privacy to the blockchain while remaining fully self-custodial, non-custodial (users holding their private keys).
As early as October 2024, Genius announced the completion of a $6 million seed round with CMCC Global leading, and participation from Cadenza Ventures, AVA Labs, Arca, Flow Traders, and other institutions.
Then on January 13 this year, Genius announced that YZi Labs had invested “tens of millions of dollars” in it, with CZ personally joining as an advisor.
Textbook-Level Anti-Rug Pull Process: From Hype to Rule Reversal
After the rules were announced, the community's most immediate feeling was of being “betrayed.” Community members complained that with CZ's endorsement and a detailed TGE schedule, everyone was willing to spend real money on trading volume for months, only to be told just before the TGE that they had to “cut 70% off” - “either take the remaining balance and leave, or spend another year with the project team.”
If we break down the whole process, this looks more like a “textbook-level anti-rug pull process” involving continuous adjustment of expectations and ultimately rule adjustments on the eve of TGE.
Initially, what was presented was a narrative with hardly any controversy: the funds, advisors, airdrop ratio, and timing were all clearly displayed, with a logical flow and clear expectations. Within this framework, continuing to generate volume, invest time and money actually became the “rational choice” for rug pullers.
Expectations were then recalibrated. Airdrop ratio reductions and distribution structure adjustments, these changes themselves were not uncommon and could even be explained in the market environment at the time. Many rug pullers chose to continue to invest at this stage, essentially accepting the new expectation of “lower returns but still room for growth.”
The real turning point came on the eve of TGE. After the claiming rules were redesigned, the previously determined allocation turned into a multiple-choice question with constraints - either accept a significant loss in exchange for liquidity, or bear the time cost for the full amount. At this point, the gap between expectation and reality was rapidly magnified.
Cost Reassessment: Aside from Early Users, Recent "Whale Farmers" Users May Face Collective "Rug Pull"
According to feedback from several long-term participants in the "farming" activity, the cost of acquiring GP points through transaction volume in recent weeks ranged from approximately $0.025 to $0.045 per point.
However, for a project that has been live for a few months and has yet to even fix the turntable function, early users find it challenging to maintain high expectations for the listing price or the second-quarter airdrop. Given this expectation, most people are more likely to choose to burn 70% during the TGE, immediately claim the remaining 30%, which means that the actual cost is directly amplified. In equivalent terms, the actual cost has now risen to $0.083 to $0.15 per point.
According to user Nathan's analysis, if the total points issuance is 200 million, for users who have been farming GP points through transaction volume in recent weeks, Genius' listing FDV would need to be at least $8 billion to avoid a "rug pull".
Airdrop Ratio vs. FDV Relationship
Perhaps, only the very early users will not lose money.
Team Response: Burning All Airdropped Tokens Can Refund All Fees Generated in Genius
After announcing the airdrop rules, the Genius community was filled with dissatisfaction. This morning, following feedback from the community, the team posted on the official Telegram channel stating that a "refund" option will be added during the airdrop claiming process. Choosing the refund option means destroying 100% of the GENIUS airdrop allocation in exchange for the fees charged by Genius. Users can request a refund within 48 hours after the TGE ends, and the refund will be processed within 48 hours after the request. Additionally, regarding the calculation of Genius fees, users need to understand the following two points:
What is refunded is the net fee, not the absolute fee. Genius has already distributed over $7 million in cash rebates to the trading community and over $1.3 million in referral rewards to traders. The team calculates the net fee that users actually paid to the trading terminal, which has already deducted the aforementioned expenses;
If a user conducts a transaction with a total fee of 20 basis points, where 15 basis points are charged by the underlying decentralized trading platform (such as PancakeSwap), and the Genius terminal only charges 5 basis points, Genius can only refund the 5 basis points fee to the user.
Genius cannot refund the user's full fee because the fee paid to Genius is different from the fee paid to the underlying provider.
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No. The difference lies in where the keys are stored.
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This is the technical background of the "help page sentence": because the key is on X's servers, X has the ability to respond to legal processes without the user's knowledge. Signal does not have this capability, not because of policy, but because it simply does not have the key.
The following illustration compares the security mechanisms of Signal, WhatsApp, Telegram, and X Chat along six dimensions. X Chat is the only one of the four where the platform holds the key and the only one without Forward Secrecy.
The significance of Forward Secrecy is that even if a key is compromised at a certain point in time, historical messages cannot be decrypted because each message has a unique key. Signal's Double Ratchet protocol automatically updates the key after each message, a mechanism lacking in X Chat.
After analyzing the X Chat architecture in June 2025, Johns Hopkins University cryptology professor Matthew Green commented, "If we judge XChat as an end-to-end encryption scheme, this seems like a pretty game-over type of vulnerability." He later added, "I would not trust this any more than I trust current unencrypted DMs."
From a September 2025 TechCrunch report to being live in April 2026, this architecture saw no changes.
In a February 9, 2026 tweet, Musk pledged to undergo rigorous security tests of X Chat before its launch on X Chat and to open source all the code.
As of the April 17 launch date, no independent third-party audit has been completed, there is no official code repository on GitHub, the App Store's privacy label reveals X Chat collects five or more categories of data including location, contact info, and search history, directly contradicting the marketing claim of "No Ads, No Trackers."
Not continuous monitoring, but a clear access point.
For every message on X Chat, users can long-press and select "Ask Grok." When this button is clicked, the message is delivered to Grok in plaintext, transitioning from encrypted to unencrypted at this stage.
This design is not a vulnerability but a feature. However, X Chat's privacy policy does not state whether this plaintext data will be used for Grok's model training or if Grok will store this conversation content. By actively clicking "Ask Grok," users are voluntarily removing the encryption protection of that message.
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X Chat's initial release only supports iOS, with the Android version simply stating "coming soon" without a timeline.
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WhatsApp's dominance in the global communication market is built on Android. Signal, with a monthly active user base of around 85 million, also relies mainly on privacy-conscious users in Android-dominant countries.
X Chat circumvented this battlefield, with two possible interpretations. One is technical debt; X Chat is built with Rust, and achieving cross-platform support is not easy, so prioritizing iOS may be an engineering constraint. The other is a strategic choice; with iOS holding a market share of nearly 55% in the U.S., X's core user base being in the U.S., prioritizing iOS means focusing on their core user base rather than engaging in direct competition with Android-dominated emerging markets and WhatsApp.
These two interpretations are not mutually exclusive, leading to the same result: X Chat's debut saw it willingly forfeit 73% of the global smartphone user base.
This matter has been described by some: X Chat, along with X Money and Grok, forms a trifecta creating a closed-loop data system parallel to the existing infrastructure, similar in concept to the WeChat ecosystem. This assessment is not new, but with X Chat's launch, it's worth revisiting the schematic.
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Every WeChat feature operates within China's regulatory framework. Musk's system operates within Western regulatory frameworks, but he also serves as the head of the Department of Government Efficiency (DOGE). This is not a WeChat replica; it is a reenactment of the same logic under different political conditions.
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After the blockade of the Strait of Hormuz, when will the war end?
Before using Musk's "Western WeChat" X Chat, you need to understand these three questions
The X Chat will be available for download on the App Store this Friday. The media has already covered the feature list, including self-destructing messages, screenshot prevention, 481-person group chats, Grok integration, and registration without a phone number, positioning it as the "Western WeChat." However, there are three questions that have hardly been addressed in any reports.
There is a sentence on X's official help page that is still hanging there: "If malicious insiders or X itself cause encrypted conversations to be exposed through legal processes, both the sender and receiver will be completely unaware."
No. The difference lies in where the keys are stored.
In Signal's end-to-end encryption, the keys never leave your device. X, the court, or any external party does not hold your keys. Signal's servers have nothing to decrypt your messages; even if they were subpoenaed, they could only provide registration timestamps and last connection times, as evidenced by past subpoena records.
X Chat uses the Juicebox protocol. This solution divides the key into three parts, each stored on three servers operated by X. When recovering the key with a PIN code, the system retrieves these three shards from X's servers and recombines them. No matter how complex the PIN code is, X is the actual custodian of the key, not the user.
This is the technical background of the "help page sentence": because the key is on X's servers, X has the ability to respond to legal processes without the user's knowledge. Signal does not have this capability, not because of policy, but because it simply does not have the key.
The following illustration compares the security mechanisms of Signal, WhatsApp, Telegram, and X Chat along six dimensions. X Chat is the only one of the four where the platform holds the key and the only one without Forward Secrecy.
The significance of Forward Secrecy is that even if a key is compromised at a certain point in time, historical messages cannot be decrypted because each message has a unique key. Signal's Double Ratchet protocol automatically updates the key after each message, a mechanism lacking in X Chat.
After analyzing the X Chat architecture in June 2025, Johns Hopkins University cryptology professor Matthew Green commented, "If we judge XChat as an end-to-end encryption scheme, this seems like a pretty game-over type of vulnerability." He later added, "I would not trust this any more than I trust current unencrypted DMs."
From a September 2025 TechCrunch report to being live in April 2026, this architecture saw no changes.
In a February 9, 2026 tweet, Musk pledged to undergo rigorous security tests of X Chat before its launch on X Chat and to open source all the code.
As of the April 17 launch date, no independent third-party audit has been completed, there is no official code repository on GitHub, the App Store's privacy label reveals X Chat collects five or more categories of data including location, contact info, and search history, directly contradicting the marketing claim of "No Ads, No Trackers."
Not continuous monitoring, but a clear access point.
For every message on X Chat, users can long-press and select "Ask Grok." When this button is clicked, the message is delivered to Grok in plaintext, transitioning from encrypted to unencrypted at this stage.
This design is not a vulnerability but a feature. However, X Chat's privacy policy does not state whether this plaintext data will be used for Grok's model training or if Grok will store this conversation content. By actively clicking "Ask Grok," users are voluntarily removing the encryption protection of that message.
There is also a structural issue: How quickly will this button shift from an "optional feature" to a "default habit"? The higher the quality of Grok's replies, the more frequently users will rely on it, leading to an increase in the proportion of messages flowing out of encryption protection. The actual encryption strength of X Chat, in the long run, depends not only on the design of the Juicebox protocol but also on the frequency of user clicks on "Ask Grok."
X Chat's initial release only supports iOS, with the Android version simply stating "coming soon" without a timeline.
In the global smartphone market, Android holds about 73%, while iOS holds about 27% (IDC/Statista, 2025). Of WhatsApp's 3.14 billion monthly active users, 73% are on Android (according to Demand Sage). In India, WhatsApp covers 854 million users, with over 95% Android penetration. In Brazil, there are 148 million users, with 81% on Android, and in Indonesia, there are 112 million users, with 87% on Android.
WhatsApp's dominance in the global communication market is built on Android. Signal, with a monthly active user base of around 85 million, also relies mainly on privacy-conscious users in Android-dominant countries.
X Chat circumvented this battlefield, with two possible interpretations. One is technical debt; X Chat is built with Rust, and achieving cross-platform support is not easy, so prioritizing iOS may be an engineering constraint. The other is a strategic choice; with iOS holding a market share of nearly 55% in the U.S., X's core user base being in the U.S., prioritizing iOS means focusing on their core user base rather than engaging in direct competition with Android-dominated emerging markets and WhatsApp.
These two interpretations are not mutually exclusive, leading to the same result: X Chat's debut saw it willingly forfeit 73% of the global smartphone user base.
This matter has been described by some: X Chat, along with X Money and Grok, forms a trifecta creating a closed-loop data system parallel to the existing infrastructure, similar in concept to the WeChat ecosystem. This assessment is not new, but with X Chat's launch, it's worth revisiting the schematic.
X Chat generates communication metadata, including information on who is talking to whom, for how long, and how frequently. This data flows into X's identity system. Part of the message content goes through the Ask Grok feature and enters Grok's processing chain. Financial transactions are handled by X Money: external public testing was completed in March, opening to the public in April, enabling fiat peer-to-peer transfers via Visa Direct. A senior Fireblocks executive confirmed plans for cryptocurrency payments to go live by the end of the year, holding money transmitter licenses in over 40 U.S. states currently.
Every WeChat feature operates within China's regulatory framework. Musk's system operates within Western regulatory frameworks, but he also serves as the head of the Department of Government Efficiency (DOGE). This is not a WeChat replica; it is a reenactment of the same logic under different political conditions.
The difference is that WeChat has never explicitly claimed to be "end-to-end encrypted" on its main interface, whereas X Chat does. "End-to-end encryption" in user perception means that no one, not even the platform, can see your messages. X Chat's architectural design does not meet this user expectation, but it uses this term.
X Chat consolidates the three data lines of "who this person is, who they are talking to, and where their money comes from and goes to" in one company's hands.
The help page sentence has never been just technical instructions.
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