It was generous to give so many away for free. But it was obviously a bad idea, for it caused an imbalance in the market, which harmed the people who invested real money into it. This is the kind of thing that is bad for crypto.

Notice what it says:  "At the culmination of the sign-up period, a minimum of 222,222 Hydro tokens will be distributed to each developer for use in integrating Raindrop authentication and further developing with Hydro and Hydrogen." Source: https://bitcointalk.org/index.php?topic=2778273.msg28420390#msg28420390

It appears to me that they gave these tokens away to developers with the intent to have them work together to further develop the project. By receiving tokens, these developers essentially agreed to use them for their intended purpose. But greed kicked in and many people who got free tokens dumped for a small profit. Had these people not done this, HYDRO would be doing very well right now. 

Serious damage has been done to this token as a result, damage that may be irreparable. I hope the HYDRO team can somehow turn this around and make this a positive experience for investors.