Crypto projects are the biggest beneficiaries of crypto airdrop events, so they tend to give out such generous bounties. Given below are a few reasons why crypto projects perform airdrops:
- Inducing Investments
When a project launches an airdrop, a buzz is created and, if done successfully, would help drive the prices upwards. Trending Google searches, social media mentions, and follower count on Twitter serve as a measure to gauge a project’s prospects. Hence, when community engagements increase due to an airdrop, the company’s overall capital would boost proportionately, thereby generating profits.
- Raising Awareness
Raising and spreading awareness is one of the primary reasons why airdrops are launched in the first place. The popularity of crypto airdrops results in crypto enthusiasts actively and aggressively promoting it. Additionally, it is noted that airdrop recipients are few of the most vocal advocates for a project.
- Rewarding Users
Investors in the crypto space usually look for the highest ROI in the short term while not caring about the project’s long-term sustainability. Thus, they tend to shift from one project to another without providing any actual value to the system. To counter this, airdrops are launched to reward loyal users who use their platforms or hold a given number of tokens in their wallets for long durations.
- Decentralization of Token Distribution
During a coin’s early days, rich investors may take advantage of their wealth and hoard a significant amount of its supply. This leads to the centralization of large amounts of coins in the hands of a few (for example, Dogecoin). In these cases, projects can use airdrop to balance and decentralize the token distribution.
- Getting to Know More About its Community
Since some airdrops need the recipient to fill in their personal details such as email, contact number, social media, etc. The information obtained can be used to get oriented with the type of community the project operates in. Additionally, targeted marketing campaigns can be launched depending on this information.