Dec 2022#Opinion#Token

Token airdrops: when theywork and when they don’t

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Authors

Roman Troskin

Roman Troskin

Director, Strategy

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6 min

What is a crypto airdrop?

In crypto, an airdrop is a free distribution of an asset, either to users who satisfy certain requirements or to the general public. 

Many think that airdrops emerged during the 2017-2018 ICO boom. However, the first airdrop we know about was the distribution of Aurora coins in Iceland in 2014. The idea was clear and simple: give every Iceland resident $385 worth of Aurora and wait for something wonderful to happen — preferably for Aurora to replace the krona. 

The plan didn’t work, but Aurora became the first landmark case of a digital token distribution based on a specific trait: in this case holding an Icelandic ID card. Since then, the airdrop principle has remained the same, but the mechanics became more complex. The ICO hype made token airdrops more common — but also spoiled their reputation with badly thought-through distributions and even worse implementation. The key airdrop formats emerged at that time. 

Types of crypto airdrops

1. Standard 

This is a mass token distribution where users have to subscribe to the project’s social accounts or perform another basic action. The quality of the resulting audience can be as low as the amount of effort needed to get tokens. This type of token airdrop can solve some early-stage traction issues and will be most effective when the number of slots is limited and there is enough marketing activity to attract users. 

A good recent example is ALTAVA on airdrops.io. The project chose a tried-and-true — if rather banal — solution and attracted over 270 thousand participants. We should note that the airdrop was a collaboration with Bored Ape Golf Club.


Airdrop terrms:

  • Visit ALTAVA’s crypto air drop page
  • Submit one’s details
  • Subscribe to several channels, like and repost.

An interesting addition was a giveaway with valuable prizes. 

Also earn more entries for each referral.

One lucky participant will win 500 USDT, $500 worth of TAVA and 1 BAGC Mystery Box, three lucky participants will win 200 USDT, $200 worth of TAVA and 1 BAGC Mystery Box each and twenty lucky participants will win 100 USDT and $100 worth of TAVA each.

The top 20 referrers will also win up to 500 USDT, $500 worth of TAVA and 1 BAGC Mystery Box each.

It’s a simple example with an easy-to-predict activity pattern, though the future outcome isn’t clear. 

2. Bounty airdrops

In this format, users receive rewards based on how successfully they complete tasks. It’s a more complex and sophisticated strategy with stricter rules; the goal is to build long-term relationships with users. 

The bounty campaign can include asking questions during an AMA, writing articles, interacting with a testnet dApp, filming videos, etc. 

A great example is the bug-hunting bounty airdrop by NEAR Protocol. It’s aimed at finding vulnerabilities, such as:

  • Asset theft
  • Unauthorized transactions
  • Transaction manipulations
  • Fee manipulations
  • Contract flows
  • Consensus bugs
  • Cryptographic issues, etc.

A user who finds an eligible vulnerability and submits a quality report can get from $100 to $1,000,000, depending on the bug’s complexity and importance. So go on and try it — just don’t break NEAR!

3. Exclusive airdrops

In 2020, Uniswap distributed 2,500 UNI to each longterm user. Back then this amount of the airdrop token was worth $1,200. There were no special conditions: all that mattered was how long one had been using Uniswap. 

GameFi projects often distribute tokens to active players or NFT holders, which helps to draw users into the funnel of a new project more organically. 

4. Hard fork airdrops

A hard fork is a split in a blockchain resulting from a non-forward-compatible change in its code. Instead of one coin, there are now two, each with its own contract. The balances in the wallets on the old chain remain the same, but the new chain can distribute equal amounts of the new coin to everyone who gets a wallet on the forked chain. You could even call it a technical necessity for people to use new contracts and dApps.

5. Holder rewards

An example is EOS or early-stage Ethereum. Such airdrops usually don’t require the participants to do anything apart from holding a specific coin in their wallet during a network snapshot. The idea is to attract users to a new project running on existing infrastructure and to stimulate them to keep holding the coin and to use the native chain. It’s a good strategy that can deliver a short-term user number growth. 

6. DAO voting

In these airdrops, tokens are distributed to eligible users to engage them in governance voting. If the tokens can’t be sold, this strategy can promote democratization and inclusion. The DAO should be able to count inividual users’ (addresses’) votes or to find another alternative to the basic „1 token=1 vote“ scheme.

Our case

it’s worth citing the airdrop that BDC Consulting organized for a client, a large metaverse project. The airdrop took place on CoinMarketCap and was quite straightforward — but accompanied with a wide awareness campaign. The conditions were as follows:

1. Add the client’s token to one’s CoinMarketCap watchlist.

2. Sign up to the project’s updates.

3. Register in the waiting list on the website (optional).

4. Follow the project on Twitter and retweet.

5. Join the official Telegram chat.

Results:

  • On CMC Gravity, the community grew from 0 to 114,661 followers.
  • The project rose from no.1153 to no.729 in the CMC rankings (the rank upon the completion of the airdrop).
  • The number of users in the official chat went from 9,039 to 22,834.
  • The number of Twitter followers rose from 30k to 63k.
  • 150,000 users added the token to their CMC watchlists.
  • The project and the token entered Gravity’s crypto/metaverse top-10 in terms of community growth and engagement.

Conclusion

Like any other campaign instrument, a good airdrop requires an understanding of the goal, the need, and the target audience. The best crypto airdrops can help launch a project and ensure a fair distribution among the community from day 1, but there is also the risk of attracting disloyal, disengaged holders. Poorly planned crypto airdrop rewards can lead to fundamental and hard-to-solve issues in the future. 

Any user acquisition and engagement tool can bring great results when handled by an experienced team. When the product itself is great, success is almost guaranteed; but the first question when planning an airdrop should still be „why“ and „how“.

 

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