©Reuters. Everyone loves cryptocurrency airdrops, but be aware of the risks
Airdrops are now considered a powerful tool for distributing tokens, acquiring new users and building a solid community. They allow projects to get noticed, as well as incentivize good behavior and foster long-term relationships with their user base. But do airdrops really work?
According to research I previously published in the Journal of Corporate Finance, the answer – at least according to the data available so far – is “yes”. But a more recent study of mine, conducted in collaboration with Kristof Lommers and Lieven Verboven, highlights that their effectiveness depends above all on thoughtful planningclear objectives and strategic execution.
The success of an airdrop is related to careful choice of eligibility criteria and incentives. These criteria can be simple (like owning a specific token), or more complex (like performing certain on-chain actions); the important thing is that they are aligned with the objectives of the airdrop. For example, if the goal is to reward the most loyal users, the eligibility criteria could include holding a certain token for a specific period. If, on the other hand, the aim is to promote a new protocol, the tokens could go to all users who have interacted with it.
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