The Smartdrop Model

  1. Audience Matters, Carefully Select the Recipients: — The key to a successful airdrop is focusing on users who are likely to deeply engage with your project and add value to your community. If you are targeting a community of decentralized exchange developers, consider 0X Protocol (ZRX) holders as recipients; if you are building a community of merchants, consider Bitcoin Cash, DASH, or Litecoin users. In the case of Polymath, a securities token trading platform, they filtered for investors, other securities issuers, and so forth. Strategically send your tokens to holders of competing Dapp or protocol tokens as part of the overall Smartdrop. Holders of competing Dapp or protocol tokens have already been filtered for product/market fit — they have already demonstrated they want to hold value in your vertical, so they are likely to be in your target demographic. Smartdrops should exclude exchanges, competing foundations, high transaction frequency addresses, mixers, shapeshifters, and other addresses that aren’t conducive to the Dapp or protocol’s long term success.
  2. Focus on Quality Over Quantity: — The reason why Google and Facebook are worth $600+ Billion is because of their ability to target the right audience for advertisers. Blockchain protocols can learn from the traditional digital advertising world and be more selective about who they target. We should always focus on quality over quantity when it comes to community members that are driving long-term value.
  3. Make it Worth While: Do A BIG Airdrop, Reward Users With Real Value Not A Rounding Error — Airdrop a meaningful amount of value in tokens to the new users. For instance, Polymath provided several hundred dollars in value (250 POLY) to those who signed up for their Telegram group, effectively joining the community of Polymath users. The total value of your airdrop should be in the tens of millions of dollars in value and represent a large part of the total network value. Thus if you pick a narrow target group (tens or hundreds of thousands) the benefit will be a significant amount per recipient. Invest directly in your future adopters and users instead of spending that value on inefficient marketing campaigns.
  4. Make It Easy, Make It Verifiable — Create a smooth onboarding process for people interested in joining your community to prove their identity. Make the steps to get involved straightforward (E.g. a Google Form, CoinList interface, or TRM API) and pick questions that generate useful, verifiable information such as email addresses, Telegram usernames, and so forth.
  5. Reward Users Aligned With Your Projects Values — If your Dapp is all about privacy then focus on users likely to be interested in privacy features. Move beyond single project tribalism and attract people who support Dapps with similar values.
  6. Incentivize Milestone-Based Distributions — Also known as bounty-campaigns, can be part of a targeted Smartdrop, protocols can reward new users with gamified, programmable incentives for completing tasks such as: downloading a Dapp, referring friends, unlocking certain achievements. In essence, this is the next-generation of campaigns similar to Uber’s “refer a friend for $5 off of your next ride”.
  1. Faster Innovation Cycles: Dapps and protocols can leverage this quick path to gaining network effects for their new technologies. When a new feature, such as zero knowledge proofs, multisignature, or other, is invented, this feature can be Smartdropped to communities of existing protocols that share aligned interests or principles. Compared to preparing a token sale or working through establishing a company, the Smartdrop model can be executed in a matter of weeks, instead of months.
  2. Less Market Volatility: As Smartdrops increase, holders of “blue chip” cryptos could receive “blue chip” like benefits: Smartdrops of new tokens, a more stable value, and a lower volatility (relative to the market). Smartdrops incentivize long-term holding of “blue chip” tokens because holders receive the benefits of new features Smartdropped to their community.
  3. Keeping The Community Together: Instead of incentivizing a never-ending series of forks of a community, if a network embraces new Smartdrops, it could increase community stickiness. Because Smartdrops bring in new ideas and technologies to existing projects, community members might be excited to work for an existing project that receives and experiments with an inflow of new ideas and technologies via Smartdrops. We are already starting to see examples of these new projects such as the Distributed Business Accelerator platform (DBA).
  1. Announce your project has selected the Smartdrop method for distribution of a portion of its tokens. That way interested developers and other community members can join and contribute to the software of the Dapp and earn part of the community reward.
  2. Schedule a date for the Smartdrop to take place and provide details for people to participate and join the community.
  3. Identify the Smartdrop targeted networks.
  4. Communicate guidelines, including a list of milestone-based incentives for Smartdrop participants.
  1. There is real potential for Smartdrops to become a mainstay of how decentralized applications distribute a majority of their tokens and thus quickly bootstrap a large pool of vested and engaged community members in a very short amount of time.
  2. Let’s rally together the broader crypto & blockchain community to make Smartdrops effective and promote best practices while leveraging the use of new tools, platforms and protocols. We can trigger a new wave of permissionless innovation in the crypto community.

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David A. Johnston

David A. Johnston

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Entrepreneur, Investor, Technologist, Voluntarist, Future Martian Settler, & Evangelist for Decentralization.