Cosmos: staking your way to airdrops
Subscribe to our smart subscription to read this report in full
In the cryptocurrency world, staking is a popular method of earning passive rewards by helping to secure protocols, but there can be much more to this activity. In particular, the Cosmos ecosystem, a blockchain on which more and more projects are being built, is known for distributing many tokens in the form of airdrops.
Airdrops are a common practice where new projects distribute their tokens for free to certain users. In Cosmos, ATOM token stakers who participate in staking are often the privileged beneficiaries of these airdrops. These free distributions can significantly increase the overall value of a user's investment in the Cosmos ecosystem. This creates a virtuous circle where more users are incentivised to stake, reinforcing the security and stability of the network.
"Cosmos is a relatively old project that has always been recognised by the community for the quality of its infrastructure, but the absence of a leader like Vitalik Buterin on Ethereum has slowed its growth," explains Thibaut Boutrou, head of development at staking provider Meria. "Its ecosystem has therefore come up with new ideas to attract new users, and Cosmos project airdrops via staking are one of them," he notes.
Stakers are valuable members of the community
Projects that launch airdrops on Cosmos tend to target users who are committed to the ecosystem, and staking is a key indicator of that commitment. Token holders who actively participate in staking are often seen as valuable members of the community and are therefore chosen to receive airdrops.
"Traditionally airdrops are sent to people who have used new projects, but the risk is of attracting only mercenary users who wait to receive tokens before going elsewhere," points out Stanislas Barthélémi, crypto expert at KPMG. "By targeting those who protect the blockchain, it makes it possible to reach people who can be considered more loyal," he points out.
By receiving different tokens from nascent projects in the Cosmos ecosystem, stakers can end up with a diversified portfolio, increasing their chances of benefiting from the growth of several projects. So it's a win-win.
At the end of 2023, Cosmos stakers received an airdrop from the Celestia project, whose token price has since increased 10-fold. Naturally, not all projects have the same fate, but this illustrates the opportunities of this type of mechanism. Airdrops are therefore a way for new projects to thank and reward these contributors, creating a sense of community and belonging.
But while airdrops can be attractive, it's important to remember that they carry risks. The value of airdropped tokens can be volatile, and the projects themselves can vary in terms of quality and viability. Investors should therefore conduct due diligence and not rely solely on airdrops as an investment strategy.