By
Bhushan Akolkar
April 16th, 2024
This piece provides insight into the flaws of the last model of airdrops and how a new kind of airdrop model might help cryptocurrency projects use airdrops more effectively.
Airdrops have grown to become a regular fixture in the cryptocurrency community. Airdrops are primarily designed to unlock lead generation for Blockchain projects, activate viral marketing, reward community members for their loyalty, and maybe trigger FOMO prior to launching a token sale.
However, the 2017 ICO frenzy led to an explosion in the number of crypto projects and a subsequent bastardization of airdrops. Airdrops have largely failed to build vibrant communities around crypto projects.
Here’s How Airdrops Were Designed to Work
The history of airdrops dates to the earliest days of Ethereum and ERC20 tokens. In those days, there weren’t many crypto-literate people and the crypto community existed in fragmented silos. Hence, new blockchain projects would send their tokens into random Ethereum addresses. The owners of the addresses will see the free tokens, get curious about the project, do their research, and hopefully, become a part of its community.
The Fatal Flaws of Current Airdrop Models
The first flaw of Airdrops is that they were presented as free money. It’s not uncommon to see marketing materials claiming “$XYZ millions worth of tokens to be airdropped”. This marketing is done even before the product that will support the token economy has been built.
In the real sense, the market that determines the price of a token and not the issuer. The market calculates the intrinsic value of a project by looking at the product, team, and token utility among other factors. Hence, when projects assign an arbitrary value to the airdropped tokens of projects that haven’t been built; they often inadvertently create a community of freeloaders.
The second flaw of the current airdrop models is that they attract opportunists who have no interest in the project, the team, or even the token itself. There are now hundreds of communities built around chasing down airdrops, getting as many “free” token as they can get, and then waiting eagerly to sell the tokens at the first opportunity they get.
Such opportunists won’t actively promote the project beyond doing the bare minimum required to secure “free tokens” and they often promote the projects to like-minded opportunities rather than to potential users or patient long-term investors.
The third flaw of current airdrop models is that they don’t have structures in place to ensure that people HODL the tokens. As soon as the token sale is completed, and the project is listed, the opportunists are the first to sell their tokens thereby creating FUD in the hearts of actual investors – the FUD could then trigger a selloff from which some projects never recover.
Meet the New Model for Unlocking Maximum Value from Airdrops
Last month, LiquidApps introduced the first ever Airdrop that included a vesting mechanism for the EOS community. There have been many talks about the DAPP token, its use in the DAPP Network, and its potential use cases in facilitating transactional ecosystems for EOS dAPPs. LiquidApps DAPP token airdrop model is designed to incorporate a vesting process into airdrops – and the model is aptly called Air-HODL.
LiquidApps Air-HODL is built around the game theory to reward actual users of the DAPP Network as opposed to stakeholders who are more concerned about how to profit in the short term. LiquidApps is air-HODLing 100,000,000 DAPP that will be allocated and divided between all the accounts that hold EOS at block #36,568,000 (“Pioneer Holders”). The DAPP Generation is already on block 63,436,685 on its 144th sales cycle of 444 cycles.
The DAPP tokens will be continuously vested over a 2-year period on a block by block basis. The 2 years vesting period has start counting after the launch of the DAPP Generation Event in February 26, 2019, and it will end on January 25, 2021. Token holders who withdraw their Air-HODLed tokens before it is fully vested will only get the pro-rata tokens while forfeiting the right to receive any additional token vestments.
LiquidApps is also using Air-HODL to incentivize wallet holders to HODL their DAPP tokens and actively use it on the network to grow the DAPP network sustainably. The game theory mechanism also ensures that the forfeited tokens of wallet holders who sold their Air-HODLed tokens will be redistributed to the HODLers who didn’t sell their tokens.
Finally, the new model will stimulate the active the use of DAPP Air-HODLed tokens during the vesting period, HODLers can stake their vested tokens after first allowing the smart contract to mark them as an active participant, selecting a package with a DSP, pushing the transaction, and executing a “stake” command.
New cryptocurrency projects that want to take the airdropping route to achieve viral marketing for their projects will do well to copy LiquidApps by including a vesting mechanism. The goal of vested airdrops is to prevent dumps and increase the active use of your coins for its intended token economy.