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Smartdrops: an evolution in public token distribution

A Smartdrop is a form of public token distribution designed to increase product understanding and user growth through participation. BNC Pro is a new portfolio management platform that unlocks Brave New Coin’s powerful suite of institutional-grade research, data and analysis tools. It launches with a Smartdrop incentive program that rewards early adopters.

Currently in BETA with a Q4 launch date – BNC Pro is a cryptocurrency management platform that integrates a user’s portfolio and trading data with a customizable suite of institutional-grade data, analysis and research features. BNC Pro will launch with a Smartdrop incentive program that rewards early adopters for completing tasks that drive product usage and discussion.

Smartdrops incentivize product growth

Smartdrops are powerful because they incentivize token usage to bootstrap user growth of blockchain-based products and services. They differ from traditional airdrops because they are not completely open. Recipients are instead selected based on the likelihood that they will be active users of the product in the future.

In the case of BNC Pro, its first Smartdrop group consisted of a group of respected cryptocurrency analysts, traders, and investors who actively manage digital asset portfolios, understand potential pain points (i.e. mismatched data from exchange APIs) and were able to provide specific feedback that led to actionable fixes within the BETA product before its November public launch.

The second Smartdrop will be available to anyone who registers to join the wait-list to use the BNC Pro platform when it launches.

Airdrops remain popular

Traditional airdrops are essentially free token giveaways used as marketing tools to increase the use of a blockchain. They remain popular. Stellar, for example, has conducted a large ongoing airdrop campaign this year to drive users and promote the Stellar network.

Universal airdrops mean that all network addresses are entitled to receive distributed tokens. Airdropped tokens are free in order to maximize participation and drive future adoption through network effects. However, giving away large sums of free, unearned tokens has created problems for some projects that have used this model.

Some airdrop recipients may view free tokens as spam and simply forget or ignore them instead of using them for their intended purpose within the network. Using them requires the user to take action and invest time.

Because airdropped tokens can be traded on secondary markets (via exchanges such as Binance or Bittrex), some users may decide that it is beneficial to sell immediately. Universal airdrops are designed to drive network adoption and utility, however, they may have the opposite effect by diluting the utility of tokens by placing them in the hands of the uninterested.

The improved Smartdrop model

Smartdrops use the powerful, public nature of blockchains to target users based on community activity and product usage. From the BNC Pro user’s perspective, participating in a BNC Smartdrop would look something like the following. Users signal their intention to participate in an airdrop by signing up with their BNC Pro wallet account. Following this, users enter a qualifying period where they complete tasks such as feature testing, community outreach, or writing blog posts. If it is determined that a user has met the task-based requirements, they are allocated airdropped tokens during a release event.

The Smart drop model is advantageous for new blockchain applications:

Drives quicker, more agile innovation cycles – Product fixes and bugs can be identified and executed quickly because of the increased communication channels that are created as part of Smartdrop campaigns (Telegram groups, Google forms etc). Users are rewarded for feedback and skin in the game drives action and feedback.

Creates less token price volatility – Early token adopters are carefully selected. They are less likely to be price speculators and more likely to be longer-term token holders. They understand that the tokens have value within the platform and token usage is rewarded. They are less likely to withdraw tokens away from the platform.

Keeps community tighter – Smart drop participants know they are contributing to the development of a product that they use. Natural incentives to contribute, share ideas and generate synergy are created within the Smartdrop user community.

Variations of the Smartdrop framework have been utilized by several token projects, but it remains a less popular model than the universal airdrop. Quantstamp, for example, conducted its ICO in 2017 using a ‘proof of care’ concept. The Quantstamp team quantified future user activity based on an equation that assessed active project contribution, community involvement, a wallet tracking algorithm, and a history of support as qualifying variables. Users then received POC scores via an online portal and were allocated tokens proportional to this score.

In the case of BNC Pro – Brave New Coin can quantify user engagement pre-drop, based on metrics such as community involvement and product interaction. Allocations can efficiently and seamlessly be distributed to specific addresses that have met the Smartdrop requirements.

For users, the transparent nature of the blockchain means they can easily view who is sending them tokens, and when, and in what quantity. Human error can be corrected using a blockchain’s immutable ledger. For example, if an address should have received tokens based on preset drop requirements, this can be verified.

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What you see is what you get, transactions on BNC Pro align with what is recorded on the Ethereum blockchain ledger.

Smartdrop dos and don’ts

  1. The importance of selecting the right community and early adopters – Potential Smartdrop participants are targeted using platforms like Telegram and Discord to communicate with users. It’s important to ensure that potential participants can provide the right sort of task-based service.
  2. Large per user token drops – Drops need to be large enough to encourage proper technology interaction and community usage. Investing tangibly in future adopters is important to creating sticky users who use and understand the token.
  3. Smooth, straightforward onboarding into the task ecosystem – Users need to be identified and verified to confirm task completion. Best practice has generally been to register users using tools such as Google forms and Telegram. While there may be more robust blockchain or privacy-focused platforms to onboard the early active adopters, the focus for a product choosing to use a Smartdrop strategy should be to allow interested participants to seamlessly join the community and be easily trackable and verifiable.
  4. Gamifying the Smartdrop – Imagine ‘refer a friend, get $5 off your next purchase’ style rewards that are used to bootstrap the growth of traditional applications. Simple action=reward bounty schemes drive active quantity-based participation that can boost early adoption and community growth.

Overall, the Smartdrop model focuses on driving application usage – which remains a major stumbling block for most new dapps or token-based applications. While token projects and applications have generated sizable market caps through speculative value, utility remains elusive.

Brave New Coin has taken a different approach and built the BNC Pro product first, with token utility available at launch. The platform combines BNC’s trusted data and insights with a suite of custom applications that support cryptocurrency portfolio management and trading decisions. BNC Pro operates on a ‘freemium’ model, with access to its premium features unlocked using the BNC token – thus delivering immediate token utility.


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