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Make Airdrop of Tokens in Solana

Why do Token Airdrops: Scale your token with a marketing move?

Your token did not reach the market cap you wanted or the community is not big enough? Believe me it happened to me more than once and also more than once doing airdrops has saved me.

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 in Solana.

Purposes of the Airdrops

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.

There is the possibility to reach both users with the token in their wallet and users who do not have the token, which serves to reach a whole new audience.

Obviously, you're going to face higher charges for airdropping to wallets that don't have the token, but the end may 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 an airdrop becomes known, forums like Reddit generally explode. Any airdrop is cause for a revolution in the network, for example the case of Catwifhat.

Catwifhat airdrop repercussion in Reddit.
Catwifhat airdrop repercussion on Reddit.

Once the airdrop was done, everyone started talking about the coin, not only about the airdrop but also about other aspects related to the project itself.

Getting more holders and token distribution

Many times we check an old wallet and see that we have a token that we never bought, i.e. we were airdropped.

We didn't know that token and it suddenly appeared in our wallet by magic. That's when we start researching about that project and we can decide whether to holde the token or sell it.

At that point the airdrop achieved its goal. First, by making us aware of the project itself and, second, by increasing the possibility of increasing the number of token holders.

Many times, whoever receives the airdrop may consider buying even more of the same token, which gives the possibility of getting into a hype of the token itself if that effect escalates. This is why the timing of the airdrop is key.

Utility

Often the purpose of the airdrop is not to increase the reach of the token but to increase the loyalty of the same community of holders.

Token distribution can be used to reward a group of people for specific purposes.

Airdrop Structures and Types

Having said that, we can see that there are different types of airdrops depending on the objectives we need:

Retrospective Airdrops

Retrospective airdrops reward users for their past use of the protocol. Although it may seem counterproductive in attracting new users, these airdrops can strengthen the loyalty and commitment of existing users, which is vital to the long-term sustainability of the project.

Task-Based Airdrops

Some airdrops require users to complete certain tasks to claim their tokens. For example, the Osmosis airdrop required users to make trades, participate in liquidity provisioning, and vote on governance proposals.

This not only increases the use of the platform but also educates users about its functionalities.

Automated vs. Manual Airdrops

Airdrops can be automated, where tokens are automatically distributed to users who meet certain criteria, or manual, where users must take some action to claim their tokens. Both approaches have their advantages and disadvantages depending on the goals of the project.

Case Studies

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 airdrop in history: Auroracoin

Auroracoin was a cryptocurrency designed as a national currency for Iceland in 2014. It was the first to use an 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 an 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

Uniswap, a decentralized exchange, launched an 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 an airdrop in 2021 to incentivize usage and liquidity provision, distributing 5% of the total token supply, valued at $230.5 million.

8. Task-based Airdrop: dYdX

dYdX, which specializes in trading and lending, conducted an airdrop in 2021 based on both past activity and tasks to be performed on the platform, distributing 7.5% of the total DYDX token supply, 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 an 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.

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