The last couple of years in the blockchain space has seen several high profile airdrops from some of the hottest blockchain projects out there. Airdrops are proving to be one of the most exciting features of web3 and are increasing in frequency. This article will provide an overview of what airdrops are and how they add value to users while further democratizing the Internet.
What is an airdrop?
An airdrop is when a blockchain project with a native token transfers the token to users for free. Blockchain projects might issue airdrops to increase their circulating supply, reward early adopters and users who regularly participate, or as a marketing tactic.
Due to the nature of blockchain tech, organizations can identify user wallets that have interacted with a given product in some fashion. A blockchain project will often take a snapshot of the blockchain ledger to decide who is eligible for a token airdrop.
For this reason, early adopters of blockchain projects are often the ones to receive airdrops. And some projects issue airdrops regularly to reward frequent participants of their platform.
Non-fungible tokens (NFTs) can be airdropped too. Creators will sometimes reward existing holders of their NFTs with new ones to add lasting value for their audience.
Notable airdrops in recent times
LooksRare – An NFT marketplace competing against OpenSea as a decentralized alternative. Upon inception, the platform issued its $LOOKS token to Ethereum wallets based on how much in gas fees they spent on OpenSea. The airdrop also acted as a major advertisement for the platform.
Uniswap – The most widely-used decentralized exchange (DEX) on the Ethereum blockchain. It retroactively airdropped 400 $UNI (about $1,200 in value at the time) to early adopters of the platform based on a snapshot of the Ethereum public ledger. The airdrop was highly publicized due to its timing around when the U.S. issued its covid-19 stimulus checks.
Rarible – One of the most popular NFT marketplaces used to regularly airdrop its $RARI token to people buying and selling NFTs on the platform. They’ve since switched this model to reward application developers using their protocol.
ENS – The Ethereum Name Server works the same as the traditional DNS in that it resolves numerical or hash-based addresses into human-readable form. It turns those impossible to memorize crypto wallet addresses into plain text. ENS airdropped its native token $ENS to every wallet address that had purchased a domain name within a specific timeframe.
Why airdrops matter in web3
In web2, early adopters of various web products and services receive no value or reward for their participation other than benefiting from the platform’s features before others. Early adopters are the backbone of any web2 platform as these are the people who beta test and spread awareness.
Likewise, while users can use web2 social media platforms for free, their data is harvested, benefiting the platform monetarily. But this leaves users with no tangible rewards for using the system.
In web3, blockchain tech allows platforms to issue cryptocurrencies with real monetary value to users participating on the platform. Additionally, since blockchains are public ledgers, a platform can identify the wallet addresses interacting with the platform the most or during a specific timeframe. And it’s an easy way to distribute rewards to many people simultaneously.
Airdrops are a way for web3 companies and NFT creators to add ongoing value for the people who give these products value in the first place. Not only that, but airdrops are also a method of democratization. Many blockchain projects issue tokens for the sake of governance. In the decentralized economy, holding a project’s tokens gives holders voting rights toward a platform’s development direction. For example, decentralized autonomous organizations (DAOs) are blockchain-based organizations that rely on governance tokens to operate and reward stakeholders.
When discussing whether web3 is really the democratized Internet of value that proponents tout, one must look to the nature of airdrops as an example of the benefits of blockchain technology. The best way to benefit from airdrops is to simply use web3 products that you find interesting after doing some research. As the technology matures, airdrops will likely become a regular occurrence.