Republic Crypto drops report on airdrops

Republic Crypto, a platform which opens up fundraising and early-stage startup investing within crypto, released a comprehensive overview of token distribution methods known as airdrops. The report covers different types of airdrops, the benefits of these programs, regulatory considerations, and more. The overview can be viewed here, with some of the highlights including: 

  • Benefits: Airdrops can be a "unique competitive" business tool that can drive greater project awareness, wider decentralization by dispersing the asset across a more diverse user base, and bootstrap a network by incentivizing early participation
  • Varying types of drops: Token distribution methods can take various forms, including network drops (indiscriminate distribution to entire network), precision drops (targeted user base), exchange drops (an exchange selects which token to drop and to whom), opt-in drop (user pays for transaction fees and executes order if wanted), and merkle-mines (pioneered by Livepeer, claiming tokens submits merkle proofs).
  • Drops' applications can expand beyond tokens: Getting tokens into the hands of users isn't the only application of an airdrop. Distribution can include digital collectibles or NFTs, algorithmic stablecoins, and drive competitive advantages over competing projects. 
  • Regulation considerations matter: A Reg CF (Crowd Fund) structured airdrop campaign is likely the most cost-effective way of distributing private securities to both accredited and unaccredited investors. The report also dispels common airdrop misconceptions such as contamination, drops to over 500 unaccredited investors forcing public reporting, and the inability to trade tokens on a secondary market.
  • Airdrops are similar to common referral/reward programs: Other examples of common "airdrop" like programs include PayPal offering $20 worth of in-network credit for early users, Starbucks' $5 coupon for registering for their app, and Robinhood offering free stocks up to $500 in value for new users.

About Author

Ryan Todd is a research analyst at The Block where he focuses on the convergence of fintech and digital assets. Previously he worked at Deutsche Bank as an equity analyst covering consumer finance and payments companies, and also spent time at ConsenSys exploring the broader Ethereum ecosystem. Ryan holds a BS in Economics and Accounting/Finance from Florida State University, and MS Finance from Vanderbilt University.