There’s no such thing as a free lunch, but it seems the crypto world didn’t get the memo. Every week we hear about someone getting burned by a fake Twitter giveaway, and Initiative Q keeps claiming new converts. Now it looks like Jed McCaleb has been hacked too, and the Stellar Development Foundation is holding its own token giveaway.
Luckily, this time it’s not a Twitter lookalike, and you don’t even have to send any XLM first. As the Foundation, paired with Blockchain, announced in a blog post:
We’re thrilled to announce SDF’s largest lumen distribution to date: an up-to-500 million XLM distribution to users of leading digital asset wallet provider, Blockchain. This airdrop will put the Stellar name and technology in front of Blockchain’s 30 million account holders, and will bring many new users into our ecosystem.
Each (KYC-verified) Blockchain wallet holder will receive 100 lumens (worth around $25), and the wallet creator will continue using airdrops like these to drive adoption.
In addition to attracting new crypto users, the airdrop is expected to increase network effects and ultimately improve the utility of Stellar and other blockchain currencies. “Blockchain Airdrops are a great way for crypto creators to drive decentralization and adoption for new networks,” Blockchain said in a blog post. “We think they’re great for crypto users too. They let you test, trade, and transact with the next generation of crypto assets without having to buy them or mine them.”
It’s also expected to build the Stellar brand, and that goal is already being realized: the airdrop has already been reported by (among others) The Independent, Fortune, and Yahoo Finance, among others, as the most valuable give-away ever.
What’s the Catch?
Still, it’s worth giving taking a moment to look the gift crypto in the mouth, especially after the critical shake we gave to Initiative Q.
This giveaway isn’t just coming from the goodness of Jed McCaleb’s lumenous heart, however generous he may be. As we’ve previously reported, one of the biggest quandaries for cryptocurrencies is finding a way to put them in people’s wallets.
For older cryptocurrencies, this is achieved by competitive mining, which prevents any one party from dominating the supply. For fixed-supply coins like XRP or Iota, having a coin monopoly comes with as many liabilities as benefits.
Skeptics like Dr. Doom frequently cite the inequality of crypto wallets as an argument against adoption, and they have a point. It’s hard to make the case for a gold standard when one tycoon owns all the mines.
Although Ripple and Tron are criticized for their enormous premines, Stellar is one of the biggest culprits: 95% of the lumens supply is held in the top hundred wallets, according to a helpful website by Jackson Palmer. At the time of writing, 92% of the total supply are still held by the SDF, according to the Stellar dashboard.
That uneven coin supply could also endanger Stellar’s chances at a Coinbase listing, as Crypto Briefing has previously suggested. Spreading the wealth might also help smooth things with the SEC, whose standards for what counts as a “decentralized” currency have not yet been clarified.
Then there’s the fact that, unlike a regular Blockchain wallet, you need to complete KYC in order to receive your free Stellar. Although Blockchain says that this requirement prevents people from double-dipping—and there’s no shortage of people willing to do so—the giveaway could inadvertently expose the emails and identities of 30 million crypto users.
So it may be worth giving this airdrop a second look, and perhaps even passing on the free lunch. We’ll definitely be giving this one a few second thoughts – right after we sign up for a new Blockchain wallet….
The author has investments in Stellar and XRP, which are mentioned in this article.