Airdrops: Supercharge Crypto With Tokens

February 16, 2022

Understanding Airdrops and how effective it can be in growing a project’s community.

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Did you buy an NFT in the last year?

Then you might get a piece of a $400 million “airdrop.”

Here’s everything you need to know about how token airdrops work.

This article was inspired by Coinvise. To read their full article, click here.

What are Token Airdrops?

Token airdrops are free tokens distributed by projects to incentivize the use of their blockchain-based platform.

Here are 3 benefits to token airdrops:

  1. Create Awareness: when individuals become token owners, they become more incentivized to share the project.
  2. Reward Loyal Users: a great way to thank early adopters for using the product. The rewards are meant for supportive members in the community rather than ones trying to make a quick buck.
  3. Decentralize Token Distribution: used for a fair distribution of the token supply to users.

There are 2 main types of airdrops:

Exit to the Community

The “Exit to the Community” airdrop rewards existing communities.

Typically, people who have been actively using the product are eligible for this airdrop. This rewards early adopters and encourages them to support the project.

Example: Individuals who purchased an ENS domain were eligible for the $ENS token airdrop. The goal of this drop was to give the community voting power for future decisions. And of course these tokens had real financial value.

Bringing Awareness

The “Bringing Awareness” airdrop is used to introduce a project.

This airdrop is great for growing a community in a short period of time.  People who have never heard of the project will be attracted by the tokens. A downside is that some people will immediately sell for a profit.

Example: OpenDAO airdropped their $SOS token for OpenSea users. These tokens were used to support emerging NFT communities. This airdrop resulted in 2.1k active members for OpenDAO.

Token Airdrop Examples:

  1. ENS: If you owned a “.eth” domain, you were eligible to claim $ENS token.
  2. OpenDAO: $SOS tokens was open for anyone who purchased on OpenSea in ETH.
  3. LooksRare: Anyone with a combined 3+ ETH trading volume on OpenSea could claim $LOOKS tokens once they listed an NFT for sale on LooksRare.
  4. Gas Dao: $GAS tokens were distributed to individuals who had spent a certain amount of gas fees.
  5. Seed Club: $CLUB tokens was dropped for existing community members to increase authority and voting rights.
  6. UniSwap: Any wallet that had interacted with Uniswap protocol before September 1 2020 was eligible for $UNI tokens.
  7. 1Inch Network: To be eligible for $1Inch tokens, users were required to have traded at least $20 or made four trades before the drop.
  8. Brave: You could watch ads to earn $BAT tokens.

Key takeaway:

Token airdrops can create awareness, reward loyal users, and decentralize token distribution.

The 2 main types are “exit to the community” and “bringing awareness”.

Using these, airdrops can be a great way to grow your project and supercharge your community.

Sources

https://www.fool.com/investing/2022/01/15/opensea-faces-disruption-in-cryptos-new-landscape/

https://beincrypto.com/learn/crypto-and-nft-airdrop/

https://coinmarketcap.com/alexandria/article/what-are-crypto-airdrops

https://cointelegraph.com/news/early-ethereum-name-service-ens-adopters-rewarded-with-a-hefty-five-figure-airdrop

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