The Growth Hack of the Century – Will AirDrops and Bounties Work for STO’s?

Bounties and AirDrops were arguably the greatest growth hack of all time.  Based on token valuations created by ICO projects, billions of USD has been distributed across thousands of projects and have been used to pay a huge army of online talent.


The concept hasn’t received nearly enough credit, and no doubt it’ll be a topic in university marketing courses in years to come.


Create a token and print your own money. Distribute it to digital nomads to promote your project on social media, create and translate content, find software bugs, and even pitch your project at an event. With the help of your new global market team, launch your ICO and raise millions.


It worked, and very well, many times.

It’s Still Going Strong

AirDrop

An airdrop is a process of dropping free tokens into hundreds, thousands, even millions of crypto wallets. In 2018 well known project Stellar announced a $125m airdrop of their utility token.


The advantage for the recipient is free tokens. The advantage for the air-dropper is kick starting usage with their token, not to mention publicity they gain if they deliver through partners who manage wallets for millions of people.

Bounty

Running a bounty (or rewards) campaign can be admin intensive for the project team, however it engages thousands of people. Every tweet, retweet, like, or post is valued and paid for in tokens.


Whilst the effects for a token sale aren’t immediately apparent, the online engagement, such as hundreds of likes per tweet, does benefit website ranking and create noise.

Why did it work for ICO utility tokens?

Utility tokens can be transferred to anyone with a crypto wallet that supports that token. Providing the token didn’t represent any value and was only a utility, it wasn’t a problem. If you transferred airmiles to a family member you wouldn’t expect a financial regulator to have a problem, the same principle applied to utility tokens.


In the early days, crypto communities were like underground music scenes. You supported the project, you supported the team, you believed in the tech, and you promoted them. This was Open Source v2.0 where the community got something back. Projects like Lisk raised 15,000 BTC with this method.

What Changed?

Bounty hunting became a cheap industry. Bounty hunters became bot farms, and the real people “freelanced” across dozens of bounties. The grassroots support for projects was lost, and it became a job.


The US financial regulator, who deems every utility token as a security has taken notice. In the case of Tomahawk they “issued tokens through a “Bounty Program” in exchange for online promotional services.”

Why won’t it work for STO’s and their security tokens?

A business cannot distribute securitized assets to random people. As the crypto industry has recently become very aware, KYC/AML is a necessary regulatory requirement to stay out of jail. You can’t just pay people with equity from your company.

Is there any benefit for an STO?

If you take away the hype, pump, dump, and crap, there are definitely huge benefits as long as it’s managed and controlled. For example, AirBnB plan to distribute equity to hosts. The application of a security token here is perfect:

  • All hosts are KYC checked
  • There are tens of thousands of hosts
  • Distribution, governance, and management can be automated
  • It creates a genuine incentive system

Could it ever work?

If we extract the best part from bounties which is “sharing value and rewarding your community”, yes, it could. From marketplace models who mass reward their communities

How might it work?

We may see agencies providing accredited and legal friendly rewards platforms that pull together large numbers of bounty hunters (community members) to promote projects. 


However, there are likely to be costs associated with this as the provider will need to vet all content, similar to how Facebook and Google approve ads. Marketing agencies will need to ensure they are not seen to be promoting financial securities.


Whilst this may be a lucrative business model in the future, for now mass adoption and commoditization is required.

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