Airdrops have long been a strategy to take advantage of network efforts to build a community of token holders, but TRON is about to embark on something never tried before – a six-year airdrop of BTT tokens to TRON holders. The question is, will it encourage HODLing or will it have precisely the opposite effect?
The history of airdrops can be traced back to AuroraCoin five years ago. As described in this TechCrunch article from 2014, over a period of three days, a programmer named Baldur Friggjar Odinsson airdropped 31.8 coins to every single citizen of Iceland – all 330,000 of them. The amount given away wasn’t insignificant either – it was worth about $385 per person at the time. The buzz in the build-up caused the price to spike ten times but it didn’t last. Soon after the airdrop completed, the price collapsed and the project was abandoned.
And therein lies the problem with airdrops. You have to weigh mass distribution and positive publicity against huge negative price pressure. If there’s no incentive for an airdrop recipient to HODL, they’ll most likely sell.
Minhui Chen, a partner at Global Blockchain Innovative Capital (GBIC) told CoinDesk last year that in China, many people refer to airdrops as “candy.”
Well, it appears that Chinese-based TRON is about to embark on an unprecedented giveaway of free candy in the form of BTT tokens.
“Think of TRON and BitTorrent like a razor and a blade,” said Justin Sun, founder of TRON and CEO of BitTorrent. “You need both together to create a new internet economy driven by decentralisation. We are seeding BTT to deliver a marketplace of innovations and applications across the web.”
The airdrop works as follows: At 0:00 UTC on the 11th of each month, the TRON team will take a snapshot of TRX balances and split up the BTT airdrop proportionally to all current TRX holders. The first 12 airdrops will each distribute 990 million BTT tokens, and every 12 months that amount will increase. It has already started – on the 11th February the first airdrop of almost 11 billion BTT took place.
The BitTorrent Foundation completed $BTT Airdrop for $TRX holders. If your tokens are on an exchange or a wallet supporting our airdrop program they are on their way. Please be patient, it may take some time given the volume airdropped ✌️
— Justin Sun (@justinsuntron) February 12, 2019
In total, between February 11th 2019 and February 11th 2025, 97 Billion BTT will be airdropped. At current prices, that’s worth about $100 million – which is less than the Stellar XLM giveaway of $125 million in November 2018 – but that was a one-off airdrop. By running it over six years, we’re in uncharted territory.
The desired outcome is to encourage holding of TRX, and encourage use of BTT. According to a Medium post: “Recipients are already able to use our utility token [BTT] to purchase goods or services such as our Pro & Ad-Free Products, or through Coinpayments merchant’s network.”
However, as AuroraCoin found to its disadvantage, airdrops don’t always go to plan.
Time will tell whether Justin Sun’s candy giveaway will give him the sweet taste of success or lead to bitter failure.