Why airdrop cryptocurrency tokens?

Abstract: A cryptocurrency token airdrop is a novel means of distributing rights over a blockchain project to a community of users and owners for free. The market value of these airdrop giveaways is often upwards of hundreds of millions of dollars. This paper considers why projects might choose this unusual and costly means of token distribution. It considers a selection of high-profile airdrops as case studies between 2014 and 2022. This is the first comprehensive analysis of the rationales and mechanisms of Web3 token airdrops. We find that two primary rationales for airdrops are marketing (to attract new users and to maintain a community) and decentralisation of ownership and control of a project (building community, providing regulatory protection, and enhancing security). The paper contributes to an understanding of business practice and strategy in the emerging cryptocurrency and blockchain industry.

Author(s): Darcy W. E. Allen, Chris Berg, Aaron M. Lane

Journal: Journal of Business Research

Vol: 163 Year: 2023 Article: 113945

DOI: 10.1016/j.jbusres.2023.113945 and manuscript version at SSRN

Cite: Allen, Darcy W. E., Chris Berg, and Aaron M. Lane. “Why Airdrop Cryptocurrency Tokens?” Journal of Business Research, vol. 163, 2023, article 113945.

1. Introduction

In November 2021, the Ethereum Name Service, an application built on the Ethereum blockchain, gave cryptocurrency tokens to its users that had an imputed market value of more than USD $660 million. In March 2022 the non-fungible token project Bored Ape Yacht Club gave away tokens with an imputed market value of more than USD$2 billion. These token giveaways, known as ‘airdrops’, are common in the cryptocurrency and blockchain industry. In an airdrop, potentially valuable digital tokens are distributed to recipients for free, with no exchange of funds, and with no (or little) expectation of reciprocal action other than that required to claim the airdrop. With the extraordinary value that seems to be routinely given away in airdrops, this paper asks: why do projects airdrop cryptocurrency tokens?

To answer this question, we analyse 12 high-profile and diverse airdrops as case studies, beginning with the first notable airdrop, Auroracoin in 2014, to the Optimism airdrop in May 2022. Our case studies have been selected based on their capacity to reveal a wide variety of airdrop structures and their rationales. The blockchain projects attached to these airdrops are themselves heterogenous, representing different parts of the Web3 stack including: layer 1 blockchains, layer 2 scaling protocols, as well as applications and organisations built using these infrastructures. Airdrops have been used in layer 1 blockchains at the base of the Web3 stack (e.g., Decred), layer 2 protocols that have emerged on top of layer 1 infrastructure blockchains to solve scaling problems (e.g., Optimism), at the application layer (e.g., Osmosis, Uniswap), as part of decentralised autonomous organisations (e.g., BanklessDAO), and in non-fungible token-based communities (e.g., Bored Ape Yacht Club). Our aim is to identify the scope of rationales and mechanisms of such token airdrops.

While airdrops are a novel economic mechanism, there are some parallels with some common business practices and strategies in multisided markets, such as sharing economy businesses like the ridesharing service Uber. Platform businesses that match buyers and sellers rely on network effects for their value (Rochet and Tirole 2003; Munger 2018). Firms that seek to establish a new network face what Chen (2021) calls the “cold start problem”. This problem is how to bring participants onto both sides of the network in a quantity that allows the platform to benefit from network externalities. One common strategy is to cross-subsidise one or more sides of a multisided market (Parker et al. 2016; Chen 2021). For instance, the revenue from one side of the market (or from investor capital) could be used for discounts for buyers (e.g., free postage, sales), or benefits for sellers (e.g., sign-up bonuses, guaranteed minimum earnings). These cross-subsidies can help achieve sufficient network size (i.e., a desired number of different sides of the market on the platform), generating a ‘moat’ from competitors. The scale of these subsidies can be as large or larger than the airdrops considered in this paper; Uber spent USD $2 billion on rider- and driverside incentives in 2015 alone (Isaac 2019).

The parallel between Web2 platform subsidies and Web3 airdrops is illuminating, but there are at least three differences between these strategies. First, subsidies for sharing economy firms are fiat currency denominated expenditures. Airdrops of tokens, as we will see, have more similarities to equity than cash. Airdropped tokens also often have associated ownership and governance rights; thus the closer parallel would be akin to subsidising drivers with Uber stock.

Second, the structure of Web3 airdrops differ from the Web2 subsidies. One major structural difference is the connection between using the product and receiving the benefit. Web2 subsidies are often contingent on (and paid at the same time as) direct use of the platform. By contrast, Web3 token airdrops aren’t always contingent on use of the platform, and are often received at a different point in time. Indeed, as Goforth (2019, p. 324) describes, an airdrop is “a distribution of a cryptocoin or token in a manner that requires no or very little effort from the recipient and involves no exchange of tangible consideration in the form of fiat or other cryptocurrencies”. While there are notable exceptions to this (such as the task-based airdrops discussed in Section 3), Web3 airdrops demonstrate more structural diversity than Web2 subsidies. Some Web3 airdrops are deployed on the basis of past activity on other platforms or protocols (e.g., OSMO airdrop based on ATOM), which don’t necessarily require a history of using the platform paying for the subsidy. Other airdrops are distributed for past platform use (sometimes termed “retrospective airdrops” such as Uniswap and dYdX). These airdrops, however, do not directly incentivise future behaviour in the same way Web2 economy subsidies do, partly because they reward past behaviour.

Third, as we will see throughout this paper, the set of revealed rationales for Web3 airdrops is more expansive than Web2 platform subsidies. While Web2 subsidies tend to specifically focus on sparking network effects between participants of a multisided market, in Web3 there are several rationales for airdrops that don’t focus on network effects – including creating liquid markets for the token, decentralising governance and regulatory arbitrage (see Section 4 below).

So, what are airdrops for? After considering what characterises cryptocurrency and blockchain tokens (Section 2) and providing an overview of the 12 airdrops considered in this paper (Section 3), we divide the two dominant rationales for airdrops into marketing and decentralisation. While many commentators describe airdrops as primarily for marketing (e.g., Casey 2018), we find that marketing (Section 4.1) is a weak rationale for airdropping tokens and the evidence of successful marketing-driven airdrops lacking. Airdrops are most effective at facilitating decentralisation. We distinguish between three purposes of decentralisation: community building, regulatory protection, and creating cryptoeconomic security. We further consider an additional two rationales for airdrops: creating public markets (Section 4.3) and as tax advantaged income for project creators (Section 4.4). In Section 4.5 we consider a secondary puzzle in airdrop distribution: why airdrops are distributed retrospectively. Section 5 concludes.

2. What is a token?

A token is a tradeable digital asset that exists on a distributed ledger (usually a blockchain) that is controlled by a private cryptographic key (Voshmgir 2020). While the tokens discussed in this paper have a wide variety of technical and economic characteristics, broadly speaking we can distinguish two general categories. The first category consists of tokens that natively form part of the consensus mechanism of the underlying blockchain. The most prominent of these are Bitcoin and Ethereum. The miners, or validators, of these blockchains, are rewarded for mining a successful block by being issued newly minted tokens (BTC and ETH respectively). This means that the supply of tokens at the time of the genesis of the blockchain is significantly less than the supply in the long run, even if the rate of new issuance reduces over time (see Voshmgir 2020, Eliason 2022a). Typically (although not always) these tokens are the means of payment for transaction fees for their blockchain – that is, the tokens provide some utility to the user (see Eliason 2022b).

The second category consists of tokens that are created as smart contracts on top of smart contract-capable blockchains. A smart contract is a contract-like agreement enforced in code (Szabo 1997; De Filippi and Wright 2018; Werbach 2018; Allen et al. 2019). The code specifies the design of the token and mechanisms such as how the token can be transferred between accounts. While there is great variety in the ways smart contract tokens can be designed, in practice they conform to a relatively limited set of standards, such as Ethereum’s ERC-20 or the Cosmos ecosystem’s ICS-20, in order to use shared infrastructure (Cuffe 2018). Unlike native chain tokens, smart contract tokens are commonly minted with a fixed supply at genesis (although some tokens also have an issuance rate) which is then distributed to stakeholders and reserved for future uses. Often the reserves of those smart contract tokens are placed within a collective treasury of digital assets. These treasuries are governed through processes such as token holder voting or through more formal not-for-profit foundations. One common strategic use of these tokens is for ecosystem incentives, including using tokens to subsidise new users to use a core product (on token economics, see Voshmgir 2020). Using tokens for ecosystem incentives became closely associated with the 2020 ‘defi summer’, where many decentralised finance (DeFi) projects competed through ecosystem incentives (e.g., see Uniswap, Compound, YAM Finance).

From an institutional economics perspective, Berg et al. (2019b) identify tokens as a hybrid of debt and equity; what Williamson (1988) first conceptualised as ‘dequity’. Tokens are a financing form that is equity-like insofar as it denotes ownership, but also debt-like as (can be) governed by firm rules that bind agents. As Berg et al. (2019b, p. 87) outline, this means that tokens “can both finance specific assets and be themselves specific assets. Tokens can be governed by smart contracts that have the same rules-set as debt.” The distinctions between tokens, equity, debt and money are outlined in Table 1 below, adapted from Berg et al. (2019b, p. 87), along the dimensions of asset specificity and whether the assets are rules-based.

Table 1

	Are the assets rules-based?
	Yes	No
Are the assets specific?	High	Tokens	Equity
Are the assets specific?	Low	Debt	Money

To describe a token as a deputy instrument does not imply that any given token is ontologically equidistant from debt or equity. Rather, protocol designers can build tokens that have more or less equity-like or debt-like characteristics. Many tokens give the holders explicit governance rights over the protocol, such as determining how products should be upgraded, new products rolled out, or managing the shared treasury, and facilitate token voting in order to do so (Allen et al. 2019; Beck et al. 2018; Voshmgir 2020). Similarly, the rules that bind agents can be more-or-less strict.

What rights do tokens give their owners? Policymakers and regulatory authorities have focused on describing the rights accumulating to token holders through a regulatory lens (e.g., Biden 2022; Gensler 2022). Exercises in taxonomy or “token-mapping” have been conducted at a high-level in response to perceived gaps or regulatory uncertainty in the application of securities laws to Web3 tokens, following the boom in Initial Coin Offerings in 2017. For example, in 2019 the United Kingdom’s Financial Conduct Authority issued regulatory guidance that distinguished between “exchange tokens” (essentially decentralised cryptocurrencies where holders have the right to exchange for another token), “utility tokens” (where token holders have rights to access a current or future product or service) and “security tokens” (where token holders have rights akin to traditional financial instruments and equities) (Financial Conduct Authority 2019). Similarly, in 2020, the European Union’s Markets in Crypto Assets proposed regulatory framework distinguishes between different kinds of “crypto-assets” for different types of regulatory treatment, including “e-money tokens”, “asset-referenced tokens”, and “utility tokens” (European Union 2020). One area that these taxonomies have overlooked is the governance rights that flow from holding tokens.

In many cases, tokens represent membership and governance rights in Decentralised Autonomous Organisations (DAOs). DAOs are digital communities that coordinate the ownership and activity of the protocol itself (Wright and De Filippi 2015; Sims 2019; Zargham and Nabben 2022; Hassan and De Filippi 2021). Recently DAOs have been used not just to govern protocols (e.g., a DeFi protocol), but also as an organisational structure to coordinate joint investments (e.g., ConstitutionDAO, Flamingo DAO), cultivate social communities (e.g., FWB DAO), or fund research and grant activities (e.g., GitcoinDAO, VitaDAO).

Governance tokens are a mechanism to coordinate collective choices in DAOs. Most directly, governance tokens have voting rights attached that enable the holder to vote on core decisions, or to delegate to other decision makers. Those decisions include appointing committees and working groups (e.g., a treasury diversification group), voting on major protocol upgrades (e.g., changes in fee structures), or treasury spending proposals (e.g., grants programs) (e.g., see Mosley et al. 2022, van Pelt et al. 2021). Tokenholders can use tokens to express their preferences, sometimes in unique ways, such as quadratic voting models (Buterin et al. 2019) or time-weighted voting mechanisms (Berg et al. 2020). Some protocols that have DAO governance tokens have nonetheless sought to adopt a “governance minimisation” approach that favours autonomous process and control rather than token holder voting where possible (Ersham and Robinson 2020).

Cryptocurrency tokens, including those with governance rights, must be distributed to various stakeholders. Putting aside distribution through the consensus process (e.g., block rewards or validator rewards), tokens are regularly distributed to the founding team, and through a private sale (e.g., to a Venture Capital investor) and a public sale (e.g., an auction to retail investors, sometimes referred to as an Initial Coin Offering or Initial Exchange Offering). Often the tokens sold privately or to retail investors are vested (locked-up) for periods of time (before the holder can access, transfer, or sell their tokens). As we see in the following case studies, a common alternative token allocation mechanism is through an airdrop. As our airdrop case studies demonstrate, these airdrops can play a role in marketing, decentralisation, creating public markets, and provide tax advantages.

3. Case studies

3.1. Research design and case studies

The website Airdrop Alert lists more than 2,300 past token airdrops, which is likely to be an underestimate. Many airdrops are trivial, and many tokens fail to create sustained long-term endeavours. In addition to failed projects and unsuccessful airdrops, there are airdrops which can be uneconomical for their recipients or even malicious. One widelyreported airdrop in January 2022, wtf.fees, required claimants to pay a claim fee to receive the token and an associated NFT, earning a revenue for the creators of the token from the act of airdropping. It also imposed a royalty on any subsequent transfers of the token. A more malicious approach is the common cyberattack where an attacker airdrops into wallets tokens that have malicious code or which require users to interact with a malicious website in order to redeem or sell those tokens.

In this paper, we aim to answer the core question of: why airdrop cryptocurrency tokens? We answer this question using case studies – an empirical methodology that investigates contemporary phenomena indepth and in-context (Yin, 2018). Case studies are particularly useful in exploratory research where the goal is to generate new insights and theories (Yin, 2018). This methodology is appropriate given our focus on cryptocurrency as a new and emerging technology. In our study, the research design focused on providing a diversity of airdrops and multiple sources. The selection of cases was based on several factors including: (1) airdrop date (seeking to draw cases over a wide period of time); (2) airdrop structure (seeking to include a wide range of
structures such as large and small, retrospective and task-based airdrops); (3) availability of open-source and publicly available data (seeking airdrop cases that have robust secondary sources available); and (4) the nature of the associated project (seeking cases that include Layer 1 blockchains, DAOs, applications and Layer 2 scaling solutions). Ultimately, we selected 12 airdrop case studies for analysis.

In Table 2 below we detail the size of the airdrops in both USD dollar value and as a percentage of the total minted supply of the token. The tokens Auroracoin, Decred, Osmosis and Evmos each had an issuance after the initial minting of the token. The word ‘premine’ refers to the amount minted before permissionless mining is launched. Bitcoin launched without a premise, which meant that every BTC in existence has been mined after the genesis block. Retrospective refers to airdrop criteria that are based on use of the project, platform or product in the past.¹

3.2. Data analysis

Table 2: Notable token airdrops, 2014–2022

Project	Initial airdrop date	Airdrop as percent of total supply	Approx. airdrop USD value (as at)²	Retrospective?
Auroracoin	Mar 2014	50% (100% of premine)	$63,653,455 (25 Mar 2014)	No
Decred	Dec 2015	4% (50% of premine)	$1,879,080 (28 Feb 2016)	No
Livepeer	Apr 2018	63%	$6,150,822 (12 Dec 2018)	No
Stellar	Nov 2018 and Sep 2019	1%	$50,700,000 (Nov 2018 – Sep 2019)³	No
Uniswap	Sep 2020	15%	$1,034,595,000 (18 Sep 2020)	Yes
Bankless DAO	May 2021	30%	$29,678,700 (5 May 2021)	Yes
Osmosis	Jun 2021	5% (50% of premine)	$230,500,000 (28 Jun 2021)	No
dYdX	Sep 2021	7.5%	$882,750,000 (9 Sep 2021)	Yes
Ethereum Name Service	Nov 2021	25.125%	$660,787,500 (9 Nov 2021)	Yes
Evinos	Mar 2022 and Apr 2022	10% (50% of premine)	$384,990,000 (4 May 2022)	No
Bored Ape Yacht Club	Mar 2022	15%	$2,007,000,000 (19 March 2022)	Yes
Optimism	May 2022	5%⁴	$341,557,274 (1 June 2022)	Yes

3.2.1. Auroracoin

Auroracoin is a cryptocurrency that was intended to act as a national currency for Iceland, launched in March 2014. Auroracoin was launched in the wake of the Icelandic economic crisis, and was explicitly intended as a private sector alternative to Iceland’s krona, which its creators argued was a ‘ruined currency’ caused by excessive monetary stimulus (Cawrey 2014). Auroracoin was built on a fork of Litecoin and was the first recorded airdrop. The airdrop was available to Icelandic citizens using Iceland’s national registration system as an identity management tool (Odinsson 2014). Auroracoin was imitated by a range of other ‘national cryptocurrencies’, with names like SpainCoin, GreeceCoin, ScotCoin, MapleCoin, launched by independent groups unaffiliated with their national central banks (Kristof 2015). None of these national cryptocurrencies have seen wide adoption.

3.2.2. Decred

Decred is a Bitcoin fork that implemented a hybrid proof-of-work and proof-of-stake consensus algorithm (Jepson 2015). It offered a novel approach to governance that involves voting on the blockchain itself (known as on-chain voting). The Decred chain was built during the Bitcoin governance crisis (De Filippi and Loveluck 2016; Allen and Berg 2020; Bier 2021), where disputes between stakeholders in Bitcoin about whether to expand the size of blocks and thereby increase the throughput of the network exposed the apparent control that block miners had over Bitcoin governance. Launched in 2015, the Decred airdrop required users to apply to be eligible by providing valid email addresses, online profiles and “a description of why the participant was interested in Decred or how they intended to contribute to the project” (Decred n.d.).

3.2.3. Livepeer

Livepeer is a decentralized video-sharing network (Petkanics and Tang 2017). Livepeer allows broadcasters to direct distribute live video content on a peer-to-peer basis through a set of users called “transcoders”. Livepeer uses the Ethereum blockchain to secure the LPT token, and a second consensus layer where transcoders play the role of validating in a delegated proof of stake network. Livepeer airdropped 63 per cent of its total supply that could be claimed by any account on the Ethereum blockchain with at least 0.1 ETH as of March 2018. In order to increase the uptake of the airdrop, after an initial three month period, third party users were able to claim on behalf of others’ accounts and received a fraction of the airdrop for doing so (Petkanics 2018).

3.2.4. Stellar

Stellar is a cryptocurrency focused on fast and low cost transactions. The Stellar network launched in 2014 and uses a federated Byzantine agreement consensus algorithm (Mazières 2016) rather than proof-ofwork or proof-of-stake. Stellar conducted two airdrops, both more than three years after the Stellar token, XLM, had been released and was trading on public markets. The first airdrop occurred between November 2018 and July 2019, where 400 million XLM were given to users of the wallet company Blockchain.com. A second airdrop occurred when 100 million XLM were given to users of the secure messaging application Keybase in September 2019 (Coin Metrics 2019).

3.2.5. Uniswap

Uniswap is a decentralised exchange built on the Ethereum network using a novel automated market making mechanism allows users to swap between two assets through a pool of assets owned by third party liquidity providers. The Uniswap protocol was first launched in November 2018. Throughout the 2020, Uniswap came to be a major part of the decentralised finance (‘defi’) ecosystem in Ethereum. In September 2020, a competitor SushiSwap forked the Uniswap source code, launched a SUSHI token, and used that token to incentivise liquidity provision in a way that threatened to draw liquidity away from Uniswap. Uniswap responded by launching its own token, UNI, just seven days after that launch. The UNI airdrop was distributed retrospectively to liquidity providers, users who had swapped assets, and holders of a SOCKS token, a tradeable token that could be redeemed for real world socks (‘UniSocks’).

3.2.6. Bankless DAO

Bankless DAO is a major online cryptocurrency focused media company that produces podcasts, newsletters and other media. In May 2021 they announced they were planning to launch a DAO built on Ethereum independent of the private company that ran Bankless media, stating that “Only an internet-native organization is capable of growing an internet-scaled revolution, and thus we need a Bankless DAO to take the reins of the bankless revolution” (Bankless DAO 2022). A retrospective airdrop was established for Bankless subscribers, donors to Bankless through the Gitcoin donation system, and holders of related Bankless non-fungible tokens (NFT). The Bankless media organisation was not allocated tokens directly in the establishment of the DAO. Instead, they requested a grant of 25 per cent of the BANK tokens once the DAO had been established (Adams 2021).

3.2.7. Osmosis

Osmosis is a distributed exchange in the Cosmos ecosystem. Osmosis
is its own ‘sovereign’ proof-of-stake blockchain that interfaces with other blockchains through the interblockchain communication protocol (Goes 2020). Osmosis led the business launch of this interoperability protocol that had been developed by engineering teams in the Cosmos ecosystem. The OSMO airdrop established the existence of the Osmosis chain and gave away 50 per cent of the initial allocation. In the Tendermint proof-of-stake model used by Osmosis, new issuance will dilute that initial premine such that it approaches asymptotically a maximum issuance of 1 billion tokens. The Osmosis launch was distributed to users who had staked the Cosmos Hub token, ATOM, and required claimants to perform a series of on-chain activities, including staking, providing liquidity, voting in governance, and making a trade, in order to claim the full amount.

3.2.8. dYdX

dYdX is a decentralised exchange on the Ethereum network that specialises in lending and perpetual margin trading. dYdX was launched in 2017, and in 2021 migrated to a layer 2 chain built on Ethereum to reduce the costs of operating on the main Ethereum chain. The launch of the dYdX token occurred more than four years after its first launch, and accompanied the creation of a dYdX Foundation. The airdrop was a combination of retrospective and task-based. In order to qualify for the airdrop, a claimant had to have interacted with dYdX in the past, and the amount of DYDX tokens available scaled depending on how much value the user had traded. However in order to claim their tokens, users had to make additional trades on the platform within the first 28 days of the airdrop announcement (dYdX Foundation 2021).

3.2.9. Ethereum Name Service

The Ethereum Name Service (ENS) is a name system for Ethereum account addresses. ENS allows users to purchase a human-readable name (appended with a.eth top-level domain), similar to a domain name, and link it to their account address. It was first deployed on Ethereum in May 2017. The ENS airdrop in November 2021 was intended to restructure the Ethereum Name Service project as a DAO and was primarily distributed to users who had purchased a.eth address. An additional 0.125 per cent of the total token allocation was also airdropped to users who had been particularly active on the Ethereum Name Service Discord platform (Millegan 2021b). The ENS airdrop required claimants to digitally sign a ‘constitution’ that set out the core principles of the DAO, such as “will not enact any change that infringes on the rights of ENS users to retain names they own, or unfairly discriminate against name owners’ ability to extend, transfer, or otherwise use their names” (Millegan 2021a). In addition, claimants had to nominate a delegate who would vote on their behalf in the DAO.

3.2.10. Evmos

Ermos is a smart contract blockchain in the Cosmos ecosystem that uses Ethereum’s Virtual Machine (EVM). The Evmos airdrop was distributed to holders of Cosmos ecosystem tokens as well as users of Ethereum protocols. The latter strategy was called the ‘rektdrop’, and targeted those who had been ‘rekt’ by high fees on Ethereum, had used high-cost cross-chain bridges, and those who had been victims of smart contract exploits or high-profile fraudulent projects (Tharsis Labs 2021). In order to claim the airdrop, users also had to conduct a series of tasks on the Evmos blockchain. Evmos first launched in March 2022 but had to halt shortly after in the face of technical problems and while only a fraction of those eligible had claimed their airdrop. It was relaunched in April 2022.

3.2.11. Bored Ape Yacht Club

The Bored Ape Yacht Club is a non-fungible token (NFT) art project. The Bored Ape Yacht Club (BAYC) is a high profile NFT project whose individual NFTs trade (as of September 2022) for at least USD$100,000. In March 2022, the firm that created BAYC, Yuga Labs, released a token to instantiate a DAO, Apecoin, and airdropped it to holders of the BAYC NFT and its spinoff, Mutant Ape Yacht Club. One unusual feature of the Apecoin airdrop was that it allowed anyone who held a BAYC NFT at the time of interaction with the airdrop smart contract to claim APE. This meant that anybody could quickly buy a BAYC NFT, claim the APE airdrop and sell both the NFT and APE (Barda et al. 2022). Using the technique common in defi of a ‘flash loan’ (Chandler et al. 2022; Wang et al. 2021), some claimants were able to execute this entire trade in single block.

3.2.12. Optimism

Optimism is a layer 2 rollup blockchain built on the Ethereum network. The high cost of Ethereum transactions has led to the creation of new blockchains that focus on fast computation and use the Ethereum network as settlement infrastructure for security. The Optimism blockchain was launched in July 2021 and has attracted a number of large defi protocols that had previously been deployed on the Ethereum mainnet. In May 2022 it released its OP token by airdrop. The airdrop was distributed to former users of Optimism, as well as users who were considered to be active contributors to the Ethereum ecosystem. These included: Gitcoin donors, users who had voted in prominent Ethereum DAOs, and users who had been on multi-signature wallets. In addition users who had interacted with bridges to cheaper blockchains while continuing to transaction on Ethereum were also eligible. In order to receive the airdrop, claimants had to accept the Optimism constitution and nominate a DAO delegate.

4. Findings: Rationales for airdrops

In this section we reveal a range of the rationales for airdrops. We summarise these rationales in Table 3 below, before providing further detailed analysis.

Table 3: Summary of findings

Airdrop Rationale	Description
Marketing	Marketing to existing and potential users is the most cited rationale for airdrops. Marketing rationales include both: Task-based airdrops to incentivise use of the product Airdrops acting as a defensive marketing strategy against close substitute projects.
Decentralisation	Airdrops typically occur in projects that seek to have decentralised governance, and decentralisation occurs in three primary ways: Airdrops help build a decentralised community by distributing ownership across many addresses. Airdrops can be used as part of a strategy towards regulatory compliance (e.g., an airdrop to demonstrate “sufficient decentralisation”) Airdrops can distribute ownership of the native token, which in proof-of-stake style networks can provide economic security against attack.
Creating Public Markets	Many projects seek to provide liquid markets for their tokens. Airdrops can be part of a strategy to provide public liquid token markets for a token, including for the purpose of price discovery.
Tax Advantaged Income	While there remains significant uncertainty around the taxation of tokens and other digital assets, one rationale for preferring airdrops over alternative forms of token distribution is to achieve tax advantaged income

4.1. Marketing

The most cited rationale for airdrops is that airdrops are a Web3native marketing technique. Casey (2018), for example, argues that airdrops are an expense incurred to inculcate a “favorable awareness” for a project. Similarly, Goforth (2019, p. 325) contends that the motive of some airdrops is to “generate awareness of the new asset” and as a “virtually free way to generate marketing.” Industry descriptions of the purpose of an airdrop echo this explanation. On the website of the cryptocurrency portfolio tracker CoinGecko, Lee (2022) argues that airdrops create a community around the project, and encourage users to conduct more in-depth research on a project than they otherwise would. Airdrops attract users to a protocol that would have otherwise not dedicated their time to learning about that protocol. Fröwis and Böhme (2019) contend that airdrops are deployed with “the intention to raise popularity and reach critical mass”, hinting at the relationship between airdrops and the desired network effects in sharing economy platforms. Furthermore, Makridis et. al. (2021) “find that airdrops are positively associated with growth in volume and there is suggestive evidence that they are most effective for DEXs”.

Stellar’s 2018 and 2019 airdrops to Keybase and Blockchain.com users was the prototypical marketing-driven airdrop. The protocol had been launched nearly four years earlier, and the airdrops were explicitly described as a method of bringing customers to both the Stellar network as well as Keybase and Blockchain.com (De 2018). For example, the Keybase community was seen as a useful target for marketing because while they were presumed to be security-conscious as early adopters of an end-to-end encryption product, they weren’t necessarily part of a cryptocurrency community. For Keybase, the airdrop would hopefully bring new users to their platform (Foxley 2019). In the light of later ‘retrospective’ airdrops – that is, airdrops which are distributed to former or existing users of a project – this joint need for marketing created complexity (we discuss this below). A significant difficulty in permissionless systems is ensuring that users do not create multiple identities (Douceur 2002; Donath 1998). While airdropping XLM to existing Keybase users would solve this ‘sybil resistance’ problem, it would do little to encourage new users of Keybase. Ultimately the airdrop used a range of authentication methods (SMS, GitHub accounts, etc) to try to verify that recipients had a unique identity.

While airdrops are commonly thought to be a marketing strategy primarily, the marketing intention is less clear upon close reading. Only a few of the major airdrops profiled in this paper were dominated by obvious marketing motives. The Stellar network and its XLM token had been established for four years when it released its airdrop, and the choice of claimants was explicitly intended to expand the range of Stellar users and tokenholders. This was particularly in the case of airdropping to Keybase users, who were using a cryptographically secured messaging service but may not have been interested in or had cause to interact with cryptocurrency. While Stellar sparked significant attention (Foxley 2019; De 2018; Casey 2018), the effectiveness of the Stellar airdrop as a marketing strategy is doubtful. An analysis by Coin Metrics (2019) suggests that only a fraction of eligible claimants of the Stellar airdrop claimed their XLM (only 20% of Keybase users did so) and of those who did, more than half sent their tokens to an exchange. This implies that those airdropped tokens were immediately sold.

While the Stellar airdrop is an example of a clearly motivated marketing airdrop, we need to be more precise about the purpose of marketing a token. For Evmos, the airdrop was used as a means to advertise desirable qualities of the protocol to groups that were particularly sensitive to those qualities. One of the categories of users for participation in the rektdrop were users of a select range of applications who are known as significant users of Ethereum’s transaction fee (‘gas guzzlers’). Users who had paid most for gas on Ethereum received proportionally higher EVMOS tokens. While Evmos made no promises about gas costs on its own platform, low gas costs on other Tendermint consensus chains implied that they would be much lower than Ethereum.

Bauer (2019) provides an alternative interpretation of airdrops as a form of marketing that avoids regulatory and quasi-regulatory bans on traditional marketing. The ban on advertising initial coin offerings imposed by social media platforms such as Facebook has limited the channels through which projects can find buyers of a token at an initial coin offering (for some discussions on initial coin offerings, see Adhami et al. 2018; Li and Mann 2018; Howell et al. 2020). Airdrops provide a direct-to-consumer mechanism to advertise a protocol. However it is difficult to map this interpretation to the experience of airdrops prior and subsequent to the publication of Bauer (2019). At the first instance, the (implied) extremely high expenditure of tokens would seem to be counterproductive if the goal of marketing was to expose possible buyers to an initial coin offering. More critically, none of the case studies discussed above are clearly tied to a formal initial coin offering. While the release of a token through an airdrop typically leads to the establishment of a public market (we discuss public markets below) whether on a centralised or decentralised exchange, airdrops are not used to directly fund development (although tokens held by the developers may enjoy capital gain as a result of their airdrop which can be then sold to fund development).

However, the case studies illuminated above suggest two mechanisms through which projects can achieve their marketing goals: by using task-based airdrops to obtain users to a protocol, and to keep existing users on a protocol in an environment where close-substituting competitors have emerged.

An early example of a task-based airdrop was the Osmosis airdrop in June 2021. The airdrop was targeted at users who were staking the tokens of the Cosmos blockchain. The launch of the Osmosis blockchain, a decentralised exchange on its own independent blockchain, was also the establishment of the Cosmos cross-blockchain interoperability model, the Interblockchain Communication Protocol (Kwon and Buchman 2016; Frey 2017; Goes 2020) and the first IBC connection was between the Cosmos Hub and Osmosis. The main feature at launch of the Osmosis blockchain was an automated market maker structured similarly to Uniswap, where buyers and sellers trade through an automatically rebalancing liquidity pool of tokens owned by liquidity providers (for discussions on automated market makers, see Mohan 2020; Zhang et al. 2018; Angeris et al. 2019; Angeris et al. 2022). To claim the airdrop, users were required to make a swap between two tokens using the Osmosis exchange facility, to stake the OSMO token, to provide liquidity to an Osmosis pool, and to vote on a governance proposal. As each task was performed, an additional amount of OSMO would be provided to the user (Lorax 2021). The dYdX and Evmos airdrops had a similar mechanic. The effect of this task-based airdrop model is to familiarise users with the suite of product offerings. Additionally, by requiring recipients to stake a fraction of their token and lockup funds in a liquidity pool, the Osmosis airdrop reduced the likelihood that all received tokens would be immediately sold.

A second marketing goal for airdrops identified in the case studies is to defend against competition. UniSwap’s airdrop was driven by the need to defend against a near-perfectly substituting competitor, SushiSwap. The SushiSwap project differed only from UniSwap by the use of the SUSHI token as a reward mechanism for liquidity providers (and the initial level of liquidity on the platform). UniSwap’s launch of UNI was a defensive manoeuvre in order to reduce the possibility that
users and liquidity providers would migrate to SushiSwap. Another example is Optimism, a general purpose layer 2 blockchain that uses the Ethereum blockchain as a settlement layer. While few layer 2 blockchains have their own token, in 2023 Arbitrum released their token, and it is widely speculated within cryptocurrency communities that close competitors (e.g., ZkSync) will also release a token. Optimism’s airdrop in May 2022 can be seen as a pre-emptive attempt to gain user loyalty. The release and distribution of a token gives users an ownership stake that might add to customer retention.

4.2. Decentralisation

The innovation in Bitcoin in 2009 was the creation of a distributed database that allowed for permissionless (Nabben and Zargham 2022) validation, thus facilitating a socio-technical system where control is decentralised among many agents rather than concentrated in a single agent (Berg et al. 2019b; Berg 2022). Decentralisation has several desirable characteristics for blockchains and smart contract protocols. These can include mechanistic benefits such as protection against cybersecurity attacks and regulatory control, but also social benefits such as the creation of a community of supporters and developers that might contribute towards the project. In this section we examine how those decentralisation goals have evolved.

4.2.1. Building a community and creating a DAO

In almost all the airdrops studied, the creation of a distributed and decentralised community of token holders has been an explicit goal. Indeed, as Werbach (2018, p. 186) argues, airdrops “raise no money at all; they are purely designed to get tokens into the hands of users.” However, the mechanisms by which they have sought to do so has changed significantly. The first airdrop considered in this paper, the attempt at an Icelandic national currency AuroraCoin, was explicitly intended to create a community around the new token. Claiming the AuroraCoin airdrop required Icelandic citizens to simply visit a claim website and provide their national identification number. While this model is simple (and the existence of Icelandic national identification makes it sybil-resistant at the expense of privacy) there was nothing in the airdrop to encourage the creation of a community of token holders. Similarly the LivePeer and Stellar airdrops did not build in communitydevelopment mechanisms.

A more sophisticated attempt to create a community of contributors was shown in the Decred airdrop in 2015. By requiring recipients to declare their interest in or desire to contribute to the Decred project, as well as linking that to social media profiles, Decred was explicitly making potential community engagement a threshold requirement to qualify for the airdrop: “getting coins into the hands of people who are interested in participating in the project” (Decred n.d.).

The adoption of the decentralised autonomous organisation as an institutional form has led to a substantial focus on community engagement for airdrop design. While the first decentralised autonomous organisation was arguably The DAO in 2016, DAOs as an organised structure became more prominent after the creation of the first significant decentralised finance protocols in 2019 and 2020. The Bankless DAO provides an interesting case of airdropping to create a community. The Bankless DAO was established as an experiment in community initiative with no initial control exercised by the company that established the Bankless Media podcast. As claim eligibility was dependent on being a subscriber to Bankless Media products, this provided a degree of sybil-resistance (see Liu and Zhu 2022 on sybil attacks). A similar case is the Apecoin airdrop, which created the ApeCoin DAO out of holders of the Bored Ape Yacht Club NFT. Each airdrop considered here, after and including the Uniswap airdrop, has created a DAO that gives token holders governance rights.

A more recent evolution of the community creation has been to require airdrop claimants to vote on a proposed DAO ‘constitution’. A number of scholars have considered blockchains and decentralised

applications to be constitutional in nature (Alston 2019; Alston et al. 2022; Berg et al. 2019a; 2019b). These DAO constitutions are by contrast written and non-deterministic constitutions that seek to establish a purpose and philosophical core of the DAO that informs decisionmaking (see Tan et al. 2022). The ENS constitution consisted of statements such as “name ownership shall not be infringed”, emphasising the implied rights of ENS name holders, as well as setting out principles by which the DAO and the ENS product would be economically governed (“Fees are primarily an incentive mechanism”). The Optimism constitution was more complex again, consisting of both philosophical statements and structure of governance, such that claimaints were signing up to a specific structure of decisionmaking within the DAO. A similar innovation pursued by both ENS and Optimism has been to have token claimants ‘delegate’ their tokens to governors, as a form of ‘liquid democracy’ or ‘cryptodemocracy’ (Behrens et al. 2014; Allen et al. 2019).

4.2.2. Regulatory compliance

Decentralisation is a strategy to ensure regulatory compliance and limit regulatory enforcement action against companies and individuals behind Web3 projects. In the United States, for example, the Securities and Exchange Commission (SEC) is the primary regulatory agency charged with enforcing US securities laws. Since 2017, the SEC has taken over 80 separate enforcement actions against what it describes as “fraudulent and unregistered crypto asset offerings and platforms” (Securities and Exchange Commission 2022). One of the ways that Web3 businesses will be captured by US securities laws is if the Web3 token issuance is considered an “investment contract.” An investment contract consists of four elements known as the ‘Howey test’⁵ being where (i) a party invests money (ii) in a common enterprise (iii) with the expectation of profit (iv) based on the efforts of a third party. Whether Web3 tokens meet the Howey test has been the subject of much legal scholarship (e.g., Hacker and Thomale 2018; Henning 2018; Henderson and Raskin 2019). The upshot of this analysis is that if a Web3 asset is sufficiently decentralised it will not meet the “efforts of a third party” element of the Howey test and therefore securities regulations will not apply. That is because it is the protocol and governance mechanisms from token holders that control the operation of the project, not the founders, developers or other third parties. To be sure, there remains a high degree of regulatory uncertainty for Web3 assets – not just in the US but globally – and each project must be assessed on its merits. Nevertheless, in this frame, an airdrop is one mechanism for founders to avoid the ambit of securities laws by providing decentralisation from the moment the protocol launches.

4.2.3. Security

A further intent for bringing about decentralisation through airdrops is establishing sufficient security in proof of stake networks. This is an explicit design choice in each of the proof of stake network airdrops considered here – Decred, Osmosis, and Evmos. In proof of stake networks, users stake their tokens to participate in the validation of the network. While implementation of staking models differs significantly (in Ethereum, users have to stake 32 ETH or use a third party liquid staking service, while in Tendermint chains like Osmosis and Evmos users delegate their stake directly to validators) the underlying principle is that having a large amount of tokens locked up in staking provides economic protection against an attack on the network. Tendermint’s classical byzantine fault tolerant system is considered secure when two-thirds of tokens to be staked, preventing any outside single actor from adding fraudulent transactions.

For proof of stake networks, airdrops solve the dilemma of how to bootstrap a secure network. The largest proof of stake chain, Ethereum, began as a proof of work chain and, having been in public markets for seven years before the transition to proof of stake, had significant decentralised ownership as a result. Blockchains which establish themselves as proof of stake chains have cryptoeconomics requirements to bring about decentralisation as soon as possible. Airdropping significant token volumes at the instantiation of the network offers a degree of protection against opportunistic behaviour from early stakeholders, whether those stakeholders are validators or the project’s developers. Decred’s hybrid proof of stake/proof of work model created a dilemma where proof of work miners could exert control over the proof of stake system. As DCRtheSoV (2019) notes “airdrop recipients were a decentralizing force and were able to protect the network, ensuring neither the developer or miners had undue influence”.

Decred’s approach to rewarding existing contributors and filtering recipients by potential contribution potentially limited the decentralisation that their airdrop could bring. Both Osmosis and Evmos’ airdrops used the token ownership records of older more established blockchains to create decentralisation. Osmosis airdropped tokens to Cosmos Hub token stakers, as well as putting a cap on the maximum OSMO tokens that any single address could claim, relying on the older chain’s more distributed ownership. By airdropping tokens to both stakers across the Cosmos ecosystem (including Osmosis stakers) and users of Ethereum protocols, Evmos was able to gain even greater decentralised ownership upon launch.

4.3. Creating public markets

Prior to the launch of a token there are no reliable market prices for those tokens. While in pre-launch there may be prices that private investors have paid for their allocations, the forces of supply and demand are not leveraged for ‘price discovery’. To facilitate price discovery (and liquidity for investors), projects must create public markets for the token (i.e., where parties are able to buy and sell the token). Options to create public markets include running an auction (e.g., a Gnosis auction), providing liquidity into a pool on a decentralised exchange (including liquidity of a paired asset), using novel pool mechanisms for price discovery (e.g., liquidity balancer pools), or use centralised platforms (e.g., listing on CoinList or on a centralised exchange). These approaches have varying capacity to generate liquid markets, facilitate price discovery, and reduce unwanted volatility.

Airdrops are often part of the strategy of creating public markets. Often an airdrop occurs at a similar time to the formation of public markets. There are several reasons why airdrops help to create public markets. At the outset, airdrops increase circulating supply, leading to potentially deeper interest and liquidity in public markets. Those people who receive an airdrop might engage in associated public markets, both in terms of buying or selling the token, and providing liquidity into liquidity pools. Indeed, as outlined in the Osmosis airdrop case study, some projects explicitly require participants to provide liquidity as a condition in claiming an airdrop (likely increasing the number of airdrop recipients who provide liquidity). While an airdrop might increase the potential liquidity of a public market, these dynamics are unpredictable – sometimes with airdrop participants producing significant supply pressure.

4.4. Tax advantaged income

A further, albeit speculative, purpose of airdrops is tax minimisation. The taxation of airdrops varies by jurisdictions but in some jurisdictions airdropping tokens to contributors and users at the origin of a project can be highly tax advantageous. The Australian Taxation Office (ATO) provides a useful example. In September 2022 the ATO revised its previous guidance about the taxation of airdrops distinguishing between “initial allocation” airdrops and airdrops of tokens which already existed in public markets. All but one (Stellar) of the airdrops considered here would be considered initial allocation airdrops. This guidance stated that if an initial allocation airdrop was issued for free they should be considered as capital assets with a capital gains cost base of $0, rather than as income priced at the time of claiming. While in Australia any capital gains will (usually) be taxed at the marginal income rate when the airdropped tokens are sold, this could potentially offer significant benefits. It is not immediately clear whether this guidance would apply to protocol developers and early contributors. Further research here is needed, as the absence of case law and tax determinations makes this motive for airdrops uncertain but possible.

4.5. Why airdrop retrospectively?

In Table 2 we identify airdrops that are distributed retrospectively that is, which are distributed to users based on their previous use of an existing protocol. Of course, all airdrops are retrospective in some way. However we are distinguishing between retrospective rewards for individuals who have directly contributed to the development of the protocol (such as developers or community managers) and retrospective rewards for simply using the protocol. The former may have done so in the explicit or implied understanding that they would receive tokens for their otherwise uncompensated work. The latter (unless they are “airdrop farming” – using a protocol in order to speculative claim an uncertain airdrop in the future) have no such claim – for example, by making a swap or providing liquidity to a decentralised exchange, as was the case in the Uniswap airdrop.

Retrospective airdrops are on the face of it a puzzle. Rewarding previous users of a protocol provides no additional incentive for new users who are critical to business growth. Retrospective airdrops do not meaningfully help resolve the cold start problem. One example of this dilemma playing out dramatically is the Stellar airdrop to Keybase, where Keybase wanted the airdrop to attract additional users itself. One could also argue that the Apecoin airdrop similarly illustrates the problem, although it appears that the failure to take a snapshot of BAYC holders before the airdrop was released (hence sparking a contest to acquire NFTs to qualify for the airdrop) was human error rather than by design. Likewise, a retrospective airdrop would seem to offer little marketing benefit as the relevant users are already familiar with the protocol.

Our analysis provides an explanation for otherwise confounding retrospective airdrops. If the purpose of an airdrop is to create or reinforce a community – as it was most clearly with Uniswap, dYdX, Bankless DAO, Bored Ape Yacht Club, ENS, and Optimism, and arguably (if we draw the relevant community wider to the Cosmos ecosystem) with Osmosis and Evmos – then rewarding users for past engagement is rational, particularly given those previously engaged users are likely to continue to engage if they feel ownership over the protocol.

5. Conclusion and implications

Token airdrops are a peculiar feature of the cryptocurrency and blockchain industry. This paper has provided an analysis and explanation for their existence. Airdrops create decentralised communities, provide (possible) regulatory protection, and in some cases contribute to the security of a protocol. While some airdrops have been used for marketing blockchains and their applications, early attempts to harness airdrops for marketing seem to have failed. More recent task-based airdrop claiming processes have been more effective at familiarising potential users with blockchain services. We also considered two additional purposes for airdrops: the creation of public markets and tax advantaged income; the latter of which remains speculative given regulatory uncertainty.

Through our case study analysis, we have demonstrated that airdrops are a prominent feature of the cryptocurrency industry. We have also shown that over time the ways that airdrops have been structured have evolved, including a range of different approaches from retroactive airdrops to more targeted airdrop criteria. The extremely high notional value of airdrops has no doubt attracted many users to cryptocurrency
more generally but that does not imply for any given project that their goals have been achieved through airdrops, certainly relative to other mechanisms for distributing cryptocurrency like private and public sales, subsidising beneficial behaviour to spark network effects, and distributing tokens to insider groups. Our analysis shows the ways that projects have improved airdrop effectiveness relative to goals – taskbased airdrops and DAO constitutions are the most obvious examples – but these will no doubt continue to evolve. As an institutional technology, blockchains and their associated technologies provide a rich menu for innovation, including for token allocation and distribution methods.

While our research contributions in this paper are largely empirical, there are several theoretical and managerial implications. Blockchain networks are complex socio-technical systems (Nabben and Zargham 2022). Research into the social science of Web3 has been deeply interdisciplinary, drawing on economics (e.g., Catalini and Gans 2020; Berg et al. 2019a, 2019b), management (e.g., Whitaker and Kräussl 2020), political science (e.g., Allen et al. 2019), law (e.g., De Filippi and Wright 2018) and ethnography (e.g., Rennie et al. 2022). We contribute to this literature by clarifying the diversity of rationales for airdrops, which have variously sought to develop markets, drive economic flywheels, market the product, decentralise, and generate financial security. Our contributions therefore can direct and align with theory in the field of the social science of blockchain.

More specifically, our work contributes to the growing literature on the implications of Web3 on marketing, advertising and brands, including in the creative industries (for an overview, see Malik et al. 2022). There is growing research interest on the role of NFTs in creating digital brand assets (e.g., Colicev 2022, Hofstetter et al. 2022), the role of advertising in building Web3 businesses (e.g., Kim 2021), the relationship between the characteristics of Web3 networks (e.g., trust) and marketing practitioners (Tan and Saraniemi 2022). Related to this are the concerns around consumer data and privacy in Web3 networks (Tan and Saraniemi 2022). Some of these concerns may be mitigated through further technological advances in airdrop designs (e.g., see Wahby et al. 2020; Treiblmaier and Petroshitskaya 2023).

Our research also has implications for the emergence of sharing economy-based business models in Web3, including marketing in the sharing economy (e.g., see Eckhardt et al. 2019). While Web2 sharing economy business models relied on fiat subsidies to drive network effects, we have demonstrated a wider variety of tools for the purposes not just of marketing, but also decentralisation, creating public markets, and tax advantaged income. We anticipate an entrepreneurial process of using airdrops in Web3 sharing business models. One implication of this is to mitigate some of the concerns of the centralised nature of Web2 platforms and their relationship to users, including in the ethical marketing literature (e.g., see Tan and Salo 2021, Freeman et al. 2007). Indeed, some of these concerns might be mitigated through airdrops and the nature of tokens as ownership rights over sharing economy protocols.

Added to these theoretical implications are the implications of our findings for managers and practitioners in Web3. Our findings contribute insights into effective airdrop design. We provide clarity for builders who are considering implementing an airdrop into their Web3 business models. Further research (as described below) might comparatively analyse the effectiveness of airdrops of achieving their stated rationale. These analyses could include various trade-offs in airdrop designs (e.g., eligibility criteria, timing, size) in achieving their objectives.

There are three main limitations of our research, each of which presents opportunities for future research. First, our sample is limited and may be subject to selection bias. We selected a diversity of case studies in terms of airdrop structure, the availability of secondary data, and their launch date. Both because many projects fail, and because we have only selected a portion of successful projects, this limits the generality of our findings. Future research could mitigate these problems through further case studies, including failed airdrops. This extension could also include complementing our approach with alternative methods and data sources (see below).

Second, we have focused on secondary data sources for our analysis. While one benefit of the Web3 environment is that many decisions are public (due to the transparent and open nature of the communities), there are also various off-chain governance processes that are not contained in public record. Future research could more deeply reveal the rationales of airdrops through alternative methods, such as ethnographic analysis (e.g., see Nabben 2020; Rennie et al. 2022) as well as more traditional survey-based methods of analysis.

Third, our research has focused on the public documentation and statements of the entrepreneurs and Web3 networks who have integrated airdrops into their projects. The other major stakeholders in airdrops are the recipients of the airdrops (i.e. the users of the project). A future research opportunity in this area includes analysis of the perceptions and behaviours of airdrop recipients, to better understand the effect of these new tools. One method for this analysis includes experimental research of alternative airdrop designs.

References

Adams, Ryan Sean. 2021. “Bankless DAO Genesis Proposal.” BanklessDAO (blog). May 4, 2021. https://medium.com/bankless-dao/bankless-dao-genesis-proposal-18c24c 484405.

Adhami, S., Giudici, G., & Martinazzi, S. (2018). Why Do Businesses Go Crypto? An Empirical Analysis of Initial Coin Offerings. Journal of Economics and Business, 100 (November), 64-75. https://doi.org/10.1016/j.jeconbua.2018.04.001

Allen, Darcy W. E., and Chris Berg. 2020. “Blockchain Governance: What We Can Learn from the Economics of Corporate Governance.” The Journal of The British Blockchain Association, March, 12455. https://doi.org/10.31585/jbba-3-1-1812020.

Allen, D. W. E., Berg, C., & Lane, A. M. (2019). Cryptodensocracy: How Blockchain Can Radically Expand Democratic Choice. Polycentricity: Studies in Institutional Diversity and Voluntary Governance. Lanham: Lexington Books.

Alston, E. (2019). Constitutions and Blockchain: Competitive Governance of Fundamental Rule Sets. Case Western Reserve Journal of Law, Technology & the Internet, 11(4).

Alston, E., Law, W., Murtazashvili, I., & Weiss, M. (2022). Blockchain Networks as Constitutional and Competitive Polycentric Orders. Journal of Institutional Economics, 1-17.

Angeris, G., Chitra, T., & Evans, A. (2022). When Does The Tail Wag The Dog? Curvature and Market Making. Cryptoconomic Systems, 2(1). https://doi.org/10.21428/ 58320208 .e5eb07ce

Angeris, Guillermo, Hsien-Tang Kao, Rei Chiang, Charlie Noyes, and Turun Chitra. 2019. “An Analysis of Unisway Markets,” 25.

Bankless DAO. 2022. “Announcing Bankless DAO.” BanklessDAO (blog). May 6, 2022. https://medium.com/bankless-dao/announcing-bankless-dao-1332205eb20.

Barda, Dikla, Roman Zaikin, and Oded Vamunu. 2022. “AirDrop Process of ApeCoin Cryptocurrency Found Vulnerable, Led to Theft of Millions of Dollars in NFTs.” Check Point Research. March 19, 2022. https://research.checkpoint.com /2022/airdrop-process-of-apercoin-cryptocurrency-found-vulnerable-led-to-th eft-of-millions-of-dollars-in-nfts/.

Bauer, B. S. (2019). Airdrops: ‘Free’ Tokens Are Not Free from Regulatory Compliance. University of Miami Business Law Review, 28(2), 311-357.

Behrens, J., Kistner, A., Nitsche, A., & Swierczek, B. (2014). The Principles of LiquidFeedback. Interactive Demokratie.

Berg, Chris. 2022. “Reliable Systems out of Unreliable Parts.” ALTI Amsterdam, July 27, 2022. https://alti.ansterdam/berg-blockchain/.

Berg, Chris, Sinclair Davidson, and Jason Potts. 2019a. “Blockchains as Constitutional Orders.” In James M. Buchanan: A Theorist of Political Economy and Social Philosophy, edited by Richard E Wagner. Palgrave Macmillan.

Berg, Chris, Sinclair Davidson, and Jason Potts. 2019b. Understanding the Blockchain Economy: An Introduction To Institutional Cryptoconomics. Edward Elgar Publishing.

Berg, C., Davidson, S., & Potts, J. (2020). Commitment Voting: A Mechanism for Intensity of Preference Revelation and Long-Term Commitment in Blockchain Governance. SSRN Electronic Journal. https://doi.org/10.2139/tern.3742435.

Biden, J. 2022. ‘Executive Order on Ensuring Responsible Development of Digital Assets’. Executive Office of the President, 9 March. https://www.whitehouse.gov/briefing-own/prezidential-action/2022/03/09/executive-order-on-ensuring-responsible-de-velopment-of-digital-assets/.

Bistr, J. (2021). The Blocksize War: Independently Published.

Boterin, V., Hitzig, Z., & Glen Weyl, E. (2019). A Flexible Design for Funding Public Goods. Management Science, 65(11), 5171-5187. https://doi.org/10.1287/ mmsc.2019.3337

Casey, Michael J. 2018. “Airdrops Are a Marketing Fboy (And That’s OK).” Coindesk, November 12, 2018, sec. Markets. https://www.coindesk.com/markets/2018/11/ 12/airdrops-are-a-marketing-fboy-and-thate-ok/.

Cawrey, Daniel. 2014. “Auroracoin Airdrop: Will Iceland Embrace a National Digital Currency?” CoinDesk, March 24, 2014, sec. Markets. https://www.coindesk.com/ma rkets/2014/03/24/auroracoin-airdrop-will-iseland-embrace-a-national-digital-curr ney/.

Chandler, Brad, Patrick Stiles, and Jared Blinken. 2022. “Defi Flash Loans: What ‘Atomicity’ Makes Possible – Why Does This Innovation Not Already Exist in Traditional Finance?” SSRN Scholarly Paper. Rochester, NY. https://doi.org/ 10.2139/rsrn.4116909.

Chen, A. (2021). The Cold Start Problem: How to Start and Scale Network Effects. New York, NY: Harper Business.

Coin Metrics. 2019. “Coin Metrics’ State of the Network: Issue 18.” Substack newsletter. Coin Metrics’ State of the Network (blog). September 24, 2019. https://coinmetrics. substack.com/p/coin-metrics-state-of-the-network-5d7.

Colcew, A. (2022). How Can Non-fungible Tokens Bring Value to Brands. International Journal of Research in Marketing.

Catalini, C., Gans, J.S. 2016. “Some Simple Economics of the Blockchain”, NBER Working Paper Series.

Cuffe, Paul. 2018. “The Role of the ERC-20 Token Standard in a Financial Revolution: The Case of Initial Coin Offerings.” In : IEC-IEEE-KATE. https://researchrepository. ied.ac/handle/10197/9974.

DCRtheSoV. 2019. “Decred’s Airdrop Explained.” Medium. December 28, 2019. https://medium.com/gl/dcrthegroot/decreds-airdrop-explained-2681c587c779/.

De Filippi, Primavera, and Benjamin Loveluck. 2016. “The Invisible Politics of Bitcoin: Governance Crisis of a Decentralized Infrastructure.” Internet Policy Review 5 (3).

De Filippi, Primavera, and Aaron Wright. 2018. Blockchain and the Law: The Rule of Code. Harvard University Press.

De, Nikkilesh. 2018. “Crypto Wallet Firm Blockchain to Airdrop $125 Million in Stellar.” CoinDesk, November 7, 2018, sec. Markets. https://www.coindesk.com/markets /2018/11/06/crypto-wallet-firm-blockchain-to-airdrop-125-million-in-stellar/.

Decred, n.d. “Premine.” Decred Documentation. Accessed September 1, 2022. https://docs.decred.org/advanced/premine/.

Donath, J. S. (1998). Identity and Deception in the Virtual Community. In Communities in Cyberspace (pp. 27-58). London: Routledge.

Doucour, J. B. (2002). The Sybil Attack. In International Workshop on Peer-to-Peer Systems (pp. 251-260). Springer.

dYdX Foundation. 2021. “Introducing DYDX.” DYdX Foundation. August 4, 2021. https://dydx.foundation/blog/intraducing-dydx-tokes.

Ersham, F., Robinson, D. 2020. Governance Minimization. Fred Ersham blog. 28 November, Available at https://lehrsam.xyx/blog/governance-minimization.

Eckhardt, G. M., Houston, M. B., Jiang, R., Lamberton, C., Rindfleisch, A., & Zervas, G. (2019). Marketing in the sharing economy. Journal of Marketing, 83(5), 5-27.

Elison, Nat. 2022a. “Tokenomics 102: Digging Deeper on Supply”, Almanack, March 6. https://every.in/almanack/tokenomics-102-digging-deeper-on-supply.

Elisson, Nat. 2022b. “Tokenomics 103: Utility”, Almanack, 11 April, https://every.in/al manack/tokenomics-103-unility.

European Union. 2020. “Proposal for a Regulation of the European Parliament and of the Council on Markets in Crypto-Assets.” https://data.consilium.europa.eu/doc/docum ent/97-13198-2022-INIT/en/pdf.

Financial Conduct Authority. 2019. “Guidance on Cryptoassets: Feedback and Final Guidance to CP 19/3.” Financial Conduct Authority. https://www.fca.org.uk/public ation/policy/ga19-22.pdf.

Foxley, William. 2019. “Stellar to Give Away 2 Billion XLM Valued at $120 Million Today.” CoinDesk, September 10, 2019, sec. Markets. https://www.coindesk.com/inmarkets/2019/09/09/stellar-to-give-away-2-billion-xlm-valued-at-120-million-today/.

Frey, Ethan. 2017. “IRC Protocol Specification v0.3.1.”.

Freeman, R. E., Martin, K., & Parmar, B. (2007). Stakeholder capitalism. Journal of Business Ethics, 74, 303-314.

Frïwis, Michael, and Rainer Böhme. 2019. “The Operational Cost of Ethereum Airdrops.” ArXiv:1907.12383 [Cd]. July. http://arxiv.org/abs/1907.12383.

Gensler, G. 2022. ‘The SEC Treats Crypto Like the Rest of the Capital Markets’. Wall Street Journal, 19 August.

Goes, Christopher. 2020. “The Interblockchain Communication Protocol: An Overview,” 20.

Goforth, C. R. (2019). It’s Raining Crypto: The Need for Regulatory Clarification When it Comes to Airdrops. Indian Journal of Law and Technology, 15, 321.

Hacker, P., & Thomale, C. (2018). Crypto-Securities Regulation: ICOs, Token Sales and Cryptocurrencies under EU Financial Law. European Company and Financial Law Review, 15(4), 645-696. https://doi.org/10.1515/eurb-2018-0021.

Hasson, S., & De Filippi, P. (2021). Decentralized Autonomous Organization. Internet Policy Review, 10(2), 1-10.

Henderson, M. T., & Rankin, M. (2019). A Regulatory Classification of Digital Assets: Toward an Operational Howey Test for Cryptocurrencies, Icos, and Other Digital Assets. Columbia Business Law Review, 2019(2), 445-495.

Henning, J. (2018). The Howey Test: Are Crypto-Anets Investment Contracts? University of Miami Business Law Review, 27(1), 51.

Hohreiter, R., de Bello, E., Brandes, L., Clegg, M., Lamberton, C., Refinstein, D., Zhang, J. Z. (2022). Crypto-marketing: How non-fungible tokens (NFTs) challenge traditional marketing. Marketing Letters, 33(4), 705-711.

Howell, S. T., Nienner, M., & Vermack, D. (2020). Initial Coin Offerings: Financing Growth with Cryptocurrency Token Sales. The Review of Financial Studies, 33(9), 3925-3974. https://doi.org/10.1093/rfs/bfsz131

Isaac, M. (2019). Super Pumped: The Battle for Uber (1st edition). New York, NY: W. W. Norton & Company.

Jepson, Christina. 2015. “Decred Technical Brief.”

Krinol, A. (2015). National Cryptocurrencies. In Handbook of Digital Currency (pp. 67-80). Elsevier. https://doi.org/10.1016/8978-0-12-802117-0.00004-7.

Kim, Joeyoung (2021). Advertising in the Metaverse: Research agenda. Journal of Interactive Advertising, 21(3), 141-144.

Kwon, Jae, and Ethan Buchman. 2016. “Cosmos Whitepaper.” https://v1.cosmos.net/wo k-resources/whtepaper.

Lee, Ian. 2022. “What Is A Cryptocurrency Airdrop And How Does It Differ From An ICO?” CoinGocks (blog). January 11, 2022. https://www.coingocks.com/learn/wh at-is-cryptocurrency-airdrop-and-how-does-it-differ-from-an-ien.

Li, J., & Mann, W. (2018). Initial Coin Offering and Platform Building. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3088726

Liu, Zhong, and Hongyang Zhu. 2022. “Fighting Syblis in Airdrops,” September. https:// doi.org/10.48550/arXiv. 2209.04603

Loras, J. D. 2021. “OSMO Airdrop Walkthrough.” Osmosis (blog). June 19, 2021. https ://medium.com/osmosis/comm-airdrop-walkthrough-ar50zh5bh0596.

Makridis, Christos, Michael Froewis, Kiran Sridhar, and Rainer Böhme. 2021. “The Rise of Decentralized Cryptocurrency Exchanges: Evaluating the Role of Airdrops and Governance Tokens.” SSRN Scholarly Paper. Rochester, NY. https://doi.org/ 10.2139 / \mathrm{srsrn} .3915140.

Malik, N., Wei, M. Y., Appel, G., & Luo, L. (2022). Blockchain Technology for Creative Industry: Current State and Research Opportunities. International Journal of Research in Marketing.

Maxlerer, David. 2016. “The Stellar Consensus Protocol: A Federated Model for InternetLevel Consensus.” https://assets.weboin-files.com/Sdose75enad2173c2ccccbe 7/fdf2560fba25692305be355f_stellar-consensus-protocol.pdf.

Millegan, Branily. 2021a. “Proposed ENS Constitution.” ENS DAO Governance Forum. November 1, 2021. https://discuss.ens.dumaine.v/proposed-ens-constitution/814. Millegan, Branily. 2021b. “SENS Token Allocation (Claiming Opens Nov 8).” November 3, 2021. https://ens.mirror.zyx/eaqblv7XFikvXbvj9jzzF9L54wzcQ8viOq 5feNXeCuY.

Mohan, Vijay. 2020. “Automated Market Makers and Decentralized Exchanges: A DeFi Primer.” SSRN Scholarly Paper ID 3722714. Rochester, NY: Social Science Research Network. https://doi.org/10.2139/ssrn.3722714.

Mosley, L., Pham, H., Guo, S., Bansal, Y., Hare, E., & Antony, N. (2022). Towards a systematic understanding of blockchain governance in proposal voting: A dash case study. Blockchain: Research and Applications, 3(3), Article 100085.

Munger, M. C. (2018). Tomorrow 3.0: Transaction Costs and the Sharing Economy. New York: Cambridge University Press.

Nabben, Késie. 2020. “‘An Ethnography of Decentralised Information Infrastructure’: Adopting cypherpunk nomenclature to categorise the unique attributes of decentralised technologies.” Available at SSRN 3752531.

Nabben, K., & Zargham, M. (2022a). Permissionlessness. Internet Policy Review, 11(2). https://policyreview.info/glossary/permissionlessness.

Nabben, K., & Zargham, M. (2022b). The Ethnography of a ‘Decentralized Autonomous Organization’ (DAO): De-reynifying Algorithmic Systems. Ethnographic Praxis in Industry Conference Proceedings, 1(November), 74-87.

Odinson, Balder Friggier. 2014. “A Nation Breaks the Shackles of a Fiat Currency.” http ://web.archive.org/web/20140331193103/https://autorecxin.org/.

Parker, G. G., Van Alstyne, M. W., & Choudary, S. P. (2016). Platform Revolution: How Networked Markets are Transforming the Economy and How to Make Them Work for Fits. WW Norton & Company.

van Pelt, B., Jansen, S., Baars, D., & Overbeek, S. (2021). Defining blockchain governance: A framework for analysis and comparison. Information Systems Management, 38(1), 21-41.

Petkanics, Doug. 2018. “How To Get Livepeer Token During the Claim Period Starting July 26th.” Livepeer Blog (blog). July 30, 2018. https://medium.com/livepeer-blog /how-to-get-livepeer-token-during-the-claim-period-starting-july-26th-de6fe82691e 8 .

Petkanics, Doug, and Eric Tang. 2017. “Livepeer Whitepaper.” Livepeer. https://github. com/livepeer/wiki/blob/b03998204882c9685a84fc133678408923fbc852/WHIT EPAPER.md.

Rennie, E., Zargham, M., Tan, J., Miller, L., Abbott, J., Nabben, K., & De Filippi, P. (2022). Toward a Participatory Digital Ethnography of Blockchain Governance. Qualitative Inquiry, 28(7), 837-847.

Rochet, J.-C., & Tirole, J. (2003). Platform Competition in Two-sided Markets. Journal of the European Economic Association, 1(4), 990-1029.

Securities and Exchange Commission. 2022. “SEC Nearly Doubles Size of Enforcement’s Crypto Assets and Cyber Unit.” SEC.Gov (blog). May 3, 2022. https://www.sec.gov/ www/press-release/2022-76.

Sims, Alexandra. 2019. “Blockchain and Decentralised Autonomous Organisations (DAOs): The Evolution of Companies?” SSRN Scholarly Paper ID 3524674.

Rochester, NY: Social Science Research Network. https://doi.org/10.2139/ ssrn.3524674.

Szabo, Nick. 1997. “Formalizing and Securing Relationships on Public Networks.” First Monday, September. https://doi.org/10.5210/fm.v20t.548.

Tan, Joshua, Max Langenkamp, Anna Weichselbraun, Ann Brody, and Lucia Korpas. 2022. “Constitutions of Web3.” Metagov Working Paper. https://constitutions.met agov.org/.

Tan, T. M., & Saraniemi, S. (2022). Trust in Blockchain-enabled Exchanges: Future Directions in Blockchain Marketing. Journal of the Academy of Marketing Science, 1-26. https://doi.org/10.1097/s11747-022-00889-0

Tan, T. M., & Salo, J. (2021). Ethical marketing in the blockchain-based sharing economy: Theoretical integration and guiding insights. Journal of Business Ethics, 1-28.

Tharsis Labs. 2021. “The Evmos Rekidrop.” Evmos (blog). December 16, 2021. https:// medium.com/evmos/the-evmos-rekidrop-able/6516a825.

Treihlmaier, H., & Petrochitskaya, E. (2023). Is it time for marketing to reappraise B2C relationship management? The emergence of a new loyalty paradigm through blockchain technology. Journal of Business Research, 159, Article 113725.

Voshmgir, S. (2020). Token Economy: How the Web3 Reinvents the Internet. Token Kitchen, Wabby, Riad S., Dan Boneh, Christopher Jeffrey, and Joseph Poon. 2020. “An airdrop that preserves recipient privacy.” In Financial Cryptography and Data Security: 24th International Conference, FC 2020, Kota Kinabalu, Malaysia, February 10-14, Revised Selected Papers 24: 444-463.

Wang, Dabao, Siwei Wu, Ziling Lin, Lei Wu, Xingliang Yuan, Vajin Zhou, Haoyu Wang, and Kui Ren. 2021. “Towards A First Step to Understand Flash Loan and Its Applications in DeFi Ecosystem.” In Proceedings of the Ninth International
Workshop on Security in Blockchain and Cloud Computing, 23-28. https://doi.org/10.1145/ 3457977.3460301.

Werbach, K. (2018). The Blockchain and the New Architecture of Trust. Cambridge, MA: MIT Press.

Whitaker, A., & Krassel, R. (2020). Fractional equity, blockchain, and the future of creative work. Management Science, 66(10), 4594-4611.

Williamson, O. E. (1988). Corporate Finance and Corporate Governance. The Journal of Finance, 43(3), 26.

Wright, Aaron, and Primavera De Filippi. 2015. “Decentralized Blockchain Technology and the Rise of Lex Cryptographia.” SSRN Scholarly Paper. Rochester, NY. https:// doi.org/10.2139/ssrn.2580664.

Yin, R. K. (2018). Case Study Research and Applications: Design and Methods (6th ed.). Thousand Oaks: Sage Publications.

Zargham, Michael, and Kelsir Nabben. 2022. “Aligning ‘Decentralized Autonomous Organization’ to Precedents in Cybernetics.” SSRN Scholarly Paper. Rochester, NY. https://doi.org/10.2139/ssrn.4077358.

Zhang, Yi, Xiaohong Chen, and Daejun Park. 2018. “Formal Specification of Constant Product (x * y = k) Market Maker Model and Implementation,” October. .