Say Hello to SmartDrops: The New Way to Give Away Crypto Money

mian001 (40)in #blockchain • 6 years ago

Are airdrops useful?

While the jury's still out about the mechanism, used of late to massively distribute crypto tokens to those who already own cryptocurrencies, several industry observers and startups already believe it could be done better.

The concept of "smartdrops" seems to have garnered some attention after a July Medium post by Yeoman's Capital founder and long-time industry investor David Johnston. In it, Johnston encouraged blockchain startups to eschew what has become a standard approach to airdrops – dumping tokens to everybody with an ethereum address – for a more targeted approach.

In practice, Johnston told CoinDesk this means, "intelligently targeting the recipients of an airdrop and giving away a meaningful amount of value," with the objective of attracting real users to participate in "the early bootstrapping of a system."

And this newly minted alternative seems to be gaining steam.

For instance, there's already some precedence to this approach. In fact, Johnston says in his Medium post that he merely recorded best practices and gave "substance to this idea that a lot of people have," specifically pointing to projects Dfinity and Polymath as examples of projects that have conducted smartdrops.

Sure enough, in June, Dfinity announced plans to airdrop $35 million worth of its tokens to community members that undergo (and pass) a know-your-customer (KYC) and anti-money laundering (AML) verification process.

Likewise, new companies have emerged to facilitate these improved airdrops. Crypto token management company TRM Labs, for example, recently launched a platform (dubbed SmartDrops of course) that allows projects to distribute tokens to select users and offers issuers analytics.

Just like Johnston, it appears many crypto stakeholders have high hopes for the new and improved airdrop and think the method could resolve issues associated with other token distribution methods, namely initial coin offerings (ICOs) that have been under regulatory scrutiny and seen industry criticism since its explosion in use.

These projects often have a hard time attracting the "bootstrappers" Johnston refers to, and their tokens frequently become objects of speculation more so than objects of utility.

"Most airdrops are really about giving a token to speculative investors so that they'll go cash it out on an exchange. It's really about trying to demonstrate to exchanges, 'hey we've got a lot of wallets, we're going to bring you a lot of people, and so let us list our token on your exchange,'" Paul Hainsworth, the CEO of Open Garden, which will use the smartdrop model for the distribution of its OG tokens soon, told CoinDesk.

Summing up many observer's thoughts about the counterintuitive nature of such decisions, Hainsworth continued: