Participant Incentives
Strictly speaking, token holders are effectively prepaying for a product or service, and the value of the token in that case lies in its functionality and utility. Buying tokens in advance means that you are getting them at an attractive/affordable price, which is an incentive in itself. Furthermore, the cryptocurrency will presumably appreciate if/when the platform becomes more popular, so if the user was going to participate in the ecosystem anyway that’s a really nice side benefit or even a huge profit if you bet on the right platform — if you manage to accumulate tokens that become more valuable over time, you can resell them to someone else.
Committing early often means getting some kind of an early bird discount too, but these purchasers can be locked up from selling for several months, which has become a fairly regular practice and has to be taken into account. In the early days of the ICOs one could buy tokens at the ICO (10–20% discount) or pre-ICO (up to 30–40% discount) sales and sell them once these tokens got listed on crypto exchanges. Consequently, many projects running ICOs are now enforcing lock-up periods based on the size of the discount to avoid early flipping and maintain a stable token price.
Bounties are essentially incentivized rewards to people in exchange for performing reasonably simple undemanding tasks for the company launching their ICO campaign. They are generally not done together with ICOs (the team can hardly deal with the ICO when it’s happening, let alone handle the bounty program as well).
During the bounty program the ICOs provide compensation in tokens for a number of tasks, such as social media/forum marketing activity, bug reporting or even improving some aspects of the platform. The crypto community has proved to be a great environment for bounty programs (it has now become an integral part of most marketing and promotional enterprises in the crypto world), as they offer incentives/rewards for both the start-ups and users alike.
Pre-ICO bounties are carried out before the ICO to improve the project’s presence on social media platforms, as they use informal advertising channels to increase market penetration. The most common pre-ICO bounty activities include:
- Social media campaign bounties
- Article/blog writing bounties
- Bitcointalk signature bounties (available to members of the Bitcointalk forum with distinguished status/high ranking)
Post-ICO bounty programs are typically aimed at improving feedback from the community and getting their suggestions. They include
- Bug reporting bounties, and
- Translation campaign bounties.
A cryptocurrency/token airdrop is a limited time event when a blockchain project distributes free tokens or coins to early adopters. In such a way a community/network of people who own the tokens is created, and the only requirement to be a recipient of such an airdrop (e.g. of Stellar Lumens or OmiseGo) is/was to have coins from the relevant blockchain stored in your wallet (most typically Bitcoins or Ether). These giveaways are often used for new crypto projects as a marketing tool to improve their token penetration/distribution among the members of the crypto community.
In addition to this format, some (usually smaller) airdrops might require a social media post or some activity on the Bitcointalk forum. Another way of getting free tokens or coins is a faucet, which is a preferred model of some crypto casinos: they give users small amounts of crypto over a long period of time.
So, how does it work (at least in theory)? A crypto airdrop raises awareness and brings new people to the project. It certainly plants a seed among the new owners (people are more likely to invest in a token that they own), and might also lead to token price appreciation. After all, this is all free money, so users can either sell the airdropped tokens or hold them and hope that their price will go up.
All incentives come with a desired behaviour and outcome.
Desired outcome is the definition of one or more tokens in the system needed to create and maintain the desired behavior.
Desired behavior can also be incentivised even without a token so we should know and check for this.
