The innovative marketing approach of 'Airdrips'
Welcome to this week’s edition of the RHIZOME Wire!
Introducing Airdrips
If you’re reading this newsletter right now, you’re probably involved enough in the ICON community to know about the many hints Min Kim dropped last week about the possibility of future airdrops within the ICON community.
During the week following these initial tweets, there was a lot of speculation and inquiry regarding just what the airdrop might be, who would receive it, and when it might happen.
Well, we finally got answers to some of those questions:
While the “airdrop” concept is nothing new to cryptocurrency, the “Airdrip” approach seems a lot more (if not entirely) unique.
Before we get into the full analysis, I’d like to bring up a quote that Ricky Dodds made earlier this month:
With hindsight, it’s hard to ignore the fact that this was an allusion to the airdrip news that was to come. But it’s important to look at exactly what Ricky is saying here (and to read between the lines a bit) within a broader context.
As you likely know by now, ICON has a number of DeFi protocols coming down the pipeline. On their own, there’s already a decent amount of interest in using these protocols.
But what’s the best way to get even more people to use something that’s not necessarily intuitive to understand and utilize? Well, you financially incentivize them to do so.
That’s where these airdrips come in.
First, some of the details for the Balanced airdrip, excerpted from the announcement article:
The first drip will drop one week after Balanced launches
Delegated ICX holders can claim their Balance Tokens from the Balanced website
The more ICX you have delegated, the more you can claim
If you don’t claim your Balance Tokens each week, you’ll lose them
Unclaimed tokens are added to the next weekly drip
To participate, you must be delegating from a wallet that you control the private key or keystore file (ICONex, MyIconWallet, etc.). If not, the staking platform you are using (i.e. Binance, ICONFI, etc.) must announce support
In my opinion, the most important part of this is the fact that users must claim their BALN tokens from the Balanced website every week. That means potentially thousands of users will be visiting the platform’s website on a regular basis. That’s some nifty marketing on its own.
But it gets even better than that.
If you aren’t aware of what the Balance token is, it means you haven’t yet read my Guide to ICON DeFi yet. In part 2 of that series, I take a look at Balanced, and spend some time talking about the Balance token:
So what is the value of the Balance token?
Most prominent in the eyes of many will be the fact that Balance token holders are entitled to a portion of the fees that the protocol generates, to be split pro-rata amongst qualified Balance Token stakers and paid on a weekly basis. Balanced will also use a portion of the fees to be set aside into a DAO fund managed by BALN holders.
However, simply holding the tokens doesn’t entitle you to a share of these rewards:
An important caveat to point out is that simply holding the Balance token doesn’t entitle you to fees. If you own Balance tokens, you must hold them in a wallet that also has debt in the Balanced network. In other words, only users of the Balanced protocol will be able to receive the benefits of the Balance token.
So we now have (potentially) thousands of people who will be receiving BALN tokens. It’s likely these tokens will have worth on the open market (since they have the potential to earn fees and also provide governance rights), but if you’d like to earn income from them, you’ll have to actually use the Balanced protocol to earn your dividends.
That means potentially thousands of BALN holders are now financially motivated to use the Balanced protocol.
By now, DeFi products are fairly ubiquitous in the cryptocurrency space, albeit mostly confined to Ethereum. Accordingly, with so many options out there, you can’t just build it and expect users to flock to it out of sheer curiosity. There has to be a financial incentive of some sort to lure in users initially (which is why we saw so many platforms over the summer offering crazy and unsustainable yields).
By adding this incentive and helping to ensure there is plenty of demand to use the protocol, ICON and Balanced are ensuring that the “total value locked” (TVL) — a key metric toward measuring the popularity and growth of DeFi protocols — is high from the very start. A high level of TVL is in itself its own form of marketing.
The fact that Balanced and ICON are attempting to reach and integrate users who may be complete DeFi novices and that they’ve created such a unique approach to doing so is impressive.
While many in the community were urging the ICON team to deploy 2017 marketing tactics like paying YouTube influencers, behind the scenes the team was coming up with a marketing approach far more fit for 2021 than 2017.
And it’s likely the party won’t end with Balanced. With other DeFi platforms coming (including some unannounced projects), we evidently haven’t seen the last of the airdrips:
Buckle up.