In Space, There Is No Atmosphere To Have An Airdrop

Last week I visited the EVE: Frontier Discord and found an announcement I found puzzling.

As those who have registered via https://community.evefrontier.com/ will know, there is currently a raffle and points system in place as part of the registration process for PHASE IV.

!!!  To be clear !!!

Raffle tickets and points will not allow you to earn any fiscal rewards: you will not earn or obtain any EVE Tokens from acquiring them 

Raffle Tickets and Points will only be applicable for the following prizes:

• An EVE Frontier Gaming PC
• $500 Icelandair Vouchers
• Fanfest Tickets
• PHASE IV Posters
• Other fun things

Of course, my confusion came from not knowing something about crypto and the practices surrounding crypto projects. Apparently some crypto-related website decided to link to the EVE: Frontier registration page listed above and tell all the crypto-bros around the globe that CCP engages in a practice known as airdrops. CCP immediately posted otherwise.

Now, if I didn't know better, I'd think an airdrop was something like a Twitch drop in which people are rewarded for watching a Twitch channel for a period of time. So pulled up Copilot and started down the rabbit hole known as the crypto world. According to Copilot:

A cryptocurrency airdrop is a marketing strategy used by blockchain projects to distribute free tokens or coins to members of the crypto community. The main goal is to raise awareness and encourage adoption of the new cryptocurrency¹².

Here are some key points about airdrops:

• Distribution: Tokens are sent directly to users’ wallets, often for free or in exchange for small promotional tasks like retweeting a post or signing up for a newsletter¹².
• Types: There are different types of airdrops, including standard airdrops (where users express interest and provide a wallet address) and exclusive airdrops (targeting specific users based on their existing holdings or activities)¹.
• Purpose: Airdrops aim to increase the visibility of a project, create a wider distribution of tokens, and incentivize users to engage with the project²³.

While airdrops can be a great way to get involved with new projects, it’s important to be cautious as some airdrops may be scams attempting to steal personal information¹.  

In the interest of full transparency (and because I'm too lazy to edit the html code) I've listed Copilot's sources below.:

(1) Cryptocurrency Airdrop: What Is It and How Does It Work - Investopedia. 
(2) Crypto Airdrop: What's an Airdrop and Why Crypto Airdrops Are Issued. 
(3) What Is a Crypto Airdrop? - Binance Academy
(4) What are Crypto Airdrops?

Investopedia, a source I'm already familiar with and trust! I looked to see the pros and cons of cryptocurrency airdrops listed in the Investopedia. The pros raised an eyebrow.

Pros

• Rewards early adopters or people engaged with a project with a stake in the project
• Raises awareness of a project due to the marketing aspect of an airdrop
• Encourages the use and adoption of a newly issued token
• May distribute tokens across holders in a manner that would not have naturally happened in an open market

I would think in the context of creating a video game, and especially marketing a game to non-crypto enthusiasts, those pros aren't really positive aspects. And the negatives were worse:

Cons

• May pose security threats if wallet holders must connect wallets to suspicious sites to claim airdrop
• May prove to be "pump-and-dump" schemes
• May dissuade some investors from participating if they prefer different ways of distributing tokens
• May prove to be worthless if the token does not have liquidity on an exchange

Investopedia seemed to call the first point a "dusting attack", so I asked Copilot to provide a little more information.

In a dusting attack, small amounts of cryptocurrency, known as “dust,” are sent to numerous wallet addresses. The primary goal is to track these addresses and potentially de-anonymize the wallet owners¹².

Here’s how airdrops can be involved in dusting attacks:

1. Distribution of Dust: Attackers use airdrops to distribute tiny amounts of cryptocurrency to a large number of wallets. This “dust” is often so small that it goes unnoticed by the wallet owners¹².

2. Tracking Transactions: Once the dust is in the wallets, attackers monitor the blockchain to track the movement of these small amounts. By analyzing the transaction patterns, they can link different wallet addresses and potentially identify the owners²³.

3. Privacy Invasion: The ultimate aim is to invade the privacy of the wallet owners. By linking wallet addresses, attackers can gather information that might be used for phishing scams, cyber-extortion, or other malicious activities²³.

To protect yourself from dusting attacks, it’s important to regularly check your wallet for small, unexpected deposits and avoid interacting with them. Using privacy-focused wallets and mixing services can also help maintain anonymity.

Sources: (1) Gemini; (2) Cointelegraph; (3) BeInCrypto

I also looked at the second con. I know about "pump and dump" schemes and that I never want to fall victim to one. I turned to Investopedia once again for an explanation.

According to the Journal, crypto pump-and-dump schemes operate in a fashion reminiscent of the early days of the stock market. During that time, a group of traders wreaked havoc in the markets by manipulating prices through purchasing in groups.  

A similar dynamic exists in cryptocurrency markets. A horde of traders drum up enthusiasm for a coin by evangelizing it on multiple channels, including social media. Subsequently, they instigate a coordinated purchasing frenzy for it. As the coin’s price climbs, other traders, unconnected to the pump-and-dump group, also latch onto the buying spree, further boosting its price. The coordinated action is repeated, except this time around, in selling the coin when it reaches a certain price target. This causes a sharp decline in its price. While the pump-and-dump group makes profits, other traders who purchased the coin based on false promises are left holding losses.

The favored medium of communication for traders involved in pump-and-dump are messaging apps Telegram and Discord. Traders form groups on both platforms. Such groups charge between $50 to $250 for membership. In some cases, traders can choose to evangelize the service to others and become members. Binance, a Hong Kong-based cryptocurrency exchange, is a favorite for such operations because it lists small coins with low liquidity that makes them ideal candidates for manipulation. 

I asked Copilot to fill in how airdrops fit into pump-and-dump schemes.

Airdrops can be misused in these schemes in several ways:

1. Creating Hype: Fraudsters distribute free tokens to a large number of people to create buzz and excitement around the cryptocurrency. This can attract more investors, driving up the price artificially.

2. False Sense of Value: By giving away tokens, scammers can create a false sense of legitimacy and value for the cryptocurrency. New investors might believe the token has real potential and invest more money.

3. Dumping Tokens: Once the price is sufficiently inflated, the scammers sell off their large holdings of the token at the peak price. This sudden sell-off causes the price to crash, leaving other investors with worthless tokens.

I pretty sure I know why CCP made such a point to quickly knock down the effort of that random cryptocurrency related site. If EVE: Frontier becomes associated with any shady or illegal activity, the game is dead before launch. From what I see, airdrops come too close for comfort.