Airdrop Might Replace ICO As A Better and More Efficient Fundraising Method

Cryptocurrency is a fast emerging, exciting and revolutionary concept that has over the time showed the world how easy it is to generate value out of nothing and distribute it back to a community of people that created it.

Right from Bitcoin, its starting point, everything that has happened in this industry have been amazing. New concept and exciting projects every day and yet, this is just the beginning of something big.

The advent of ICO can be dated back to July 2018 when Mastercoin held the first ICO and then Ethereum in 2014 raised 3,700 BTC in its first 12 hours of ICO, equal to approximately $2.3 million at the time. When people and businesses saw the potential of ICO and how easy it makes fundraising, they opt in to this method to fund projects and from there the concept just continued to evolve until now that it might possibly be replaced by another exciting new method.

Already there is a report that ICO funding goes down by 44 percent this year. The question is do we expect it to go more down or suddenly pick up?

My opinion is that it might not go back up, at least for the mean time and at the same time, it’s not dying. It’s just evolving and will continue to. ICO as a fundraising method already has many shortcoming that threaten its existence, the most avid one remains SEC regulation, scam activities and government ban.

Airdrop Token Distribution Model

Airdrop is simply the distribution of free token to the crypto community by a new crypto or blockchain project. Initially this concept began as a model that helps the community distribute tokens when there’s a fork and the new chain token is created, it’s distributed back to token holders of the existing chain.

Over time airdrop started being used by crypto projects as a bounty system to gain new community members and incentive participation in the system. This proves to be a good marketing model for most projects and many more continue to adopt it.

Airdrop – The New ICO

From being just a bounty and fork distribution model of token, airdrop is becoming a totally new model for fund raising of a crypto project. How this happens is that projects now increase the total supply of tokens into billions and distribute a large part of it to either an existing community of a chain or a new community of people that show interest in the project.

This allows the community to decide the worth of the token, while the project creator keeps a good percentage of the token supply as team and management fund with hope that when tokens get to the market, they will be worth enough to use for the funding of the project.

How Is This A Better Model Compared To ICO?

It’s a better and interesting model because:

Everyone benefits; the ordinary community member gets free tokens by just deciding to become part of the community, even without financial commitment as long as they are a member of the community they get free tokens they should have paid for in ICO and tell me who don’t like it when it’s free?

The project benefits; because it becomes easy to build a large community of people interested in and working for the project as long as they hold the token, their interest is glued because they know they can get a reasonable return on investment if the project grows and token appreciate in value. Also, its a wealth creation opportunity for project creators, if the token price appreciates reasonably, looking that they are in possession of a large amount of token supply their stake is suddenly worth something big.

The market benefit; if both the token holders and project creators are benefiting, the market can’t be left out because the holders and the projects create and advance the market.

Conclusion

The industry is still evolving and will continue to, not much can be guaranteed and one knows exactly where we will go from here or what will be the next new exciting concept, but I’m confident that we will not stop growing as more and more people continue to flood in this space.

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Comments

  1. Dammy

    The date on your comment “The advent of ICO can be dated back to July 2018…..” is incorrect. You might want to review that because your article date is older than the historical information you’re trying to pass across.

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