Why Run Token Airdrops: Scale Your token a Marketing Strategy
Launching a token a major undertaking, and one of the key marketing strategies many consider is using an airdrop.
But should you do it? In this article I tell you when a airdrop makes sense, how to execute it effectively and the costs involved.
If you are still doubting if it is not a waste of money give me a chance to delve into the reasons and goodness of making airdrops from your token. If at this point you are already sure about doing it go through the article on how to make an airdrop on Solana.
Purposes of the Airdrops
Airdrops can significantly boost engagement for your token. Offering free tokens is a powerful incentive to attract attention and get people involved in your project. A airdrop can generate excitement and even cause your engagement rates to skyrocket.
However, it is important to recognize that a airdrop is not a foolproof strategy. Poorly planned airdrops can be costly and can lead to the demise of a project. It is crucial to understand both the benefits and risks before launching.
Poorly planned airdrops can be costly and can lead to the demise of a project.
Airdrops are performed for specific purposes. The most common are:
Reach new users
One of the main reasons for airdrops is marketing. Airdrops can attract new users and generate attention to a project.
It is possible to reach both users who have the token their wallet those who do token, which allows you to reach a completely new audience.
Obviously, you'll face higher fees for airdrop wallets that don't hold the token, but it might be worth it.
While not all airdrops are successful in terms of marketing, some, such as Stellar's, demonstrated the ability to attract significant attention albeit with mixed results in terms of user retention.
Stellar made airdrops worth US$120 million to Keybase and blockchain.com users, distributing 400 million XLM and 100 million XLM respectively.
Create Hype in networks
It doesn't take much to know the hype that any moderately sized airdrop provokes in the networks and forums.
When a airdrop becomes known, forums like Reddit generally explode. Any airdrop is cause for a revolution in the network, for example the case of Catwifhat.
Once the airdrop was done, everyone started to talk about the coin, not only about the airdrop but also about other aspects related to the project itself.
Attracting more token holders and token distribution
We often check an wallet and find a token never bought—in other words, we received it via an airdrop.
We token heard of that token , and suddenly it appeared in our wallet magic. That's when we start researching the project so we can decide whether to hold onto the token sell it.
At that point, the airdrop its goal. First, by raising awareness of the project itself, and second, by increasing the likelihood of attracting more token holders.
Often, recipients of an airdrop consider buying even more of token same token, which can fuel hype around token if that effect gains momentum. That’s why the timing of the airdrop crucial.
Utility
Often, the purpose of airdrop to expand the token reach, token to build loyalty among the existing community of holders.
token distribution token be used to reward a group of people for specific purposes.
Two models of airdrop
There are two types of distribution models:
- Direct token distribution: This method involves sending tokens directly to the wallets of the recipients. Although simple, the cost per wallet can add up quickly, especially if you target a large number of users. For example, distributing to 1,000 wallets will cost approximately 2 Solana.
- Distribution through claim site: A more cost-effective approach is to create a claim site. Using a codeless tool such as Smithy, you can create a site where users claim their tokens. This method reduces costs, as users pay transaction fees when they claim their tokens, making it a more scalable solution.
Aidrops Success Stories
A study analyzed high-profile airdrops between 2014 and 2022, each with its own characteristics and objectives. These cases illustrate the diversity of approaches to airdrop implementation.
1. The first ever airdrop : Auroracoin
Auroracoin was a cryptocurrency designed as a national currency for Iceland in 2014. It was the first to use a airdrop, distributing 50% of the total supply to Icelandic citizens through a national registration system. The valuation of this airdrop was approximately $63.7 million.
2. Airdrops with KYC: Decred
Decred, launched in 2015, implemented a airdrop that required users to provide valid email addresses and online profiles, fostering a community interested in contributing to the project. The airdrop accounted for 4% of the total token supply, valued at $1.9 million.
3. Airdrops for a large part of the supply: Livepeer
Livepeer is a decentralized video network that airdropped 63% of its total supply to any account on the Ethereum blockchain with at least 0.1 ETH in 2018, worth approximately $6.2 million.
4. Airdrops by parts: Stellar
Stellar made two significant airdrops, distributing 400 million XLMs and 100 million XLMs to blockchain.com and Keybase users between 2018 and 2019, worth approximately $50.7 million.
5. Large Aidrops: Uniswap
Uniswapa decentralized exchange, launched a airdrop in 2020 distributing 15% of its total supply of UNI tokens to users and liquidity providers retrospectively, valued at more than $1.034 billion.
6. Aidrops to build community loyalty: Bankless DAO
Bankless DAO, launched in 2021, airdropped 30% of its total supply of BANK tokens to subscribers and donors to establish a decentralized autonomous organization (DAO), worth approximately $29.7 million.
7. Osmosis
Osmosis, a decentralized exchange in the Cosmos ecosystem, used a airdrop in 2021 to incentivize usage and liquidity provision, distributing 5% of the total token supply, valued at $230.5 million.
8. Airdrop task-based: dYdX
dYdX, specializing in trading and lending, made a airdrop in 2021 based on both past activity and tasks to be performed on the platform, distributing 7.5% of the total supply of DYDX tokens, valued at $882.8 million.
9. Ethereum Name Service
In 2021, Ethereum Name Service airdropped 25.125% of its total supply of ENS tokens to its users, requiring them to sign a constitution and delegate their tokens for governance, worth approximately $660.8 million.
10. Aidrops for the community: Bored Ape Yacht Club
The Bored Ape Yacht Club launched a airdrop in 2022 that allowed holders of its NFTs to claim 15% of the total supply of APE tokens, creating the ApeCoin DAO, worth approximately $2.007 billion.
Conclusion
Airdrops are a powerful and versatile tool in the arsenal of any cryptocurrency project. They can be used for marketing, encouraging decentralization, creating public markets and potentially gaining tax advantages.
The key is to design airdrops in a way that aligns with specific project objectives and community needs. Innovation in token distribution mechanisms, such as airdrops, will continue to evolve and play a crucial role in the expansion and success of blockchain projects.
Industrial Engineer. Member of the Smithii's marketing team. Solana trader. Collaborator in the $SHRIMP memecoin launch.