Ukraine crypto donors hoping to profit from the airdrop
Ethereum transfers to Ukraine have decreased significantly since the airdrop was canceled.
You’ve definitely read at least one story extolling the virtues of cryptocurrency holders and supporters for the tens of millions of dollars in philanthropic gifts to Ukraine’s government.
However, an examination of the Ethereum blockchain data over the last five weeks — from when Ukraine began accepting crypto donations to the end of March — reveals that the vast majority of transactions occurred in a span of less than two days, when donors believed they would receive an airdrop in exchange for their contribution.
An airdrop is essentially a massive giveaway that typically involves the distribution of cryptocurrency tokens to users.
In short, the majority of cryptocurrency donors sent money to Ukraine with the expectation of personally benefiting from their donation. How? Later on, they’d sell the reward they’d received in exchange for their donated cryptocurrency, perceiving their participation as an investment.
On Feb. 26, 2022, the official Ukraine government Twitter account stunned many online by announcing the launch of a cryptocurrency donation program. Ukraine’s official Bitcoin and Ethereum wallet addresses were mentioned in the tweet, which crypto holders may use to donate. Ether (ETH), the currency used on the Ethereum blockchain, is one of the two largest cryptocurrencies, trailing only Bitcoin in terms of market capitalization.
On that first day, almost 2,800 Ethereum transactions were transmitted to Ukraine’s wallet address, according to public Ethereum blockchain statistics. On Feb. 27, little over 3,000 transactions were made.
One would anticipate an increase of transactions in these early days as a result of the cryptocurrency space’s growing buzz and subsequent media coverage. However, by February 28, Ethereum transfers to Ukraine had decreased to just over 1,200.
Ukraine then tweeted “airdrop confirmed” on March 2, 2022. The window of opportunity to participate in the airdrop would close on March 3.
Airdrops may take the form of a non-fungible token (NFT) or a fungible token, such as free money deposited in users’ wallets.
Due to the fact that tokens are financial assets, airdrops are marketing stunts that reward participants financially. After receiving an airdrop, holders can exchange their tokens for fiat currency, like as US dollars. And in order to receive that return, you must invest in a cryptocurrency project in some form. In this scenario, by giving to the official wallet address of the Ukraine government.
On the day the airdrop was announced, Ethereum transactions increased by more than 33,600 percent, from roughly 2,400 to over 33,600. March 3 witnessed nearly 25,600 transactions, and the total may have been higher. However, just hours before the deadline for donations to qualify for the airdrop, Ukraine’s Vice Prime Minister and Minister of Digital Transformation, Mykhailo Fedorov, declared that the airdrop had been canceled.
Donations of ether to Ukraine suddenly decreased. The day after the airdrop was halted, only about 840 transactions were transferred to Ukraine, and the number of transactions continued to reduce on a daily basis. Over the last week, only about two to three dozen Ethereum transactions per day have been made to Ukraine.
Therefore, why was Ukraine’s planned airdrop canceled? Because Ukrainian government officials saw that many crypto donors were attempting to benefit from their philanthropic contributions, which were supposed to aid Ukraine during Russia’s invasion of the war-torn country.
According to Ukraine’s deputy minister of digital transformation and growth of the information technology industry, Alex Bornyakov, “a large number of people” began donating incredibly small quantities of ether, apparently for the only purpose of receiving the airdrop.
Ukraine imposed no minimum donation requirement for receiving the airdrop, implying that even very small donations may have benefited from the kickback.
“People developed a desire for profit,” Ukraine’s deputy minister of digital transformation and IT sector growth, Alex Bornyakov, told Motherboard in an interview. “I believe it is unethical.”
In the end, cryptocurrency promoters undoubtedly benefited regardless of the outcome of the airdrop. Due to the millions of philanthropic contributions delivered to Ukraine, media outlets rewarded the bitcoin industry with favorable attention.
In actuality, the majority of those transactions were not motivated by charity.