Free money is a powerful motivator.
It’s no wonder airdrops have become a popular go-to-market tactic for founders of emergent web3 protocols. They’ve also become a frustrating feature of the crypto ecosystem for the incumbent platforms in the war for customer attention. I’ve written about this before (see Twitter thread below), but in this article, I’m going to “double-click” on the implications of this new GTM tactic for crypto founders and consumers.
Just in the last month, airdrops were used to promote two new blockchain projects that are competing for the position OpenSea, the leading NFT marketplace. And it’s no surprise, as OpenSea is one of the most profitable positions in the crypto landscape, generating between $202M+ in monthly platform revenues in December 2021 alone. OpenSea also recently picked up a $300M Series C funding at a $13.3B valuation. OpenDAO and LooksRare, two new open-source NFT marketplaces are gunning for a piece of the action.
Here is where it gets interesting – they have OpenSea’s customer list. It’s right there, in real time, on the blockchain for anyone to see, including their competitors like OpenDao and LooksRare. This is the equivalent of the perfect data set for the most brutally direct marketing campaign ever. Imagine the implications of having your customer list out in the wild, for all of your competitors to see, steal, and target.
Because of this, it has become an outright war with free money being airdropped into the wallets of OpenSea’s customers as incredibly direct marketing campaigns to acquire customers by these emergent platforms. Out of thin air, these two platforms combined have shot to over $600M in market cap value between OpenDao’s $SOS and LooksRare $LOOKS airdrop tokens that were simply given away for free to OpenSea’s users.
This is what we believe to be one of the most powerful tools in the crypto founders GTM toolkit – airdrops.
What is a crypto airdrop?
An airdrop is a marketing strategy that involves a company distributing free tokens or cryptocurrency to a group of customers (including to the customers of competitors). They allow blockchain projects not only to generate buzz around product announcements, but also build up a community that may support the development of their product.
Why are crypto airdrops popular?
Airdrops have become increasingly popular in 2021 as a way for blockchain startups to generate awareness and demand for their new platforms and products. For startups, airdrops offer a low-cost, high-impact marketing opportunity to reach a large number of people. Airdrops enable blockchain startups to identify a group of potential customer wallets, target them directly, and incentivize and reward some behavior.
For consumers, airdrops are effectively free money, as ridiculous as that sounds! It’s direct CAC, into consumers’ wallets for trying, using, or contributing value to a service.
What are the implications of airdrops?
Airdrops have been a good thing, continuing to expand the frontier of the “crypto canvas” we are all collectively experimenting on, and who is going to complain about getting (or not getting) free money, and augmenting/eclipsing their IRL salary for just playing around in web3.
We have seen an increasing number of projects airdropping tokens to bootstrap adoption and use of new platforms, and this trend shows no signs of abating. That said, this has got to be incredibly frustrating for founders and will continue to fuel the burn-out trend we are seeing building in such a dynamic space (if you are a founder who has experienced this, please do share, would love to hear about it).
We are going to see these airdrop war games play out, and we’re all going to learn a lot about the engagement that follows, but certainly, we are looking at a new tool in the crypto founders toolkit worth exploring.
I’m going to continue to explore Airdrops and other GTM tactics for crypto founders, so please do follow along on my Twitter or by subscribing to Underscore’s Core Bulletin here.
Happy airdropping!
