As the world of cryptocurrency continues to grow, developers across the globe continue to create new currencies and tokens. If anything, the industry has taught us that early adoption of new decentralized finance (DeFi) can have numerous perks, including reaping huge profits. One of the primary ways used to launch a DeFi is an airdrop.
In this article, we will examine what a retroactive airdrop is, why it is widespread, and whether it is worth your time.
The Retroactive Airdrops Perspective
Usually, a retroactive airdrop happens when an existing protocol releases a native token. You can think of it as rewarding a project's early adopters and those who contributed to its initial growth. And because retroactive airdrops involve tasks that are already up and running for some time, they are more valuable than ordinary airdrops.
The overall value proposition is, in fact, more significant. Anticipating the retroactive airdrop, the price of a project's existing and new tokens go up significantly, more often than not. Plus, like regular airdrops, you get valuable tokens for free.
The term retroactive gained popularity after Uniswap's UNI token airdrop on September 17, 2020. This exchange has announced that it will give away UNI tokens for free to users who have interacted with its platform through trading or providing liquidity before September 1, 2020. Each user who met the above condition could receive 400 UNIs worth approximately US$2,000. Shortly after a few hours, a series of major exchanges, such as Binance, OKX, and Coinbase, also announced the listing and trading of UNI tokens, pushing this coin's value up.
Why the Popularity of Retroactive Airdrops?
The "retroactive" part of this is essential because for users to be eligible for the airdrop, they must be on the platform before it is announced. Retroactive airdrops have become a popular way to launch something because they bet on some marketing aspects, including:
It Creates FOMO- "Fear of Missing Out" (FOMO) is a marketing phenomenon that utilizes the aspect of limitations. In the fashion industry, for instance, "drops" are done to launch limited clothing items that only a few people can access, which creates a demand for the specific item.
It rewards Users- Retroactive airdrops offer rewards because they give out free tokens; later, when their value rises, the benefactors can trade them for a profit. This way, loyal and early users who believe in the company can reap benefits.
It Attracts New Users to the Project- Using a retroactive airdrop, a token can attract users from different projects to theirs. Some users might choose one token over another due to better designs, usability, or adding the token to their portfolio.
Takeaway
The Retroactive airdrop could sometimes surprise us with a massive return if we did it right. It can change and leverage one's position in the crypto world. The benefit of Retroactive to users and the project is vast, but we should be selective for potential projects.
However, retroactive airdrops are not free since you need to spend time and a selection of fees on the platforms, and there is no guarantee that the platforms you farm will have airdrops.
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