Are Airdrops Effective Marketing? | Nasdaq

Airdrops. That magical term seems to excite crypto users and spark endless discussions about on-chain interaction. In recent years, airdrops have added significant liquidity into the crypto market and took numerous promising projects to new heights. Today, it’s common to say we’re entering into “airdrop season” as a number of new and existing protocols and projects on chains including Ethereum layer 2s, Solana and Cosmos look to build engagement by promising or hinting at an airdrop.

But have you ever wondered why airdrops have gained such popularity in the saturated crypto space? Why do they work so effectively amidst other fleeting trends? What even defines a well-executed airdrop campaign?

See also: What’s an Airdrop?

At its core, airdrops tap into our universal fascination with getting something for “free.”

However, there’s more at play here than just receiving something for nothing. In reality, airdrops are not truly “free.” They are distributed as rewards for actively participating in the growth of a crypto project or blockchain ecosystem. In other words, they cost your time and attention.

The question is, how can an airdrop keep receipients engaged? Beyond appealing to our desire for financial rewards, ideally, airdrops also trigger our sense of belonging to a community.

The brilliance of using airdrops as an effective marketing strategy lies in their dual functionality at the top of the funnel stage, a term used in marketing to describe the journey a consumer goes on before making a purchase. Airdrops serve as an entry point, introducing users to new projects and platforms.

See also: JUP Token Soars After Massive $700M Jupiter Airdrop

However, the objective extends beyond just acquiring users, as airdrop campaigns can be designed to retain user engagement and liquidity even after a token launch.

For instance, staking mechanisms further solidify a token holder’s connection to a project by encouraging long-term investment. Furthermore, strategically incorporating staking mechanisms into airdrops can improve tokenomics by controlling the circulating supply, thereby supporting token prices in the highly volatile crypto markets.

To retain these users, though, a project must complement its initial offering with an engaging user experience. By rewarding users who stake their…