Airdrops first became popular around mid-2017 when new projects such as OmiseGo started on the alternative marketing model. The concept of an airdrop is quite simple. Holders of a certain cryptocurrency are given a small number of free tokens of a new project in a bid to generate awareness.
This is necessary in the world of cryptocurrency – there are too many innovative projects and attaining market share is incredibly difficult yet vitally important. The small amount of cryptocurrency deposited into the wallets of (typically) ETH holders means that people will research the coin, have a vested interest, and spread the word. The airdrop is typically used in tandem with Initial Coin Offerings, the primary fundraising model for new blockchain projects.
The death of the airdrop and birth of the smartdrop
But as useful as the airdrop is, it has most likely had its day. Smartdrops are being heralded as ‘smarter’ airdrops. This is because typical airdrops are not specific. Or, to be somewhat cruder, standard airdrops are dumb, or ‘dumbdrops’. They simply give a small number of free tokens to everybody who also owns a certain coin. Which is what OmiseGo did, transferring small amounts of the OMG token to over 460,000 people who had over 0.1 in ETH.
But targeted marketing is everything, and the audience needs to be relevant. This is how advertisers make money. By tailoring specific coins towards specific users, the conversion rate should be far higher, the conversion being increased investment and awareness in this context. Smartdrops will enable blockchain projects to attain long-term participants who have a real interest. With smartdrops, people have to fulfill social tasks or KYC obligations, meaning they are really interested in the project itself as opposed to being randomly awarded some tokens. They are more likely to organically build the network.
Who is running smartdrops?
There are a number of projects which are opting for the smartdrop approach. One such project is the ETERBASE crypto exchange, who are seeking to become the world’s first fully regulated cryptocurrency exchange while simultaneously providing all typical banking services. They have broken their smartdrop down into simple tiers in order to attain relevant long-term participants. Qlear is a blockchain company operating in the gaming industry which is also running a smartdrop. Participants are required to perform three social tasks to take part and receive tokens.
Polymath is perhaps the most well-known blockchain project to run a smartdrop. The project aims to tokenize traditional investment assets to make them more easily accessible to investors, using a securities token offering (STO). Users had to undergo KYC requirements before receiving their tokens.
It is clear that the world of cryptocurrency marketing and investment is evolving. The smartdrop is replacing the airdrop, and it makes sense. It is simply a more targeted form of advertising, and in the world of marketing the more specific, the better. Similarly, the ICO model itself is likely being uprooted, replaced with the Initial Loan Procurement (ILP) model and other constructs.
Digital Nomad with an interest in Zen and Blockchain technology.
Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.