Surely any of us participating in the Crypto market will have heard of or even spent time and effort hunting for airdrops from projects, but as the number of people hunting for airdrops is increasing, will this land become more and more popular? Will it gradually become outdated? Join Weakhand to learn about the reasons why airdrops will never go out of style in DeFi.
If you are interested in airdrops, here are some projects that can be airdropped in the future:
- Retroactive DeBank Hunting Guide
- Retroactive Hunting Guide Project zkSync Era
- Retroactive LayerZero Hunting Guide
What is Airdrop?
Airdrop is an act of distributing tokens from the project to the community completely free of charge at the time of token issuance. In exchange for this airdrop, everyone in the community will usually participate in certain activities classified as follows:
- Retroactive: A form in which projects will distribute tokens to supporters and early users of their products on testnet or mainnet to contribute to project development. Projects will often airdrop a large amount of tokens to users through this method and almost only do it once at TGE time.
- Bounty Airdrop: A form of project that rewards a certain amount of tokens or money, requiring participants to complete certain tasks such as interacting on social networks Twitter, Telegram,… or opening an account , first transaction on the platform. Projects will be able to organize many different Bounty Airdrops, but the reward will usually not be too large.
Airdrop also creates a difference between the DeFi market and the traditional financial market by opening up many opportunities for anyone to change their position with a small amount of capital, in contrast to TradFi which requires everyone have a large enough capital to participate.
Reasons Why Airdrops Will Never Go Out of Style in DeFi
Use airdrop to avoid securities laws
Securities are evidence of assets or capital of a company or organization issued in many different forms such as certificates, book entries or electronic data. In each different country there will be different laws and the definition of securities will also be different, however we can use the US Securities Exchange Act of 1934 to determine the definition of securities. when this is the largest market in the world.
Specifically, if we take the US Securities Exchange Act of 1934 to apply to projects in the Crypto market that issue tokens for the first time through ICO, these projects can completely be sued and fined. because ICO is no different from the act of publicly raising capital for a “Share Securities”.
For Crypto projects not headquartered in the United States, they may have more freedom in choosing the form of token launch. However, most large projects at the present time have their headquarters in the United States, because this is the largest financial center in the world, making them also subject to somewhat stricter laws.
In fact, there have been many projects that have encountered problems related to securities laws, the most typical one is probably Ripple. The US Securities and Exchange Commission (SEC) sued Ripple on the grounds that the issuance of XRP without going through the SEC was a security from December 2020 to the present. This 3-year lawsuit has consumed of Ripple to more than $200M in costs to hire famous lawyers and experts.
One of the best ways to launch tokens without getting involved in current securities laws is to issue an airdrop. Because simply put, an airdrop is an act of issuing free tokens to users, unlike an act of public capital raising for an “Equity Securities”.
Use airdrop for Marketing
There are many forms of Marketing in the Crypto market in particular and the financial market in particular, including:
- Social Media Marketing.
- Search Engine Optimization (SEO).
- Content Marketing.
- Influencer Marketing.
- Affiliate Marketing.
- Paid Advertising.
However, to implement the above forms of Marketing, projects and companies often have to go through services from a third party. The effectiveness from these forms is not really too good for projects in Crypto market because it is a new market and it is quite difficult to study user activities.
Instead of paying fees to third parties, projects can choose to use an allocation from the total token supply to allocate for airdrops. Using airdrops for Marketing will usually be spread by the community as follows:
- Airdrop announcement stage: The community spreads about a big project about to deploy tokens and airdrops. The question each person asks themselves when hearing this information is “Am I eligible to receive the airdrop?” and look forward to announcing the eligibility list.
- The stage of announcing the eligible list: Usually, after a person knows they are eligible to receive an airdrop, they will share this joy on social networks, which unintentionally increases the reach and awareness of the project.
- The period before TGE token: What those receiving the airdrop are interested in before TGE is the price of the token after listing, stories about the price of the token will also be discussed on social networks.
- Period after TGE: If this is a large enough airdrop, users will share this achievement on social media channels again.
Arbitrum’s token deployment and airdrop announcement received more than 4 million views
It can be said that Marketing in the form of airdrop has no different meaning than the saying “natural scent” when the community discusses with each other on social network channels, thereby increasing reach and recognition. In addition, in essence, we can also assume that the project does not need to spend any money from the budget to pay Marketing costs through airdrop.
“Decentralized” in the true sense
Basically, the initial distribution of tokens through forms such as ICO, IDO, IGO,… to the community also brings decentralization to the project when the token is owned by many people. However, in reality, it is very difficult to verify whether those participating in the early sale rounds are real users or not because basically there are a lot of scams and cheats and when too many tokens fall into the hands of the wrong people. Bad guys will lose the necessary decentralization.
Using airdrop to distribute tokens to the community is probably a more reasonable form when only real users with real needs participate in using the project. Using on-chain tools to filter and reward tokens to real users will essentially maintain the necessary decentralization of the project.
Summary
From the reasons mentioned above, we can conclude that airdrops will never go out of style in the DeFi market. Weakhand hopes that this article has brought everyone useful information.
