Why airdrop cryptocurrency tokens?

22 Pages Posted: 31 Oct 2022

Date Written: October 21, 2022

Abstract

A cryptocurrency token airdrop is a novel means of distributing rights over a blockchain project to a community of users and owners for free. The market value of these airdrop giveaways is often upwards of hundreds of millions of dollars. This paper considers why projects might choose this unusual and costly means of token distribution. It considers a selection of high-profile airdrops as case studies between 2014 and 2022. This is the first comprehensive analysis of the rationales and mechanisms of Web3 token airdrops. We find that two primary rationales for airdrops are marketing (to attract new users and to maintain a community) and decentralisation of ownership and control of a project (building community, providing regulatory protection, and enhancing security). The paper contributes to an understanding of business practice and strategy in the emerging cryptocurrency and blockchain industry.

Keywords: Airdrops, Cryptocurrency, Tokens, Blockchain, Web3, Marketing

Suggested Citation

Allen, Darcy and Berg, Chris and Lane, Aaron M., Why airdrop cryptocurrency tokens? (October 21, 2022). Available at SSRN: https://ssrn.com/abstract=4254360 or http://dx.doi.org/10.2139/ssrn.4254360

Darcy Allen (Contact Author)

RMIT University ( email )

440 Elizabeth Street
Melbourne, 3000
Australia

Chris Berg

RMIT University ( email )

124 La Trobe Street
Melbourne, 3000
Australia

Aaron M. Lane

RMIT University ( email )

124 La Trobe Street
Melbourne, 3000
Australia

HOME PAGE: http://https://www.rmit.edu.au/contact/staff-contacts/academic-staff/l/lane-dr-aaron

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