Let’s face it, airdrops aren’t perfect. Somewhere along the way, investors have discovered some faults with relations to how airdrops work and several parties are not pleased. The latest that is looking to improve on the airdrop is called the Smartdrop.
What is a Smartdrop?
Smartdrop is the latest that is said to be improving on some features that investors are unhappy about with regard to airdrops.
An airdrop is when a project distributes a certain number of tokens to participants of a project. This can be as a reward or incentive for performing certain marketing related tasks or for merely being in possession of a specific coin.
Read Bitmart’s blog on airdrops ‘How to benefit from an airdrop.’
On the other hand, a Smartdrop takes on a more targeted approach. It started when David Johnston, the founder of Yeoman’s Capital posted a blog on Medium earlier this year. Johnston suggested cryptocurrency projects improve on some things associated with airdrops and called it a Smartdrop.
He suggested they give a meaningful amount of coins to recipients. They should also target their recipients more carefully as opposed to just giving coins to anyone who has an Ethereum wallet address. By doing this, they would attract genuine users whom are more likely to add value to the project.
An example of a Smartdrop is the Dfinity project. In June this year, they announced that they would be airdropping $35 million worth of tokens. But, in order to qualify for this airdrop, users had to complete a Know-Your-Customer (KYC) as well as an Anti-Money Laundering (AML) verification process.
The problem with ICOs and airdrops
At the moment, there is a feeling amongst the crypto community that ICOs and airdrops are not all that legit. It is no secret that many have been burnt when buying into an ICO. This may be due to the fact that the ICO price dropped drastically upon going live on an exchange or the project not being realised.
When it comes to airdrops, one sometimes has to wait for days or months before receiving the promised tokens. Usually, by that time they have lost so much of their value. Majority of airdrop tokens may not even be available on an exchange yet and users have to wait until the token gets listed in order to trade.
Johnson calls some airdrop and ICO tokens “objects of speculation” instead of objects of utility.
How does it work?
Ultimately, airdrops or Smartdrops should be used to build a community of users, right? The Open Garden project is taking this approach. Open Garden is a decentralized Wifi project. They intend to launch their product first and then do an airdrop to encourage people to use the product. This will be at the same time as the project’s mainnet and live protocol are launched. The idea is for token holders to use the token for what it was intended for and not pump and dump.
In his blog post, Johnston also talks about the number of coins that are airdropped. He mentions that airdropping 1% of tokens is rather useless and projects should get more serious.
With regards to price prediction, Johnston suggested projects find better ways to do this. For example, the Augur projects that features a decentralized prediction market.
In conclusion, the one great thing about the crypto industry is that there will always be room for growth and improvement.