In web3, projects with active and vibrant communities usually end up making waves in the space and accumulating large portions of the global crypto market capitalization. Hence, founders are always exploring new ways to retain and attract community members.
While there are many strategies you can employ to attract people and boost engagement in your crypto project, airdrops have proven to be one of the most profound methods. Most crypto projects use it as a marketing technique to generate hype around their project and increase engagement.
Who doesn't want free money?
However, utilizing airdrops in your community building strategy isn't all rosy. Without a well-thought structured approach, airdrops can yield the opposite effect on your project.
In this piece, we'll guide you on the right process you can follow to launch airdrops and boost engagement within a web3 community.
What are Airdrops?
Airdrops are free tokens that crypto projects distribute to users as a marketing tool to increase awareness and grow their networks. Without the help of already well-established influencers in the web3 industry, it can be quite difficult to gain attention, considering the thousands of projects all competing to retain users.
But since airdrops are free, they can help you spread out the word about your project across the space. Plus most airdropped tokens confer owners with governance rights to determine the future trajectory of a project, hence fueling more community engagement.
For example, early decentralized exchanges like Uniswap and Curve gained a big boost in their community and market capitalization after airdropping their governance tokens to users.
Although airdrops aren't entirely 'free' in the literal sense. Some airdrops require users to perform a specific task like following/sharing a social media post, filling out a form with your email address, purchasing a particular token, etc. While others are done to reward holders for their loyalty.
Another exciting feature of airdrops is the ability to compel attention from people who are yet to join the crypto industry - offering them free tokens provides an inexpensive way of joining and learning about the industry.
Your project becomes the eyes and legs through which they see and walk in the industry. And such people can become loyal community members in the long run.
However, it can be quite challenging to attract real community members who aren't just in to make a quick buck off the tokens you airdrop. Web3 projects have crashed too many times after airdrop participants dumped their tokens on exchanges to make quick profits.
Other times, some projects often fail to attract attention even when they conduct multiple airdrop events. This is because people are becoming more sceptical of participating in airdrops as the FREE MONEY incentives serve as an ideal tool for malicious entities to conduct scams.
Additionally, many hardcore bitcoin believers see airdrops as another way of printing money and fueling inflation, which they believe crypto should be the opposite of.
With these challenges, the big question becomes: How do I scale through to launch a successful airdrop that will attract and promote community engagement?
Launching Airdrops That Increase Community Engagements
Below are five attributes that every crypto project needs to integrate with an airdrops to boost interactions in their community:
- Have a well defined project with a clear value proposition
- Educate Your Audience
- Stay Committed to Your Promises
- Employ an Innovative Approach
- Distribute Ownership
Have a Well Defined Project With a Clear Value Proposition
While it's easy to mint new tokens and conduct an airdrop, those tokens in themselves have no value except that people believe in your project.
"Token value = belief from the community"
Too many founders airdrop tokens to generate hype without adequately planning on the future of their project - its utility and community structures.
Because of how quickly you can launch a startup in decentralized environments, most founders hurriedly produce whitepapers and advertise their projects alongside its upcoming airdrop on top social media platforms. Sometimes they fork a popular protocol and make announcements for users to claim free tokens on the new chain.
These types of projects often end up attracting people who are only interested in flipping airdrops for profit immediately after they receive it. The hundreds of projects that fail daily are serving as reminders for true crypto enthusiasts not to get involved in hype without underlying utility.
Web3 enthusiasts are beginning to read between the lines and they want to see the product beneath all the buzz around the market. Many airdrops end up as dead tokens in wallets because the project's founders offered no value for people to believe in or failed to address security flaws before launching.
A prime example of an airdrop without a product idea is the GAS token. The GAS DAO was able to generate buzz on Twitter after announcing that it will be airdropping GAS tokens to Ethereum wallet addresses.
In less than two days, GAS accumulated a market capitalization of over $50 million. However, its price tanked within the same week when people started expressing concern that the project has no utility without any roadmap.
In contrast, ENS airdropped tokens to users after over 4 years of having a working product. In turn, the project attracted a host of committed community members.
Educate Your Audience
You need to ensure that the message you aim to communicate with your whitepaper is clearly understood by people. Whitepapers and the codes in your project can be technical sometimes for your average community members to understand.
And if you can't get them onboard, you'll find fewer people spreading the word about your upcoming airdrop.
Some airdrops go unnoticed in the space and fail to generate the needed buzz because community members are yet to understand the incentives behind sharing such information.
Others require technical mechanisms for claiming, and without a proper know-how, people become stranded and eventually move on from whatever it is your project has to offer.
Educating your audience not only makes them committed but also drives buzz for your project. You can leverage AMA sessions on Reddit and Twitter spaces to answer questions regarding your upcoming airdrop, the long-term benefits for holders, rewards for spreading the word, etc.
This shows people your commitment and convinces them to hold onto their airdropped tokens long-term instead of flipping them for quick profits. It also serves as an avenue to reach new leads who can become loyal community members when they receive the airdrops.
In addition, the countless airdrop scams that abound in web3 can discourage people from showing any interest in airdrops. Educating your community and showing them how to securely participate in your project's airdrop can help you to get them back on track.
Stay Committed to Your Promises
It's easy to make amazing promises and set high goals for your projects, especially when you intend to convince people not to sell off their airdropped tokens.
While shooting for the stars is nice, also ensure you are not making outrageous and unattainable promises. Because when it begins to seem like you are, your community members will begin to gradually bail out on you by selling their tokens.
"Do not promise what you can't achieve."
You can attract thousands and even millions of people to your project with great promises following the launch of an airdrop, but what keeps them is your hard work to make that vision a reality.
They want to see the signs that by holding onto the airdropped tokens from your project, they won't be missing out on the profits of cashing out early. That rather it'll see them gaining the upside fruits of patience just like holders of the Uniswap airdrop in 2020.
It's best to keep your promises SMART - Specific, measurable, attainable, relevant, and time-bound - to enable you to move down the lane on your project's roadmap. For example, Curve Finance has walked through their roadmap gradually without any outrageous goals.
In turn, they've become the largest DEX in the world and liquidity providers who received its airdrop in 2020 have largely benefited from their rise. Like the popular Bible philosopher said, "the race is not to the swift."
Employ an Innovative Approach
The airdrops of most projects fail because their founders play copycat by launching exactly the same way as other airdrops. While it's understandable not to complicate the whole process, exploring unique ways to airdrop tokens can in itself generate hype for your project, especially if it's not the first airdrop you're conducting.
You don't want to lose that element of surprise and appeal that gets people anticipating and spreading the news. Consider flipping the script.
For example, LooksRare employed an eye-catching approach in distributing its airdrop - to claim the airdrop, you must have traded a certain amount on OpenSea, and would need to mint an NFT on the LooksRare marketplace.
This generated buzz on the market as thousands of OpenSea users flooded the LooksRare marketplace. While the hype was short-lived, the key takeaway here is how an innovative airdrop concept can increase community engagement for your project.
Many projects that launch nowadays in the web3 space usually distribute only a small percentage of tokens to the public in an airdrop. This piece outlines how the percentage of tokens assigned to airdrops has shrunk over time.
Although there are quite a number of good reasons for this as most airdrop recipients are often fond of dumping their tokens for quick profits. Even at that, you will have to find a way to distribute ownership in your project if you want to have a strong community.
A possible solution is to employ a gradual emission of tokens to community members. At other times, some founders reserve a large chunk of tokens for themselves, their team and VCs while using airdrops to generate hype so they can start cashing out some of their tokens.
The open source nature of web3 allows people to research and know your token allocation. Once they discover such misappropriation without a good reason, they may cash out their tokens quickly or better still, not participate in your airdrop at all.
Build together with your community and ensure you employ a tokenomics design that will eventually distribute ownership to them.
You can also reach out to our talented team to help you get started on how you can launch airdrops and scale up your web3 community.