#27 Airdrops as the ultimate marketing tool
Optimism launched an airdrop: we look into how this native Web 3 tool can change marketing. Also, Musk's Twitter, Yuga Labs breaks Ethereum, and Telegram Reloaded.
(cheap influencer trick coming…)
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The marketing world is probably one of the earliest adopters of new technological trends, albeit often for the wrong reasons. Marketers will constantly be on the lookout for breakthrough innovations to jump on them and get a few minutes of fame with a whiff of boldness. This brainless approach has often led to clumsy, tone-deaf campaigns.
But there is a lot in store for those brands that a ready to dig a little deeper. Web 3 is an ultra noisy, ultra-competitive sector, where the marketer’s toolkit has expanded thanks to tokens and their ability to disrupt the companies’ and clients’ roles.
When created with honesty and common sense, a project's token can have a lot of uses: they are fundraising tools, help distribute revenue, and fuel decentralized governance. All of them are processes that get people to become much more than passive project consumers.
And that’s exactly what marketing and communication are about. Traditionally, marketing goals will be illustrated by a funnel made of the desired stages a company wants its users to go through. They start with basic awareness - get someone to learn about a brand- and end when that someone has become a happy customer and is now inviting others to do the same.
Tokens have blown this process up because they have redesigned the incentive structure that bonds teams and customers.
Airdrops are among the best examples of these new Web 3 marketing tools worth reviewing. An airdrop involves the distribution of a portion of a token’s supply among the wallets of end users according to specific criteria.
Let’s take a look at the anatomy of a specific airdrop
Two weeks ago, Optimism announced the launch of their token, together with an airdrop that shook crypto.
Before we start: what is Optimism?
Optimism is an Ethereum Layer 2 scalability solution. Layer 2s are projects designed to scale subjacent blockchains, in this case, Ethereum. They bundle and validate transactions independently and then validate those bundles on their base layer. They offer fast and cheap transactions and Ethereum-level security while they un-clog the base layer.
Optimism announced the creation of over 4,2B of the OP tokens, of which 19% will eventually be used for airdrops, although only 5% will be deployed in this first airdrop.
That 5% will end up in wallets that have performed specific actions, like using Optimism’s L2, voting in a DAO governance program, or donating to Gitcoin, a project for open source code contributions.
These actions are behaviors that leave a trace on the blockchain and are therefore visible to everybody. By searching for these behaviors, Optimism gathered over 250,000 addresses that became eligible to receive OP tokens.
Enough about Optimism for now. Let’s get back to the explanation
The magic of airdrops is twofold.
On the one hand, giving the community ownership of the project’s token is the fastest path down the marketing funnel. Tokens, especially when designed to have actual value (monetary value, governance power, or other value accrued), can turn a potential user into a possible advocate in one single move. A brand new token holder is heavily incentivized to help a project thrive.
On the other hand, airdrops offer a goldmine for segmentation thanks to the traceability of on-chain behaviors. Web 2 had already brought a qualitative leap in how brands could target their audiences by going much deeper than in the past in the socio-demographic and taste layers: an advertiser could target someone by gender, age, location, language...but also because of prior social media interaction with a particular brand or because of their browsing history.
On-chain behavior eliminates private data because wallets do not carry any personal information but instead provide full disclosure of every user’s step on a blockchain.
Optimism’s criteria exemplify how a project can reward behaviors based on the project’s principles. This Layer 2 rewards the earliest Optimism users (Optimism users and Repeat OP users). It is also dropping tokens on wallets because of their contribution to DAO governance, open-source code (Gitcoin donors), or because they participated in other L1 activities. Optimism wants to reward people who have actively contributed to Web 3.
The ability to target behavior with this level of detail is unprecedented. For example, marketers can stop guessing what the buyer of a particular brand of shampoo looks like (is it male or female? How old? Where do they make a purchase?) and instead know exactly which wallet did what. And instead of looking for a specific type of content to expose them to (TV ad? Website banner? Coupon?), be able to hit them directly with a token. Tokens instantly incentivize people to dive into a project, engage and learn about it, and potentially become an advocate.
Optimism is saving 14% of their OP supply for future airdrops. And they have already shown their cards in terms of the behaviors they want to promote among crypto users. Act accordingly.
⬡ Six Angles
We select six topics to illustrate the very different angles crypto can be approached from. We could choose dozens, but six is the atomic number of carbon… and otherwise we'd be writing for ages.
1. Twitter | What’s in store for crypto
So Elon Musk is purchasing Twitter, and, as we have learned lately, he will get a little help from crypto friends (Binance, among other crypto savvy companies, is pitching in with some funds to finance the operation).
Musk’s conquest of Twitter has roots in the mogul’s alleged quest for free speech, but it will probably have implications for the crypto world. This is a summary of past and (possible) future events that can hint at where things might go.
Musk before Twitter
Elon Musk bought $1.5B in BTC for Tesla’s treasury and paved the way for other corporations to incorporate crypto into their balance sheet (yes, Microstrategy was first, but they always felt more like an outlier compared to the #1 electric car company in the world)
Tesla temporarily claimed they would accept payments in BTC, although they took it back, claiming environmental concerns. If these concerns were addressed, Tesla would allegedly retrieve this policy.
Musk himself claims to own BTC, ETH, and DOGE, and he has been an open advocate of the latter. Though it might have sometimes felt like a sarcastic take, he has accepted a role on Dogecoin’s board of advisors and included DOGE in Tesla’s merchandise shop accepted payment currencies.
Twitter before Musk
Jack Dorsey, Twitter’s founder, and CEO until just recently, is one of the world’s most open advocates for Bitcoin. And Dorsey fully endorsed Musk’s move on Twitter.
Twitter has been able to process small payments to content creators through Lightning Network (a bitcoin L2) since September 2021, when they launched the Twitter Tips function.
Twitter also launched project Bluesky: Dorsey’s take on decentralized social media. Bluesky announced the purchase of Twitter by Musk would not affect their plans, and they have recently unveiled their first batch of open source code.
More recently, Twitter announced a partnership with Polygon to incorporate payments in the stablecoin USDC.
Twitter after Musk
Musk has spoken only briefly about his intentions and plans for crypto within the Twitter move. But one of the aspects that have raised some interest is Musk’s intention to authenticate all humans. Something that could probably involve the use of crypto.
2. Scalability | Yuga Labs breaks Ethereum with virtual land sale
Yuga Labs continues to make history and walks inexorably towards becoming a 3.0 media franchise. The company is responsible for creating the Bored Ape Yacht Club saga, with Bored Apes, Mutant Apes, and the recent acquisition of blue-chip collections Cryptopunks and Meebits. Together with other landmark NFT projects, they will inhabit Otherside, Yuga Labs’ upcoming metaverse.
Yuga’s last move broke Ethereum. Last week the project launched the sale of Otherdeeds, a representation of the future land in the Otherside metaverse. This 👇
The launch broke Ethereum. The minting process was so massive that it led to an unprecedented gas war which included over $5M in transaction fees for failed purchases.
Yuga Labs was quick to point the finger at Ethereum’s scalability problem, which we all already knew about, and hint at the possibility of eventually creating their blockchain (like Cryptokitties or Axie Infinity before them).
While Yuga is not wrong in its assessment, they are quickly becoming an unpopular brand in crypto. According to some, the smart contracts responsible for the drop were inefficient. And the launch itself had some people frowning because only users who passed a KYC test were whitelisted, something infrequent in crypto.
Maybe this is what mass adoption of crypto looks like. As the major firms start looking more like Disney than Bitcoin, maybe their behavior will be equally disconnected from the ethos of crypto.
3. Institutional investment | Fidelity adds Bitcoin to 401(k) Accounts
Authorities and regulators have often warned the public about the volatility and speculative risk of investing in cryptocurrencies. While it is true that crypto poses certain new threats that were unknown to date, like the problems linked to self-management of funds, there is another important risk to be mentioned about investing in crypto: not doing it at all.
Pension funds worldwide are struggling to safeguard the future purchasing power of their contributors. Crypto brings the possibility to balance a portfolio with an asset that has been the best performing investment asset in history and a defense mechanism against some macroeconomic dangers, such as heavy inflation.
Fidelity has been the first major retirement-plan provider to incorporate bitcoin as an investment asset in their 401(k) accounts.
A 401(k) account is a company-sponsored retirement plan in the U.S. to which employees can contribute income while employers may match contributions (…) Fidelity’s retirement accounts are big business: They held an estimated $2.4 trillion in 401(k) assets in 2020, or more than a third of the market at the time. Fidelity Investments Will Offer Bitcoin Inclusion in Its 401(k) Accounts
Fidelity’s 401(k) are a great display of faith in crypto coming from a humongous financial actor.
4. Macro trends | The different speeds of crypto
Crypto prices have been struggling for months. Ever since the all-time highs in November, the charts show generalized downwards slopes that, on the other hand, rhyme with broader market dynamics, determined by inflation numbers, interest rates, the war in Ukraine, and the supply chain crisis.
Crypto price is calculated to every second. But there are other elements in crypto whose clock moves at a different pace.
VCs and institutional investors keep bringing bullish news to the space. New funds are constantly announced (one more billion here) while the banking industry keeps rolling out new pilot projects that have been probably long months in the making (like Goldman Sachs’ first bitcoin-backed loan)
Brands keep dropping by crypto as the most exciting road for innovation. The FIFA World Cup has closed an agreement with Algorand to be its blockchain of choice, while Starbucks announces the launch of NFTs for 2022.
While crypto pricing responds to world events in real-time, the slower-paced trends show no sign of stopping—quite the contrary.
5. Bitcoin | Central African Republic to accept bitcoin as legal tender
The Central African Republic has recently become the second country to accept bitcoin as legal tender within its borders. It’s a country of less than 5 million in population and hardly has an 11% internet reach.
On the other side of the Atlantic Ocean, Panama is also making pro-bitcoin moves. This 4,3M people country is moving towards accepting bitcoin as payment, although commerces are not obliged to accept it. It is also giving legal status to DAOs.
In the meantime, things don’t look too good where it all started. Bitcoin is struggling to gain traction in El Salvador despite its legal status. The country’s bond program is meeting difficulties, and users are abandoning the use of the currency once the initial rewards have dried out.
These are all steps of little significance for crypto in the short term. The economic footprint of these countries is often smaller than that of big corporations. Also, maximalism should not prevent people from seeing the big picture: for the time being, the nation-sized experiments are still underwhelming.
6. Mass adoption | Telegram strikes back
Telegram has been the silent overperformer in the social media race lately. While Instagram continued to rule and TikTok made the noise of an upcoming rocket, Telegram continued adding users to its ranks by luring everybody who felt disenfranchised on other platforms like Facebook or Whatsapp.
Recently, Telegram revamped its Toncoin project. Back in the ICO era, Toncoin was one of the most hyped projects: Telegram, a web 2 giant, was launching a proprietary blockchain paired with a token, the gram. A communications platform with millions of users making payments through their phones was the roadmap to crypto’s promised land of instant, borderless, decentralized payments.
Soon enough, though, the Toncoin project was halted by regulatory pressure, among quite some controversy surrounding the opaque Telegram team.
But stealth is one of Telegram’s most outstanding traces. So can Telegram start silently winning the crypto adoption race too?
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