Stellar is Distributing Free Tokens to Users of Messaging App Keybase

The Stellar Development Foundation (SDF) is conducting an airdrop (or distributing tokens free of charge) of two billion Stellar Lumens (XLM), the native cryptocurrency in Stellar’s blockchain. The airdrop is worth $120 million. As of this writing, XLM has a price of $0.057 per token on Coinmarketcap and an overall valuation of $1.1 billion.

The airdrop will consist of monthly distributions of 100 million XLM to Keybase’ 300,000 users over the next 20 months. SDF is committed to airdrops for three months; subsequent disbursal of funds depends on the airdrop hitting certain “success metrics”.

“The foundation’s mandate is to deliver lumens [XLM] into the world. This is part of that plan. The up to 2 billion is a really great way. And we will have checks along the way,” Denelle Dixon, CEO of SDF, told online publication Coindesk.

Messaging app are fast becoming a popular method for cryptocurrency companies to reach out to users. Messaging app Telegram, a favorite among cryptocurrency developers, will issue TON, its native token, to its user base later this year. As part of its distribution strategy for its cryptocurrency Libra, social media behemoth Facebook intends to preload its popular messaging app Whatsapp with Calibra, a wallet that supports Libra.  

About Keybase and Stellar

Keybase launched cryptocurrency wallets to support Stellar Lumens in May this year. The wallets enable Keybase users to send Lumens to each other and to people on third-party services. The tokens can be priced in real currency.

Stellar, which was started by an Ethereum co-founder, is a blockchain for cross-border transfers. Its native token, Lumens, serves the same bridge asset function that XRP performs on the Ripple blockchain, meaning it used for intermediate conversions between two fiat currencies. The key difference between both blockchains lies in their customers. While Ripple’s blockchain is targeted at banks and financial institutions, Stellar claims to be targeting emerging markets. It has partnered with IBM to develop a payment network that uses fiat currency-versions of stablecoins issued on Stellar’s blockchain.

What are Airdrops?

Airdrops are free distribution of tokens. They are the equivalent of free money in fiat terms.

Mainstream adoption of cryptocurrencies has been relatively slow. Airdrops are one way to juice demand for them and incentivize users to conduct transactions with them. These transactions can take the form of daily activities, such as purchase or sale of goods using tokens, or trading in crypto markets.

An example of an airdrop on a national scale occurred in Venezuela, when the country’s President, Nicolas Maduro, approved $150,000 in May 2019 for the distribution of one million crypto wallets preloaded with its cryptocurrency Petro among the country’s youth.

Another function of airdrops is to serve as advertising campaigns. Free tokens build awareness about the cryptocurrency (and its team) among investors and traders, thereby increasing its liquidity in markets.  

Finally, airdrops can also be used to be promote a product. The relationship between Keybase and Stellar is mutually beneficial. Stellar benefits by reaching Keybase’ user base while the lure (and possible profits from trading crypto) attracts users to Keybase. In mainstream marketing, payments company Square conducted a similar strategy through its Cash App Fridays. The Fintech company offered prizes of as much as $10,000 through its Cash App to users who tweeted responses to its Friday questions. According to research, the campaign boosted its overall customer engagement metrics and increased customer count.