How To Bootstrap Dapps and Protocols Without An ICO

Authors: David A. Johnston, Mark Thorsen, Henry Liu, Erik Kuebler & Grace Torrellas

Technical Reviewers: Kyle Samani, Tushar Jain, & Nathan Johnston


This paper proposes best practices for “Smartdrops”, as a means of fast-tracking community growth, raising brand awareness and incentivizing early adopters that are highly aligned with the values of your project. Intelligently targeting the recipients of an airdrop and giving away a meaningful amount of value provides large benefits to your project, primarily: increased network effect and allowing many new users to access your technology.

A Smartdrop is a permissionless way of introducing new technology to users of protocols with established network effects. It takes the technology of a new Dapp or protocol — in the form of a token — and makes it available to a substantial community of users on the existing protocol on day one.

For background on the topic of Airdrops generally, check out “WTF is an Airdrop a Detailed Guide to Free Cryptocurrency”:

History of “Dumb Airdrops”

Prior to cryptocurrency, if a technologist wanted to build a community around his or her new application, the technologist would need to build that community from scratch. They would raise capital, hire a marketing team, run ads on Google or Facebook and generally spend a lot of time getting people to pay attention to their new application.

Since the early years of public blockchains, projects have been experimenting with giveaways of new tokens to grow communities. In 2017, OmiseGo launched an airdrop for its OMG tokens. They transferred OMG to over 460,000 people whose ETH addresses had a balance of more than 0.1 ETH. This broad, un-targeted giveaway of tokens meant to create interest in the OmiseGo platform has been copied by thousands of projects since. However, it is not without flaws.

Because broad, Dumb Airdrops aren’t targeted, they may be viewed by recipients as spam, or tracked for the wrong reasons. In some cases, users spend time tracking Dumb Airdrops for the sole purpose of selling “free” tokens, rather than using them or learning about their use-cases. As a result, teams issuing Dumb Airdrops send their tokens into the wallets of users who aren’t interested in using their tokens or building a new community. Although teams are issuing Dumb Airdrops to build community and drive network growth, they are met with opposite results. Dumb Airdrops are a waste of tokens.


Unlike traditional Dumb Airdrops, Smartdrops leverage the public nature of on-chain data to target users. Because blockchains are essentially free, open-source APIs, the only requirements for connecting to and scraping them is code. Thus, Smartdrops are a more efficient means of new user acquisition and community building.

Perhaps Smartdrops of the future will combine “big data” blockchain analytics and artificial intelligence sorting mechanisms to accurately parse through millions of users, and recommend those likely to use a new Dapp or protocol’s token. We foresee that that the majority of future Dapp and protocol’s “marketing” budgets will involve Smartdrops, and expect Smartdrop service providers to become the “Google Analytics” of the blockchain technology industry.

New Methods For Smarter Airdrops

Quantstamp (QSP): To incentivize community engagement, contributions, and new user acquisition, Quantstamp utilized their “Proof of Care” campaign. Quantstamp quantified users’ engagement based on an equation tracking “active project contribution + community involvement + wallet tracking algorithm + history of support.” Users received “POC” scores based on their engagement, and were rewarded tokens proportional to score.

Polymath (POLY): Polymath rewarded early users for joining their Telegram channel, providing a ETH wallet address, and filling out a short survey about themselves. Polymath quickly gained 40,000+ members in their Telegram community as word spread about the Airdrop.

DFINITY (DFN): Dfinity announced that they will be sending approximately $35MM worth of their DFN tokens to their community of future users, prioritizing early backers. Recipients will be able to use their DFN tokens to experiment with the Dfinity platform and build applications when the Dfinity network launches.

Best Practices Emerging For “Smartdrops”

These milestone-based distributions don’t have to be limited to a particular time-frame, will enable protocols to consistently engage with new users, and will drive user adoption. Milestone distributions can also scale based on time — first-moving users receive larger rewards.

Benefits for The Existing Token Networks

How To Prepare For A Smartdrop

Example Distribution Via A Smartdrop For A New Privacy Coin:

15% of tokens distributed to community members who hold meetups, evangelize the project, and preform promotion or education related tasks.

25% of tokens distributed to developers who program the Dapp.

60% of tokens distributed to members of the Zcash community.

Use The Right Tools For Compliance, Smart Contracts, & Community Management — Owned by Coinbase, can assist in creating a list of users who opt into an Airdrop. — Owned by, is focused on accredited investors.

TRM — Owned by TRM Labs, an API for Smartdrops.

Abacus Protocol — One line of code to call up their compliance tools / smart contracts for developers building financial Dapps.

Xpo.Network — Does the job qualifying and rewarding community members through community growth oriented tasks.

Downside & Risks:

Gaming The System:

People WILL attempt to game & abuse this distribution system. Plan accordingly and try and maximize the good actors who get access to the Smartdrop tokens.

Shallow Buy In:

Projects could end up as “happy meal” promotion toys that are forgotten quickly and nobody wants them — if it’s easy to get these tokens, there might not be much real buy in from new users.

Unknown Token Value:

Because the Smartdrop distribution method isn’t a sale and thus isn’t priced, the tokens lack an established price at the time they are generated. This pricing will have to emerge naturally from the secondary markets that are formed by community members interested in trading the tokens.

Illiquid Treasury:

By skipping a token sale, the new Dapp is counting on the market to establish a value for its tokens and those less traded, more illiquid tokens to then fund its development, instead of gathering a more liquid currency type token such as Ethereum.

Unclear Regulations:

Around the token value and asset classification: be warned that even giving away tokens is not necessarily free from scrutiny under securities, money transmission or other laws. This is more specific to US based consumers. See compliance tools section above.


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

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