New Incentives
“New Incentives” – a cartoon that illustrates that using airdrops as an incentive is not working to bring in new crypto users.
Crypto airdrops trace back to Bitcoin’s early days, when Satoshi Nakamoto distributed the first cryptocurrency by mining blocks and rewarding early miners, a precursor to the structured airdrops seen today.
Airdrops have evolved into a marketing tool used to reward potential users of a token by dropping the token into the consumer’s crypto wallet, analogous to British Airways providing free miles into a consumer’s airline miles account to incent new ticket sales.
However, the analogy breaks down after further study because airdrops are impenetrably difficult to obtain of any sizeable amount relative to the time to acquire them and they require numerous hoops that only the deeply initiated crypto user would understand, so they tend not to bring in any non-web3 users.
The logic is that airdrops stimulate early adoption and a vocal community, which then attracts the FOMO retail crowd to buy the token and hey presto we have another token bull run.
According to a report by Christos Makridis of Stanford University, decentralized exchanges that adopt airdrops as part of their marketing campaigns result in a 13% and 8% increase in the monthly growth rate of their market cap and transaction volume. But, with a16z’s recent report identifying only 60M active monthly users and 220M active addresses in crypto, targeting only a crypto native group with wallet addresses is not going to create a firestorm of adoption.
The industry should look at the likes of WeChat that used a similar model of incentives targeting the whole Chinese market with $83M free red packets that resulted in it becoming the leader in the country’s social messaging and e-payment space with 1.34Bn users.
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Sources:
Roomy Khan (Mar 13, 2024) – Airdrops: Marketing Genius Fueling The Crypto Renaissance – Forbes
Nimrod Lehavi (Jun 26, 2024) – The Good, The Bad, And The Pointless? Giving A Lift To Crypto Airdrops – Forbes
Zoltan Vardai (Sep 20, 2024) – Trump silent on crypto platform, SEC urged to clarify airdrops: Finance Redefined – Cointelegraph
