Token distributions have taken many shapes over the last year. One of the most well-known approaches for broadly distributing tokens is known as an airdrop. An “airdrop” is simply the giving away of a digital asset free of a monetary exchange. Until now, projects have had varying degrees of success with their approaches, with many being launched without deference to US securities regulations. Even so, airdrops stand to be a unique competitive business tool in the new digital economy, and Regulation Crowdfunding offers a compelling, compliant, and viable path to execution. In this report we discuss the: (1) arguments in favor of airdrops and their shortcomings, (2) main types of airdrops we have seen, (3) alternative use cases for airdrops, and (4) legal and technical framework Republic is using for its new airdrop product.
There are many potential benefits to conducting an airdrop, among them: (i) increasing awareness and public exposure of a tokenized product or network, (ii) decentralizing networks, and (iii) bootstrapping new networks or communities.
Airdrops have the potential to increase a project’s visibility and public exposure. The crypto industry has become extremely competitive; making your token shine is challenging. Giving away tokens thrusts access to your product directly into the “hands,” or wallets, of consumers and can grab their attention. In fact, this same strategy has worked well with non-crypto products.
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