Why Airdrop Cryptocurrency Tokens?

Allen, DWE, Berg, C, Lane, A (forthcoming) 'Why Airdrop Cryptocurrency Tokens?' Journal of Business Research.

33 Pages Posted: 31 Oct 2022 Last revised: 8 Apr 2023

See all articles by Darcy W E Allen

Darcy W E Allen

Royal Melbourne Institute of Technolog (RMIT University)

Chris Berg

Royal Melbourne Institute of Technolog (RMIT University)

Aaron M. Lane

Royal Melbourne Institute of Technolog (RMIT University)

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 diverse 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). Additional rationales include creating liquid public markets and taxation treatment of token distribution. 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 W E and Berg, Chris and Lane, Aaron M., Why Airdrop Cryptocurrency Tokens? (October 21, 2022). Allen, DWE, Berg, C, Lane, A (forthcoming) 'Why Airdrop Cryptocurrency Tokens?' Journal of Business Research., Available at SSRN: https://ssrn.com/abstract=4254360 or http://dx.doi.org/10.2139/ssrn.4254360

Darcy W E Allen (Contact Author)

Royal Melbourne Institute of Technolog (RMIT University) ( email )

Melbourne, 3000
Australia

Chris Berg

Royal Melbourne Institute of Technolog (RMIT University) ( email )

124 La Trobe Street
Melbourne, 3000
Australia

Aaron M. Lane

Royal Melbourne Institute of Technolog (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

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
300
Abstract Views
1,442
Rank
193,609
PlumX Metrics