Performing on-chain activity, often across many wallets, to qualify for anticipated airdrops. Sybil detection is the protocol's effort to exclude wallets controlled by one person.
Airdrops received are income at fair market value when claimable. The gas and swap activity used to qualify are their own disposals, and the fees are not deductible for an investor. Where farming is systematic across many wallets, it may be a trade or business, with income treatment and self-employment tax.
No. Income at receipt either way. The scale and organization can make the activity a business, which changes the character and adds self-employment tax.
Source: Rev. Rul. 2023-14; IRS Notice 2014-21
Last reviewed September 18, 2026. Tax rules change; confirm current law before acting.
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