Topic:

Operation Dumbo Drop: To Airdrop or Not to Airdrop for Initial Coin Offering Success?

Time&Date: 

09:00 am - 10:30 am, June 11, 2024 (Tuesday)

Venue

Room 619, Teaching A Building

Zoom Link: 
https:

https://cuhk-edu-cn.zoom.us/j/3985407949?pwd=QnZJMHU3SDUwaFdtWTF6N3RWcGlMdz09 
Meeting ID: 398 540 7949
Passcode: 779898

Speaker:

Prof. Hsing Kenneth Cheng (University of Florida)

The rapid advancement and adoption of blockchain technology have heralded an explosive growth of Initial Coin Offerings (ICOs) as a new and popular fundraising approach for blockchain start-ups. To motivate blockchain individuals to invest in the subsequent ICO, a growing number of blockchain-based project founders employ the airdrop campaign, through which they distribute a specific amount of free official tokens or promotional tokens to potential investors on the blockchain with or without their permission. Of paramount concern to the founders contemplating whether to launch an airdrop campaign are whether the airdrop campaign has a positive effect on the potential investors’ investment behaviors in their ICOs and how the efficacy of the airdrop may vary with investors. To address these critical questions, we implement a regression discontinuity design by leveraging the quasi-randomization of a blockchain project’s promotional airdrop campaign on the Ethereum platform. We find that the promotional airdrop leads to a 2.3 times increase in the potential investors’ ICO investment probability, as well as a significant and positive effect on their investment amount. We further find that the airdrop is more effective in increasing the investment for individuals with transacted projects dissimilar to the focal project than those with similar ones, which supports the diversification perspective in investment. We also find that the airdrop can motivate token receivers to stick with the focal project for a longer period. We show the generalizability of our findings by leveraging the randomized token airdrop strategies of multiple ICO projects. Our study contributes to the literature on ICOs and marketing strategy for financial instruments and provides important implications to blockchain start-ups on whether and how to launch an airdrop campaign.

Biography:

Professor Cheng is the John B. Higdon Eminent Scholar and Department Chair of Department of Information Systems and Operations Management at The University of Florida. His research interests focus on interdisciplinary information systems issues involving information technology, economics, management, marketing, and operations management with specific emphasis on big data and business analytics, economic and policy issues of information technology and the internet, electronic commerce, software pricing strategy, and supply chain management. He was ranked 20th (for the period of 2009-2011), 16th (for the period of 2010-2012), and 32nd (for the period of 2015-2020) among the world’s top-100 researchers in information systems based on publications on the top three information systems journals including MIS Quarterly, Information Systems Research, and Journal of Management Information System.