Between immediate and massive resales, Sybil attacks, and incentive point campaigns, have airdrops run their course? Some experts are seriously asking this question, as platforms like Kraken and Coinbase prepare for a comeback of Initial Coin Offerings (ICOs).
Airdrop: An Obsolete Community Model?
Cryptocurrency airdrops have seen significant growth within the ecosystem following now-iconic operations, such as the distribution of UNI tokens initiated by the Uniswap platform in 2020. A very popular way to reward early adopters, this approach will quickly run into recurring problems.
Indeed, these campaigns became a playground for certain airdrop hunters, determined to capture as many of these rewards as possible by launching Sybil attacks using thousands of wallets. At the same time, the legitimate recipients were selling off the received cryptocurrencies en masse, causing the price to plummet immediately upon launch.
Faced with this situation, some protocols will change the rules of the game to the point of transforming these rewards into a genuine marketing campaign, aiming to attract users by promising payments proportional to their activity, in a “play-for-points” approach.
These experiments were largely spurred by the disappearance of Initial Coin Offerings (ICOs), which were very popular in 2018, before regulatory crackdowns at the time led to their outright abandonment.
But things could very well change over the course of the next year…
“An ICO attracts people who want to buy your token”
The fact seems undeniable: U.S. policy toward cryptocurrencies has evolved in a very positive direction since the Trump administration took office, to the point where some industry experts are anticipating a strong comeback for Initial Coin Offerings (ICOs), which had previously fallen out of favor.
Proof of this can be seen in recent initiatives led by certain cryptocurrency exchange platforms, such as Kraken and the launch of its Launchpad in partnership with Legion—billed as “the world’s first ICO underwriter”—or Coinbase’s acquisition of Echo, the leading blockchain fundraising platform.
This is obvious, according to Matt O’Connor, co-founder of the ICO-dedicated platform Legion, because Initial Coin Offerings are much simpler and more efficient for the crypto projects involved to manage, with the advantage of generating immediate and secure revenue, whereas the benefits associated with airdrops remain more unstable and delayed.
An airdrop attracts people who want to sell your token, while an ICO attracts people who want to buy your token.
Matt O’Connor
A shift that will present new challenges for crypto projects as they determine the best path forward without risking the discontent of their community.
Perhaps by adopting both approaches together, as in the recent case of the Plasma blockchain, which conducted an initial sale of XPL tokens but also distributed a $10,000 airdrop a few days after the launch of its mainnet.
