SEC S19-W1 || Crypto Opportunities: Airdrops and Giveaways.

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In the dynamic world of cryptocurrencies, you may often see the Crypto companies announces Airdrops and Giveaways. In this blog, we will see the details about Airdrops and Giveaways.

Table of Contents.

1. Explain what a cryptocurrency airdrop is and what its main objectives are. Give examples of projects that have used airdrops.
2. What is the difference between an airdrop and a giveaway in the field of cryptocurrencies? Explain with concrete examples, including similar initiatives with the Steem token.
3. What are the advantages and disadvantages of airdrops for project developers and participants? Use cases involving the Steem token if possible.
4. What are the security and regulatory challenges related to cryptocurrency airdrops and giveaways? How can these challenges be managed?
5. Propose a detailed plan to organize an airdrop using the Steem token. The plan should include eligibility criteria, required participant actions, implemented safety measures, and promotional strategies to maximize impact.

Explain what a cryptocurrency airdrop is and what its main objectives are. Give examples of projects that have send airdrops.

Cryptocurrency airdrop is one of the marketing strategies that mostly used by newly establish Crypto companies to send their own tokens/coins to random user’s specific crypto wallet address. The main objectives of airdrop are marketing/promotions about the platform, acquire more users on the platform, build strong community. and rewarding user participants, and proof of decentralized.

Marketing/Promotions: Crypto companies use Airdrop concept for marketing and promotion purpose wherein they can send many tokens to the random user’s crypto wallet to gain more visibility on the new platform token/coin.

Acquire more users on the platform: To gain user popularity the crypto companies send free tokens for which users get attracted.

Build strong community: New crypto companies require more supporters and early-stage holders who are indirectly becomes a promoter for the crypto companies. Airdrop can help in this.

Rewarding participants: Airdrop used to reward holders by sending them few tokens directly in their crypto wallet.

Proof of Decentralized: Users look cryptocurrency companies as decentralized network. Hence, sending token via Airdrop across many users, it helps to gain trust on platform as decentralized.

• Projects that have used airdrops - Data Ownership Protocol.

The crypto project Data Ownership Protocol is a standard blockchain technology on data ownership and has launched its Airdrop in Gate.io Web3 startup project. The total winner in this airdrop will be 100 and each will receive airdrop value of $ 30. Apart from the participation process there is no other cost needed to apply for this airdrop. This airdrop project is currently active and the official details for this airdrop is available on Gate.io site, click 👉 here.

What is the difference between an airdrop and a giveaway in the field of cryptocurrencies? Explain with concrete examples, including similar initiatives with the Steem token.

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Airdrop and giveaway both these methods are used to send tokens to the users. The major difference is this only that the Airdrop is mainly use to automatically send tokens to the large users and Giveaway used to send tokens as rewards to the user after completing specific tasks.

Airdrop used to send token directly to the user wallet. This is for gain user popularity, making everyone aware about the new crypto token and the platform, and to proof of decentralize network. In this uses no need to do any specific tasks apart from like involve in blockchain ecosystem, hold coins.

Example: Like mentioned above crypto project Data Ownership Protocol supports Gate.io and sends 2,800,000 DOPs to Gate.io Web 3 wallet users. Free $DOP will be automatically added to the registered Gate io wallets for users.

Giveaway is a rewarding program wherein token send to users as rewards. However, to receive tokens as reward, users need to complete the requested tasks like make comment on posts, retweet twitter posts, refer friends, etc.

Example: Binance frequently organized giveaway events wherein users get chance to earn BNB coins by participating event and performing requested task like social media task to support Binance.

Airdrop and Giveaway Initiatives with the Steem Token.

Steem is based on social media platform blockchain, the platform like Steemit, the active users of the platform received a Steem by their publication and creation of content and upvoted on the content post by other users. This helps to reward active users on the platform and the future growth.

Another airdrop example is that users can hold the Steem Power in their wallet and just delegate it to the active communities, in this the users not really needed to do anything but they will receive additional Steem through curation weekly or monthly.

Steemit platform runs Giveaway programs like the one most recent active program Steemit Engagement Challenge wherein the platform of the users create content by ensuring specific requirements are fulfilled like the participants must follow #club5050 or #club75 or #club100, the user should be verified and active, user have to set 25% beneficiary to @null account, created content should have at least 10 upvotes and 5 comments, by involving in these activities users gets giveaway means received additional Steem via upvoted their content by steemcurator01 and steemcurato02.

What are the advantages and disadvantages of airdrops for project developers and participants? Use cases involving the Steem token if possible.

➡️ Airdrop Advantages For Project Developers.

Advertisement: By Airdrop, the developers can create a noise about the platform/project. Sending free tokens to the large number of audiences, developers can gain user popularity and attract serious investors.

• Steem token use case: Steem blockchain send tokens based on upvote ratio and user content which engaged creators on the Steemit platform. This helps to create awareness of the platform and gain more users to the platform.

Acquire user and relationship: Airdrop can gain more users and boost relationship with them to get involved with the platform/project. Users are encouraged to explore the ecosystem and stay active on the site by receiving free tokens.

• Steem token use case: On Steemit platform, airdrop means upvoting user content for their hard work and contribution which provides them Steem tokens. This can motivate users to continue on the platform, create more quality contents, and actively involved in the communities.

Decentralize Network: Sending free tokens to the random users via Airdrop can provide guarantee about decentralization platform/project.

• Steem token use case: Steem blockchain send Steem to the users across the platform based on their contribution which provides guarantee about decentralized communities and creators.

➡️ Airdrop Disadvantages For Project Developers.

Expensive: In the Airdrop, the crypto projects need to reserve some number of tokens and need to manage them accurate to sending them on the network. This arrangement can be expensive.

• Steem token use case: To maintain ecosystem long-term sustainability of the project, Steemit needed to take care in managing the continuous sending of STEEM coins to the creators and curators.

Users stability: After providing free tokens to the users via Airdrop, some users may not remain in continue relationship with the crypto project due to which the project community involvement and growth become less.

• Steem token use case: Initially users actively get involved with the community, contests, but later few users did not remain continue on the platform and simply sold the Steem token that they got from airdropped/upvote, due to this the require impression can be getting low.

Market Price Effect: Many users may sell token immediately right after received through Airdrops which effect on token market price and keep decrease.

• Steem token use case: On Steemit, the users may sell Steem immediately after received due to which the overall Steem market price can affect badly.

➡️ Airdrop Advantages For Participants.

Free Tokens: Anyone can be a lucky to get free tokens from the airdrop without any investment.

• Steem token use case: On Steemit, active users keep receive Steem token from the upvote on their content which encourage uses to stay on the platform.

Financial Gain: Free token received from the Airdrops can be appreciate in period of times when token price rise in the market, this can give financial gain to the users without made investment.

• Steem token use case: On Steemit, received Steem token can be hold in a wallet which will give financial support when a Steem price rise in a market.

Users/Community Engagement: Airdrop ca boost users and communities which indirectly encourage them to stay with the project.

• Steem token use case: On Steemit, upvoting and supporting to the user’s contribution (content) and make a loyal participant for the platform who will actively create content, upvote, comment and support to the platform growth.

➡️ Airdrop Disadvantages For Participants.

Scam: Scammers may attract users by showing legitimate cryptocurrency project which organizing a free airdrop wherein they may ask to connect web wallet, hold specific coin which lead security breach as scammer can get access to your wallet which may makes user loss.

• Steem token use case: On Steemit, Scammers may send you comment containing suspicious link and offering to join free airdrop to get free Steem tokens. Free tokens attract users but clicking such link sent by unknown user can lead loss as scammer can get users wallet keys and transfer your holding to the unknown account.

Less User Interest: Very low value of airdrops, users get less interest which can actually decrease the actual value of some good airdrops.

• Steem token use case: On Steemit, with number of communities conducting new projects, contests. However, with low value of upvote and Steem tokens, according to the low market value can lead active users to less interest on a platform.

Taxsession: In some regulatory, received tokens via airdrop can be considered in a income which can lead users to pay defined tax.

• Steem token use case: On Steemit, according to the Steemit FAQ section Will I get a 1099 from Steemit?, the participant should aware that they are not paid by Steemit, instead the network is rewarding and need to correct taxes from the reputed tax company. Unawareness of this can create complicate for participant in their financial report.

What are the security and regulatory challenges related to cryptocurrency airdrops and giveaways? How can these challenges be managed?

Airdrop and Giveaways are now become a major source and best marketing strategy for cryptocurrency projects to send free tokens to users who will quickly connect to the platform and like to invest in. However, in way cryptocurrency is growing the scammers and fraud are also increasing hence now all Airdrops are legitimate. It is important to understand the challenges involved in cryptocurrency airdrops and giveaways, and how we can manage them so that we can be safe from getting trap.

➡️ security and regulatory challenges to cryptocurrency airdrops and giveaways.

The security challenges like, the scammers keep eyes on some crypto projects and when such projects announce airdrops and giveaways, the scammers make similar fake airdrop website that mirror real project website and social accounts. They start advertise about this fake airdrop by using fake accounts but with real profile account details. Such scammer website may ask to connect your Web wallets or ask to enter seed phase, sometime may ask to send minor fund to a specific address. Performing such activities by user own they get trapped and indirectly shared their security access with the scammers which lead users to hacked their Web wallet and possible to lose all holdings in a Web wallet.

Smart contract loop holes can be affected seriously to users and their funds, Airdrops uses smart contract to perform all the backend process. However, if there are any issues in a contract code then it can be danger as smart contract can be vulnerable to attacked by hackers.

The group of scam peoples may create multiple fake accounts and wallet addresses, they all apply for the Airdrops and Giveaway to receives large number of tokens by combining tokens from all their wallet addresses. This can affect to the good crypto project as they may not get loyal users which lead them for not receive serious support even distribute a free token.

Regarding regulatory challenges, in some countries the crypto tokens received via Airdrops and Giveaways can be consider as security or income due to which even the tokens received from Airdrops and Giveaways, the users have to be act within the defined regulation and may need to pay certain amount as tax to the government tax authorities.

Further, it may possible to execute illegal financial activities through Airdrops and Giveaways like Money Laundering and Terrorism Financing. Hence, as a regulation the cryptocurrency project management may need to implement Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) that can prevent such illegal activities in Airdrops and Giveaways.

➡️ How to manage security and regulatory challenges to cryptocurrency airdrops and giveaways.

All cryptocurrencies are based on contract code but not all users understand the meaning of those code. Hence to manage security challenges, users should aware the hidden risk in such airdrops and giveaways offers. The users can refer to the security audit report for ensuring airdrops and giveaways distribution process is secure and 100% compliances.

Avoid airdrops and giveaways messages on social media or telegram from random users within the project community. Only reliable on the project organizer messages on social media or telegram.

Report to the community organizer’s if you come across suspicious activity on scam for airdrops and giveaways. This can create awareness faster within the community and help to find risk and solve it at earliest.

Propose a detailed plan to organize an airdrop using the Steem token. The plan should include eligibility criteria, required participant actions, implemented safety measures, and promotional strategies to maximize impact.

To organize a successful airdrop for the Steem token, we can make below plan that consider all the factors.

✔️ Eligibility Criteria:

• To ensure user is active on Steemit, the users account must have 3 to 5 months old and active member at least one of the communities. Also, user participating contest or creating Dairy game posts.

• The newly added users must have gone through the verification posts and completed other Lists of Achievement Tasks

• Priority given to the users who are continually putting efforts and other activities, and producing quality contents on the platform.

• Users hold Steem Power and not power down in last 3 months.

• Users utilizing some proportion of the Steem received as author reward through the upvote in powering up to increase Steem Power.

• Users have given vote to at least 3 Witnesses. List of Steemit Witness

✔️ Required participant action:

• Make positive comment on airdrop announcement post.

• Resteem airdrop announcement post.

• Must have powerup some amount of Steem received as author reward through the upvote or must have received specific SP as curation reward.

• Required to followed 10 or more Steemit active users.

• Create a plagiarism and AI free content/post on this airdrop ensuring mentioned requested asked.

• Share created post on your social media account including specific #Steeem and #Steemit tag.

• Make at least 3 positive comments on other posts.

✔️ Implemented safety measures.

• Setup moderators who can check the entries submitted by users.

• To avoid human error in checking eligibility criteria, ensure the information is easily available on the Steemit tools websites like https://steemworld.org/ and https://steemscan.com/

• To prevent from fake or temporary users accounts, ensure the users are actively visible in the last 3 to 5 months.

• Assess the security audit for making sure the distribution goes smoothly.

• If providing upvotes to users then need to ensure having the sufficient balance voting power to send upvote at earliest.

• Users may sell Steem tokens immediately after receive from airdrop and giveaway which may affect Steem market price. For this we need to set maximum token or upvote ratio/power % to per user. This will also show the fair airdrop distributions.

• Making aware to all users about the airdrops and do not entertain unknown user if they send any comment, link and offering attractive scheme and asking to click to link. Only refer official statement about the Airdrops and Giveaway.

✔️ Promotional strategies to maximize impact.

• Create an engaging post and graphical videos, images about Airdrop announcement and post them on social media platform like Twitter, Facebook, Reddit.

• Asked generic and funny quiz about cryptocurrency on social media platform that aim to the Airdrop, answering to those Quiz create more excitement to the users about the Airdrop.

• Mentioned Steemit users to retweet- reshare those posts on their social account.

• Send Press Release about the Airdrops.

• Create a countdown for airdrop on Steemit Website and Social media platforms to create most awaiting and excitement airdrop.

• Collaborate with social media vlogging influencer like on Dtube, YouTube whose create content on cryptocurrencies and promote the airdrops to their subscribers/followers.

To organize effective Steem token airdrop, we can plan similar to the above which may gain user popularity and registrations for the airdrops.

Such a strategy can use social media to reach a worldwide audience. Also, by following such plan, the other crypto project may also get attract and possibly get serious investor on the platform and some partnership. This can effect positively to the Steem token market price.

_{Disclaimer: The information provided in this blog is for educational and informational purposes only. It should not be construed as investment advice or a recommendation to buy or sell any securities mentioned. Investing in the stock and crypto market involves risks, including the potential loss of principal. Readers are encouraged to conduct their own research and consult with a qualified financial advisor before making any investment decisions. The author of this blog is not liable for any losses or damages arising from the use of the information provided herein.}

Author,
@steam4u
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