Between immediate and massive resales, Sybil attacks, and incentive campaigns, have airdrops had their day? Some experts are seriously asking this question, as platforms such as Kraken and Coinbase prepare for a comeback of Initial Coin Offerings (ICOs).
Airdrops: an obsolete community model?
Cryptocurrency airdrops have experienced significant growth within the ecosystem following now iconic operations, such as the distribution of UNI tokens initiated by the Uniswap platform in 2020. This is a very popular way of rewarding early users, but one that quickly runs into recurring problems.
These operations have become a playground for certain airdrop hunters, determined to capture as many of these rewards as possible by carrying out Sybil attacks using thousands of wallets. At the same time, their legitimate beneficiaries are reselling the cryptocurrencies they receive en masse, to the point of causing the price to plummet as soon as it is launched.
Faced with this situation, some protocols changed the rules of the game to the point of transforming these rewards into a real communication operation, in order to attract users by promising them payments proportional to their activity, in a “play-for-points” type approach.
These experiments were largely encouraged 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 well change over the next year…
“An ICO attracts people who want to buy your token”
It seems undeniable that US policy on cryptocurrencies has evolved in a very positive way since the Trump administration arrived in the White House, to the point where some industry experts are predicting a strong comeback for Initial Coin Offerings (ICOs), which had previously been abandoned.
Proof of this can be seen in recent initiatives 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,” and 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 to manage for the crypto projects concerned, with the advantage of generating immediate and secure revenue, whereas the profits associated with airdrops remain more unstable and deferred.
An airdrop attracts people who want to sell your token, while an ICO attracts people who want to buy your token.
Matt O’Connor
This shift will bring new challenges for crypto projects, which will need to determine the best course of action without risking the discontent of their community.
Perhaps by adopting both procedures jointly, as in the recent case of the Plasma blockchain, which initiated an initial sale of XPL tokens, but also an $10,000 airdrop a few days after the launch of its mainnet.
