All about airdrops
Eddy Lazzarin, Daren Matsuoka, Andrew Hall, and Robert Hackett
Airdrops — a way to distribute tokens to users en masse — can help build community, decentralize control of networks, overcome the cold-start problem, and much more. They are one of the most familiar, and yet most misunderstood, mechanics in crypto.
So in this episode of the web3 with a16z podcast, we explore the history of airdrops both in and outside the crypto industry (from WWII to credit cards to blockchains); the challenges of incentive design; and key learnings from airdrops to date. We also answer questions like, how do you avoid Sybil attacks — where an attacker uses many fake identities to manipulate a system — and professional airdrop farming? Should your token drop be big or small, one-time or ongoing? And what happens when AI agents enter the mix?
Whether you’re a builder planning a token launch, a community lead or marketer looking to grow a particular community, a user seeking to understand why some get token rewards, or just curious why airdrops have become such a powerful mechanism — this episode is for you.
Resources referenced in the episode:
A framework for regulating airdrops
Miles Jennings
One of the main drawbacks for builders exploring airdrops has been the regulatory environment here in the United States: Projects rightly worry that the SEC’s regulation-by-enforcement approach, embraced under the Biden administration, could thwart good-faith efforts.
Airdrops are a crucial mechanism for distributing control of some blockchain networks, including decentralized projects looking to reward early users. And yet confusion around regulatory approaches has forced these companies to locate outside of the U.S. and exclude U.S. consumers from receiving tokens. This is bad for American innovation and for U.S. consumers.
Recently, the SEC has asked for input from the public on how it should update its regulation of crypto, including airdrops. We submitted a formal reply — summarized in “Airdrops: Safe, legal, frequent” — in which we propose five conditions that, when met, should mean that the airdrop or similar incentive-based reward distributions can be excluded from U.S. securities laws.
A 360-degree view of stablecoins
Stablecoins may be crypto’s first “killer app.” In our most recent State of Crypto report, we noted that stablecoins found product-market fit, as major scaling upgrades drastically reduced costs. Transaction volumes reached $1.82 trillion in March of this year, a record high. But stablecoin activity is largely uncorrelated to crypto market cycles — organic, non-speculative use appears to be widespread and growing even as crypto trading volume fluctuates, as the chart in the last link shows.
Still, it’s easy to underestimate the promise of stablecoins without taking a closer look at the impact they’re having on users, builders, and businesses. Stablecoins are one of the only mediums — besides cash and gold — to operate without centralized gatekeepers like payment networks and central banks. Stablecoins are already one of the cheapest ways to send a dollar (sending $200 from the U.S. to Colombia using stablecoins costs less than $.01). But stablecoins are not just cutting fees; they’re permissionlessly programmable and extensible. So for the first time, anyone can easily integrate globally available, fast, and nearly free money into a product using stablecoin rails while building new fintech features. Companies from Stripe to SpaceX are embracing stablecoins.
So how did stablecoins become poised to disrupt the global payments industry? Who will benefit most from their adoption? And how can builders and businesses think about them? In this list, we’ve rounded up a few pieces and perspectives on stablecoins published by a16z crypto to better understand how we got here, starting with what is (and is not) a stablecoin, and ending on ideas for reimagining money from first principles.
Scott Walker, Kate Dellolio, and David Sverdlov
Registered Investment Advisers (RIAs) investing in crypto assets have suffered from both a lack of regulatory clarity and limited viable custodial options. Adding another layer of complication, crypto assets bear ownership and transfer risks that are unlike other assets.
The industry needs a principles-based approach to solve this issue for professional investors who are safeguarding crypto assets on behalf of consumer clients and others. If the point of custody is to ensure that investments are responsibly stewarded, then regulation should focus on actual safeguards and protections — not rigid legal classifications.
In developing responses to the SEC’s recent request for information, we have created principles that, if implemented, would extend the goals of the Advisers Act’s Custody Rule — security, periodic disclosure, and independent verification — to this new asset class of tokens.
🪙 Stablecoin pals. PayPal said it will be introducing 3.7% annual rewards on customer balances of PYUSD, a U.S. dollar-pegged stablecoin issued by the company. The program, which applies to PayPal and Venmo wallets and will pay out in PYUSD, is expected to launch this summer. Partnering with PayPal, Coinbase has also slashed platform fees on the buying, selling, and trading of PYUSD to zero. (Bloomberg, PayPal)
🎈 Network coverage. Decentralized wireless network Helium is teaming up with AT&T to provide AT&T subscribers with expanded wireless network coverage. Helium reports having more than 93,000 hotspots worldwide, which act like mini cell towers. (Decrypt)
🏗️ Building onchain. Coinbase’s Base released a playbook for building on its platform. The guide covers how to create onchain apps and tokens, covering the pre-launch, launch, and post-launch stages. (Base)
…I shall call him minimeme
— a16z crypto editorial team
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