Crypto airdrop and the market value
Hi frens,
I’ve seen some cases earned a lot through crypto airdrops. One earned 100,000 USD worth of tokens from Uniswap, Ethereum Name Service, Gitcoin, and dYdX. Another case earned almost 1,000,000 USD worth of token only from Arbitrum, by carefully creating 500 wallet addresses.
Why are crypto projects conducting an airdrop, or are expected by users to do so? Those are governance tokens, so undoubtedly similar to stakes of a company. It’s just another form of ICO (Initial Coin Offering), in my opinion.
Early investors and users (who thought they’ve invested early efforts in it) expect to earn more money back. That’s very capitalism.
On the other hand, some projects may hope to bring more new users on board through airdrop. That’s a very different goal. A DAO or even a company isn’t truly decentralized until governed by its own users. Sounds like a cooperative, right?
Unfortunately, 99% of airdropped Uniswap tokens have been sold, and close to 98% did not take part in the governance process at all. Capitalism wins, again.
From the perspective of traditional stock market, most crypto projects seem to be unbelievably naive, or let’s say, experimental.
The fundamental problem is, you cannot beat fake accounts. You cannot define “new” users effectively, either accounts since web1 or wallet addresses in web3.
So why chasing active accounts on web3, or say active users on web2? To create “market value”, an illusion of prosperity, or market confidence, which brings always positive economic growth.
You don’t print money. You just create a token, and build confidence around it.
A one billion market doesn’t mean one billion cash in the market at all. Let’s say 100 tokens were created, and one person bought one token at $100. Now it’s a $100 × 100 = 100,000 market value.
That sounds unconvincing, so let’s build the market slowly. Someone created 100 wallets to purchase the token at x, x from $1 to $100 linearly. With the cost of 1+2+3+…+100 = $5,050 in cash, those transactions have created a $100,000 market value as well. If a bonding curve model for the price was applied, let’s take the price as 2^x, with just 2+4+8+16+32+64+128 = $254, a $100,000 market value was created.
Those examples may seem naive, but the key point is to build market confidence, or in the worst scenario, hype.
What could we learn from it? Focus on building genuine value, and attract users through that value. Not those money games.
Your friend,
Denken