Being in a cryptocurrency business requires you to get familiar with everything related to cryptos, blockchain tokens or NFTs. And if you are already crypto enthusiasts and have received airdrops at any stage for interacting on any of the existing or new platforms and you are wondering as to what it is then here is a low down on all things that are related to it.
What is a Crypto Airdrop?
The concept of crypto airdrop in blockchain-based projects works as a part of the broader marketing approach wherein developers send out free tokens or coins to promote their new digital currency and create more awareness for their brand. Tokens are sent out to wallet addresses of members of blockchain communities for free or may be in exchange of a small service such as retweet a post in favor of the services of the company that has sent crypto airdrops. Airdrops are valuable in laying down the foundation principles for a token’s initial value by letting users trade their tokens.
The prime objective behind the crypto airdrop campaigns is to provide newly minted coins or tokens to new entrants in order to encourage more engagement from users in the corresponding projects. This marketing stunt by developers of blockchain projects works on the same lines as receiving free discount cards via emails to attract more visitors to a new offline store in the area. However, crypto airdrops are not targeted to make the receivers of tokens spend their money but it is intended more at creating brand awareness for new projects and services.
How does crypto airdrop work?
Multiple ways are present to help developers and blockchain community owners to conduct a crypto airdrop and here are the following:
Crypto Airdrops are a part of the bigger promotional activities used largely by start-ups in the cryptocurrency domain to support them in bootstrapping a digital currency project and creating awareness about the cryptos and tokens issued by them. The main goal is to distribute the minted coins as part of a marketing stunt to encourage more people to trade in it when the crypto asset gets listed as an initial coin offering (ICO) on the exchange.
It is not just the company websites on which the developers or creators of the crypto airdrops promote their offerings but they also run promotional free token airdrop marketing campaigns on forums. The tokens, generally those of Bitcoin or Ethereum, are sent out to users’ wallet addresses in return for a small task such as posting a blog on a social media platform or writing a few lines about the project to create hype.
In return of the free tokens or coins sent out as crypto airdrops users have to fulfill one or a few small social media services that can in turn make such users again qualify as good candidates for receiving the airdrop at a later date.
Distribution of tokens is done in an automatic manner to asset holders with wallets having a balance of a particular amount. For example: every crypto holder with wallet balance of 0.01 ether or higher are made eligible to receive the airdrop.
Allowing users to claim their airdrop cryptocurrencies from the blockchain project’s web platform though a smart contract
Risks associated with crypto airdrops marketing campaign
Although token airdrop or more popularly known as crypto airdrop has gained popularity over the last few years, these are fraught with risks. A lot of new blockchain-based projects would run token airdrops that serve a purpose which is no less than pump-dump schemes. To dive deeper into the risk, there are scenarios when the crypto token issuance platform developers would offer tokens or free coins to create a buzz around their project and to get them listed on an exchange. However, once the token starts trading, mass selling of the tokens is done by the creator itself and that might trigger the prices to crash.
Another potential risk of the token airdrops is the dusting attack where hackers or scammers will promise to send out a few tokens or cryptos to vulnerable and unwary users with the malicious intention to breach the recipient’s privacy. Hackers will often use airdrop campaigns as a way to hack into the system of the recipient and monitor their transaction activity of the tokens given out to attack your privacy.
Finally, some countries levy taxes on the income earned from the cryptos and hence any amount received even as free coins or tokens would attract some percentage of tax on them, irrespective of whether you required airdrop or not in the first place.
Types of Airdrop
Crypto airdrop are mostly of four kinds as discussed briefly about them below:
- Standard airdrop: With the standard airdrops, a fixed amount of native coins or tokens are transferred into the wallet addresses of the users as a part of the broader marketing approach. The main idea is to publicize the brand and also motivate more people to accept the asset as is usually provided during the initial coin offering. Users just need to set up an account with the upcoming project and also give the wallet address at the distribution event.
- Bounty airdrop : Bounty airdrops work as a smart marketing stunt where consumers can take part in promotional activities such as sending a tweet or posting on social media networks about the blockchain project and also acquire the digital asset. As part of the promotional activities, a consumer can also subscribe to the e-newsletter of the project or also take part in the forum for the project. Therefore the effort required to receive free tokens or bounty airdrops may be a little more than as required in a typical airdrop marketing strategy. However, these activities too do not require too much of a user’s time.
- Exclusive airdrop: In order to receive the exclusive airdrop where a chosen set of people need to subscribe to an airdrop aggregator and in exchange of their promotional effort they are distributed cryptocurrencies. Information about the upcoming and noteworthy crypto projects and also anticipated airdrops are then shared on the third-party websites.
- Holder airdrop : Holder airdrops can be received by users with a fixed number of cryptocurrency in their wallets. The crypto project providing free tokens or holder airdrops takes a snapshot of the digital asset holdings on a particular date and lets users claim an airdrop based on their ownership of the cryptos in their wallets.
Airdrops backing blockchain start-up’s marketing activities
If the airdrop marketing campaigns look intriguing and you as a blockchain project developer are beginning to adopt it then make sure you understand the benefits it offers. This innovative marketing campaign that is fast gaining prominence in the crypto space is primarily aimed at creating the desired buzz and hype around a new project or already bootstrapped virtual currency project. The main idea behind rewarding the customers with free tokens or airdrops is to win over their loyalty and also make them come back again and again on the existing platform and engage more on it. Besides, a number of reasons exist for which the blockchain developers feel the need for carrying out the airdrop marketing campaign and these are some of the following:
Airdrop serve as a reward for showing loyalty to existing platforms
The blockchain-based projects often involving services like the trading and crypto exchange platforms wish to reward their loyal customers for sticking to them and one way of doing it is providing them free tokens or airdrops. Even subscribers receiving free cryptocurrency airdrops are given to incentivize the loyal customers and motivate them to continue their patronage on the existing platforms. The concept of airdops is similar to the vouchers and discount coupons often run by non-blockchain-based project owners in the mainstream commercial domains as a way to reward their loyal customers.
For example – a major cryptocurrency exchange and trading platform – Binance conducted an airdrop marketing campaign, sending out almost 500 TRX digital currencies to the loyal consumers and wallet holders that showed patronage to their platform. The validity of the airdrop was from the end of October 2017 to the mid of November 2017. Airdrops were sent only to the wallet addresses of those account holders which had a minimum of 0.003 BTC and had finished at least one transaction on the account. However, the Binance trading and exchange platform also sent out crypto airdrops to account holders having equivalent of 0.003 BTC in other cryptocurrencies and fulfilled the transaction requirements.
Lead Database Generation
The prime marketing motive behind the airdrop campaign is to send out free tokens and attract more leads. Blockchain-based projects starting out new platforms or running promotional activities focus all their energies on generating adequate leads that can push their marketing campaigns and also boost consumers to stay loyal to their platforms. Owners of new and old blockchain enterprises can generate a valuable database of their customers with the use of airdrops. Users are required to fill out surveys and also complete forms providing valuable user information that can further be leveraged for designing effective marketing plans. Use of airdrops to generate lead databases can also be put into effect by non-blockchain businesses as part of their greater marketing strategy.
Create Awareness about a New Cryptocurrency
Given that the cryptocurrency market is an expanding market, new crypto exchange and trading platforms can remain unseen and obscure if they are not given the right marketing push with implementation of innovative marketing concepts and stunts. And it is herein that the concept of airdrop acquires substantial importance. Just as is the case with other digital avenues and domains, any new introduction in the cryptocurrency space also requires promotion. Creating the much-needed hype is important in the crypto ecosystem. New cryptocurrency entrants also look for ways to invest into the favorable crypto options and one great way of encouraging them is to send them airdrops.
Social media marketing techniques for airdrops can drive the much-needed attention for the new digital assets and platforms. Moreover the use of airdrop crypto marketing campaigns can be supplemented with the implementation of organic advertising and word-of-mouth popularity to drive user participation in the crypto world. For example – Bitcoin cash was supported with the use of an airdrop marketing campaign to bootstrap their new currency. Developers of the platform sent out a corresponding amount of Bitcoin cash to every participant for every Bitcoin they held. As a result of this smart marketing stunt, Bitcoin Cash topped the charts, becoming the leading among the top 10 cryptocurrencies in the market.
Advantages & Disadvantages
Token Airdrops: Pros
We all love freebies and the main benefit for any recipient of token airdrops is that they do not cost anything at all. It is like the equivalent of receiving free money and that might go up in value. Moreover, with use of airdrops, blockchain-based projects can win the loyalty of consumers and spread awareness about their currencies and reach out to a far wider audience.
The crypto-airdrops marketing campaign can help blockchain-based developers and project owners to spread the word quickly and help them find users to participate on their platforms.
Low cost marketing approach
Often the start-ups and even existing crypto and blockchain-based projects run on small marketing budgets. Hence, one great way for them to market their new platforms is to send out airdrops and free tokens. The airdrop marketing campaigns are not too costly and a well-designed marketing stunt can help developers achieve their goals without going overboard on budget. Moreover, recipients of airdrop can be encouraged to get more familiar with the token and also make them feel as if they are the real stakeholders, having a major determining influence on the future of tokens. Airdrops can also be used to raise adequate funds for the new projects.
Token Airdrops: Cons
It can be quite a difficult task to decide the number of free tokens to give out to the users for marketing purposes. If you choose to give out only a few free tokens then your community-building initiative and promotional activities may not yield fruitful results. However, sending out too many free crypto airdrops also runs the risk of eroding the market value of your tokens. For instance – U Network that used airdrops for promotional reasons was forced to buy back the tokens that they had earlier sent out to their customers for they ran out of airdrops themselves.
Giving out free tokens or airdrops can also dilute the market value of these tokens. In many cases the users who receive the airdrops are often seen indulging in its trade or selling them off as soon as they receive it, thereby bringing down the total value of these tokens in the market. Witnessing the rapid plunge in the value of their tokens might discourage them from further investments and staying loyal to the trading platform.
Examples of successful airdrop campaigns
Here are some of the popular use cases and examples witnessed by cryptocurrency industry where use of crypto airdrops has took many by surprise:
OpenDao’s used the airdrop concept as a marketing stunt to motivate and incentivize all non-fungible token (NFT) creators, collections and also the enthusiasts with history of transaction on its NFT marketplace – OpenSea. Airdrop recipients simply had to claim the tokens from the website but did not have to repay by performing small tasks. This marketing approach helped OpenDao to increase its user base and grow the social media platform – twitter following. More than 120,000 wallet addresses had claimed the token.
Gas DAO is also known to have undertaken a similar marketing initiative. The platform issued the GAS tokens on the Ethereum blockchain and users needed to pay $1,559 or more in gas fees on Ethereum through the website qualified for receiving the airdrop. The free tokens were sent out to more than 57,000 wallet addresses. Moreover, the platform also issues voting rights in the Gas DAO, thus providing active users with the right to be the voice of the network.
LooksRare Team designed the airdrop campaign to send out tokens to users having more than 3 ether in transaction volume on the marketplace from June 16, 2021 – Dec. 16, 2021. Airdrops are sent out after listing an NFT for sale on the LooksRare marketplace. A certain amount from the trader fees as generated by the LooksRare platform were offered to the users holding the tokens from the team. It also provided the option to users to stake their tokens and earn more tokens.
How to create your airdrop strategy
Planning to devise the right airdrop marketing strategy to win more users and retain the loyalty of your consumers. Here are certain steps that you as a blockchain-based project owner or a developer needs to follow to create the perfect airdrop marketing campaign
Chalk out your marketing goals
As with the case with any marketing initiatives you start, even with the introduction of airdrop, it is recommended that you define your goals and gauge the results you wish to accomplish and the actions you wish to undertake for making it successful. Determining the results that you wish to achieve with your airdrop campaign can help you choose the right type of airdrops. While a lot of businesses generally take up regular airdrops, we suggest going for the bounty or special airdrops in order to create a robust and small community of faithful, loyal customers who come back to your platform for getting rewarded with free tokens or cryptos.
Design a distribution plan
The next step in airdrop marketing stunt is to decide upon the quantity of the airdrops you intend to send out to your users. This is a highly critical step as that will have a major determining role to play on the token economics for the future. It will also determine the success rate for your blockchain-based project.
At times, sending out too few coins or tokens may not help you reach out to a wider audience and at the same time too many free tokens can dilute the market value of your tokens. It is important to understand the overall supply chain and future market worth before deciding on the number of airdrops to be sent out to recipients. It is advisable to plan “smart drops” that help in building a smaller yet a stronger community of customers with a substantial number of tokens being sent out.
Build your community
Blockchain developers focused on building and investing on community development are more likely to succeed in the competitive market. Hence, airdrop campaigns are a great way to foster community. However, they are sometimes not enough to make the loyal customers stay invested in your platforms so airdrops should not be the only marketing initiative but be a part of the wider and extensive marketing and community building plan.
Expand your blockchain network by encouraging and attracting more users with handsome rewards such as airdrops. Stay active on social media platforms and digital marketing domains such as Reddit, Telegram, BitcoinTalk and other popular ones to grow your community of users. Opening accounts on such platforms are critical marketing gimmicks.
Simplify the process and make it verifiable
Users get out of by complexities and hence try to keep the on boarding process simple and hassle-free. Simple processes such as filling up an easy Google form and asking relevant questions that will encourage users to use your platform more.
Stress on Quality Over Quantity
It is important to choose the right set of marketing objectives and have a clear target audience in mind when devising the marketing initiatives such as crypto airdrops. Take a cue from the conventional advertising strategies and become more selective in choosing your target audience. Focus on gaining attention from long-term investors and users when building your community.
Once you have understood how the crypto airdrop campaign works, its critical role, the strategies to devise it the right way then you are ready to launch your very own airdrop campaign and reap optimum benefits. Devising the right airdrop campaign can yield good results for your blockchain based project and also give the much needed boost to your existing well-thought out marketing initiative.
Evomantra can support your airdrop marketing campaign by providing the right expertise and technical support. We are the leading blockchain marketing experts in helping developers build their network and engage with their target users. With an expert and experienced team handling all the nitty-gritties, your airdrop marketing campaign will turn out to be more than just another fad.