SEC S19-W1 || Crypto Opportunities: Airdrops and Giveaways

Cryptocurrency has presented us with many opportunities over the years and among these opportunities we have the airdrops and the giveaways which is the topic of discussion for this week's engagement challenge.

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We have just started season 19 of the Steemit engagement challenge another 6 weeks journey of learning and relearning. I'm glad to be part of this journey this week as we are starting with a very unique and important topic that I believe everyone will like to share their knowledge about. Without further ado let's get started.

Explain what a cryptocurrency airdrop is and what its main objectives are. Give examples of projects that have used airdrops.

When we talk about the word cryptocurrency airdrops we are referring to the free distribution or sharing of cryptocurrency which can be information of a coin or token to the crypto community which is you and I.

From the above statement, I would like us to look more in-depth at a few keywords such as free distribution, coins or tokens, and the crypto community. Let's discuss these keywords more in-depth so that everyone will be able to have a full knowledge of what airdrop is all about.

Free distribution: Free distribution means you don't have to pay or give anything before you are given these airdrops so it is completely free once you are eligible. We will discuss eligibility in more detail as we progress.

Coins or tokens: Airdrops are usually in the form of tokens or coins some of which are already tradeable whereas some are new coins that the project owners want to public to know about and possibly trade to increase their circulation and market capitalization.

Crypto community: You and I are the crypto community. These airdrops are always given to users because the essence is for more people to know about the said coin or token. When more people know and hold the token it will then increase the market capitalization of the token which will help the price to surge due to the number of traders in the said token.

Having discussed what airdrops are, I would like to look at the main objectives of airdrops and what they stand to achieve when giving out free tokens or coins to the crypto community or public.

Firstly, the main objective of airdrops is to create awareness in the general public that there exists this coin or token. When people become aware of this coin, then it becomes easier for them to start putting interest in the project especially when they see that it is a promising project.

Putting interest in the project will also give the project a wider recognition thereby increasing the market capitalisation and the price of the asset as well. So if a project does an airdrop and those who are opportune to have this airdrop see that there is security, transparency, and accountability in the project they will tend to invest more in it hoping to get more returns in the coming days.

Those who weren't privileged to participate will also go into the project by purchasing these assets or trading them as well because probably they have heard how promising the future of the project will be.

Airdrops can be given in two ways i.e. two criteria may be used to do airdrops and that is the bounty drops which require users to complete some task a good example is the recent NOT coin project where you tap to earn or it can be in the form of holders drop which requires users to have or hold a certain coin before they can get the new coin or another different coin for holding the coin they are holding.

So in whichever criteria are used, you as a receiver must also play your part. It is free means you don't have to pay for it but it doesn't mean you will not do some tasks or have to pass the criteria for eligibility. When we talk about eligibility we are referring to meeting the laydown criteria to have the airdrops it can be completing your KYC, connecting your wallet, holding a certain token or coin, or reaching a certain point.

Examples of some projects that have used airdrops in recent times. Recall we said airdrops can be given based on bounty i.e., carrying out some task or by holders.

For task performance i.e., the bounty drops, we can see that from the distribution of UNI tokens by the uniswap exchange to their users who have performed any operations such as swapping of coins in the exchange in recent times. Here the eligibility, is as a registered user of the uniswap exchange, performing any swapping activities in the exchange and then getting some portion of UNI for free.

For the holders, we can see a good example of Solana NFT holders where you are given a BONK token based on the worth of the Solana NFT you are holding. So here you become an automatic owner of the BONK token simply because you are holding the Solana NFT.

What is the difference between an airdrop and a giveaway in the field of cryptocurrencies? Explain with concrete examples, including similar initiatives with the Steem token.

From the explanation in question 1 above, I'm sure we understand what airdrops are all about but for the sake of clarity I will still discuss briefly about it and then compare it with giveaways so that we can see the difference between them.

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Cryptocurrency airdrops refer to the free distribution or sharing of cryptocurrency which can be an inform of a coin or token to the crypto community which is you and I. Getting an airdrop has a criteria and the two criteria I see mostly are either through task performance which I call bounty drop or through holders of a particular coin or token.

A crypto airdrop is usually organised by cryptocurrency projects or a blockchain project that wants to create awareness about their products or the taken they are promoting.

A giveaway is similar to an airdrop because it involves the free distribution of coins or tokens to users for specific purposes such as contests, promotions, and many more. When a milestone is achieved by someone, he or she may decide to do a giveaway and he may set criteria also for you to be eligible for the giveaway. So give away can be done by individuals, cryptocurrency project owners, and blockchain projects.

So in summary, both airdrops and giveaways involve the free distribution of coins or tokens. Though airdrops are mainly done by blockchain projects giveaways can be done by even an individual.

Let's take the Steem token as an example. There was no airdrop for the Steem token but we currently have a giveaway going on in the platform in the form of liquid Steem distribution and also vote distribution.

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In Steemit there are contests and this contest has a reward attached to them. When you win a contest, depending on the reward allocated by the contest organizer you will have a giveaway either in the form of Steem, SP, or upvote.

Recently we saw the Quiz which was going on by SC01 where critical questions are asked and if you get the answers correctly, you will receive a whopping upvote. That is a giveaway it is free but you must pass some tasks to get rewarded.

So whichever way the reward comes for being a winner of a particular contest or engagement, it means you have received a giveaway. So that is how the giveaway on Steemit works.

What are the advantages and disadvantages of airdrops for project developers and participants? Use cases involving the Steem token if possible.

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There are many advantages associated with airdrops for both the project developers and the participants of the projects and a few of these advantages can be seen below.

Advantages of airdrops for project developers and participants

Advantages of airdrops for project developers and participants

Creating awareness: One of the major advantage of airdrop is to create awareness to the public about the said project or token which will enable more people to be aware of it and possibly invest in it. We have examples the Steem coffee ☕ project in Indonesia and the Steem electrical in Nigeria where payment when using Steem is cheaper.

Community building: Airdrops helps to build a community of like minds as many who register to participate have become automatic members of the community which also help the project developers to get more ideas from its participants in how to build a stronger community.

Rewards users: The main reason why people join airdrop is to get rewarded for the task they have done. As they get reward, the project also gets visibility because more people are using their products thereby creating more awareness and increasing market capitalisation.

Engagement within the community: When there is airdrop, you will notice engagement within the community and when this discussion is ongoing it keeps the community lively so that project founders can hear from its users and give appropriate feedback since users are always at the receiving end.

In Steemit today we have the engagement challenge were users get rewarded for their quality and quantity interaction with others. It has become one of the criteria to select best picks for an engagement challenge. Also since good comments are as good as a good post, we have seen the Steemit team advising curators to always support good comments as well.

So engagement within ever community is very important for both the participants and the project owners.

Gathering information: Aidrops can help the project organiser to gather information about their users and also design a criteria based on that to distribute the the aidrop. Most times the KYC pattern helps to reduce or eliminate cheats during airdrop and that is why in Steemit today we have introduction post.

There are many disadvantages associated with airdrops for both the project developers and the participants of the projects and a few of these disadvantages can be seen below.

Disadvantages of airdrops for project developers and participants

Not Valued: Since aidrops are free tokens and mostly they are newly minted token recently listed or about to be listed, it may not have much significant value in price and for that reason participant may not value the token given to them making it look worthless.

Decline on price: Since the token is given for free, participants may decide to sell off what they are given immediately and this can lead to the sharp decline in the price of the asset.

Loss of interest in community building: Since most person are only in the community for the airdrop, immediately they receive their aidrops they may decide to live the community because what they came for has been given to them already especially if there is no mechanism to keep them back in the community.

Scam risk: Aidrops always opens participant to risk of scam especially when they start coming up with certain criteria for eligibility or depositing certain amount of a particular token before you can withdraw.

What are the security and regulatory challenges related to cryptocurrency airdrops and giveaways? How can these challenges be managed?

There are many security and regulatory challenge associated or related to cryptocurrency airdrops and giveaway and a few of them is listed below

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Project Clarity: When the project is not clear to the public or its community it becomes a very big challenge because users will always question everything that is going on within the project and people will also be scared to invest because it may be a scam project since their project is not clear.

This is why white paper and road map is very important in any crypto project. When the road map says that the airdrop distribution will take place in 1Q and the listing in 2Q and this doesn't happen as stated without any concrete reason from the project team them it will be tagged as a fake and unclear project.

Road map and white paper and following what the team put inside from the beginning makes the project clear.

Transparency: Another major security and regulatory challenge associated with airdrops and giveaway is transparency. When carrying out an airdrop, the criteria must be clearly spelt out for people to know if they are eligible for it or not during distribution.

When there is no transparency then you will notice that at the dieing minutes, a rule will come out to slash people from getting what they have worked for. So this challenge can only be tackled when project owners who want to do airdrop come out clear and do things for all to see.

Data Privacy issues: Almost every project does KYC this is to eliminate bot and people with many accounts from participating but the issues is if the data collected are safe because many projects have used these data to defraud others.

So these are few challenges we have when it comes to airdrops and giveaway in the cryptocurrency space. Most times regulatory bodies also doesn't allow project companies to perform the activities they are suppose to perform which hinds the steady flow of things with the cryptocurrency space.

How can these challenges be managed?

From the security and regulatory challenge listed above we can deduce how this challenge can be solved. So when we look at clearity of project, it is an important aspect that must be taking into consideration if we want our project to be free of this security and regulatory challenge.

Secondly, transparency of activities within the project and the regulatory body which has been established to keep the events within the airdrop project in check. So everything done must be very clear and open for everyone to see else the project will remain questionable.

Collaboration and data privacy is another part that must be taken into consideration. There should always be an agreement between the project owner and the regulatory team and they should always keep on check the privacy of their customer by ensuring that data of their customers are not licked to the outside world.

Propose a detailed plan to organize an airdrop using the Steem token. The plan should include eligibility criteria, required participant actions, implemented safety measures, and promotional strategies to maximize impact.

Assuming we want to hold an airdrop of the Steem token, the aidrop will be based two criterion i.e., bounty criteria which has to do with performing of certain task and holder criteria which has to do with holding Steem in form of Steem Power (SP).

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So the eligibility criteria to be part of this aidrop can be seen from the table below. These are my set down rules for members to participate in the aidrop just like we have eligibility criteria to apply for certain things in the Steemit platform such booming support, SR, community curators or even the engagement challenge.

Required SP	2,500
Age of account	Atleast 1 year
Club	Atleast club5050
Referral	Minimum of 2
Social	Join Discord and Telegram channels
KYC	ID and facial verification
Binding	Email and Phone
Checking	Daily Checking (earn 20 Steem) and if failed slashed reward by 5%

From the listed criteria above, you will notice that we have eligibility criteria which include having atleast 2,500 SP, age of account must be atleast a year and many more as listed above. For the participant actions, we have the daily checking and verification and also joining social chanbels. For the safety measures, we have the KYC and the binding of mail and phone. Lastly for the promotion strategies we must refer atleast 2 persons.

So before anyone can participate in the Steem aidrop, the criteria can be used. This will help the project to have much regard and because it will firstly scrutinized and be sure that it is given the asset to those who will value it. Also, KYC will eliminate the use of bot and multiple accounts.

Conclusion

Cryptocurrency airdrops and giveaway are major ways which anyone can use to get free asset just by performing certain task and meeting certain criteria. A good example is the one I have presented above. Though it is free but certain things are put into consideration before anyone can get the airdrop.

Finally, I want to invite @msharif, @patjewell and @ripon0630 to also join the contest and share with us their thoughts about crypto airdrops and giveaway.