Say Hello to SmartDrops: The New Way to Give Away Crypto Money

While the jury's still out about the mechanism, used of late to massively distribute crypto tokens to those who already own cryptocurrencies, several industry observers and startups already believe it could be done better.

Crypto token management company TRM Labs, for example, recently launched a platform that allows projects to distribute tokens to select users and offers issuers analytics.

Just like Johnston, it appears many crypto stakeholders have high hopes for the new and improved airdrop and think the method could resolve issues associated with other token distribution methods, namely initial coin offerings that have been under regulatory scrutiny and seen industry criticism since its explosion in use.

"Most airdrops are really about giving a token to speculative investors so that they'll go cash it out on an exchange. It's really about trying to demonstrate to exchanges, 'hey we've got a lot of wallets, we're going to bring you a lot of people, and so let us list our token on your exchange,'" Paul Hainsworth, the CEO of Open Garden, which will use the smartdrop model for the distribution of its OG tokens soon, told CoinDesk.

Adopting smartdrops as the primary means of token distribution would not necessarily render ICOs obsolete.

"We're launching the product, doing an airdrop to give people tokens so they can start using it in the network, demonstrating utility, and then once we have sufficient utility in the network, then we'll distribute our tokens to investors," Hainsworth told CoinDesk.

It's not enough just to give tokens to the "Right" users.

One significant decision projects must make is the percentage of tokens to distribute and the price of those tokens.

For its smartdrop, Open Garden plans to give away just under 5 percent of its total tokens in a two-phase distribution.

Open Garden has decided to launch its token at $0.01, which Hainsworth explained was related to the pricing from the last round of the private presale of its native tokens.