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Ukrainian Government Cancels Crypto Airdrop and Announces Army NFTs Instead

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Ukraine is amazingly competent and creative in raising cryptocurrency donations. This has already brought the country more than 60 million dollars. We give an overview and speculate what the coins will be useful for.

Ukraine is amazingly skilled at raising funds through cryptocurrencies. The country is underlining that it is a crypto nation right up to the top of the government.

As previously reported , the official Ukraine account has posted addresses for Bitcoin, Ether, and USDT (as well as other ERC20 tokens). Deputy Prime Minister and Digital Minister Mykhailo Fedorov himself confirmed these addresses.

Meanwhile, the bitcoin address has received 12,961 transactions, or 243 bitcoin. In addition, 356 Bitcoin are currently being donated to the Ukrainian aid organization Come Back Alive . So a total of 600 Bitcoin or 25 million dollars flowed into Ukraine.

A total of 6900 ethers arrived at the Ethereum address , a good 18 million dollars, and a number of tokens that is difficult to keep track of. Etherscan is currently showing balances in 210 tokens and a value of 3 million dollars, primarily in USDT and DAI dollars.

Polkadot and Dogecoin

But Ukraine knows enough about cryptocurrencies to know that’s not all. Fedorov apparently understands a basic truth of the crypto scene: give a crypto whale the pinky in publicity and it will throw both hands at you.

On Tuesday, the Ukraine account posted a polkadot address to signal that it also accepts donations in the cryptocurrency DOT . Unfortunately, Polkadot’s block explorers only show the current balance, but not how much an account has received so far. The current balance of the address is about 1 million dollars, which arrived in 2735 transactions. Since Polkadot founder Gavin Wood alone donated 5 million dollars  more than 6 million dollars should have been raised.

And because things are going so well, Vice Prime Minister Fedorov also posted a donation address for Dogecoin shortly afterwards, noting that Dogecoin is currently worth more than the ruble. With a good half a million Dogecoin, Ukraine has only brought in 70,000 dollars so far.

The airdrop that doesn’t happen after all

In order to increase the willingness to donate, Fedorov uses an unusual method that is popular in the crypto scene: He announces an airdrop, with a snapshot on March 3rd, i.e. today.

To understand that, we have to go back a bit. In the course of the past year, the practice of retrospectively rewarding users of a Dapp with an airdrop has been established in the Ethereum community. The best known were from Uniswap and ENS . A date is set when a blockchain snapshot is taken, and the addresses that were active up to that point – those that swapped via Uniswap or bought an .eth domain – are given a token, such as $UNI or $ENS.

So, in the same way, Ukraine should now reward people who donate cryptocurrencies. Done right, it could be more than just a gimmick: Should Ukraine defend the country, a Ukraine token could, for example, give discounts on visas, appointments with politicians, free accommodation and so on. It could become the first really useful token.

First, however, the airdrop had an absurd side effect: it prompted thousands to send worthless tokens or micro-amounts to Ukraine’s Ethereum address. These now paid more to the miners than they donated to Ukraine. If you now ask where the miners are located, it becomes grotesque: after the mining exit from China, Russia of all places became the home of numerous miners. It is conceivable that Russia will benefit more from the airdrop than Ukraine.

In the meantime, people are rowing back there anyway. Digital Minister Fedorov tweets that the airdrop is now being dropped “after careful consultation”. Instead, an NFT will soon be issued to support the Ukrainian armed forces. Such non-fungible tokens could inherently perform the same or similar functions as fungible tokens. But they have the advantage that the tokens are individual, creating a kind of art and auction market for memes. You could practically buy sponsorship for Ukrainian soldiers and their heroic deeds.

Holger Rehm from the Blockchain Center comments on the cancellation of the airdrop with the words: “Best. rug pull. Ever.”

A “rug pull” describes a fraudulent maneuver in the crypto scene: developers announce a project, collect coins for it – and then leave it. They pull the rug out from under the investors’ legs. One of the oddities of this conflict is that a nation-state in a state of war is now, intentionally or unintentionally, borrowing from the strategies of crypto scammers.

A total of more than 50 million euros – but for what?

As described above , the UkraineDAO also collects donations independently of the government . It already rewards donors with tokens, although it is not yet clear what the token will be good for. Nevertheless, the UkraineDAO managed to collect ether worth a good 7 million dollars.

Certainly the amount of donations is by no means exhaustively listed. For example, Binance has raised more than 5 million dollars, Justin Sun has donated $200,000 to Tron, and so on. It’s difficult to overlook all of this. But if you take an interim result here, you get more than 60 million dollars.

But what are the cryptocurrencies bringing to the country? Probably not that much at the moment. No amount of money in the world can stop Russia’s advance, and even freshly bought military equipment will probably take too long to arrive. Eventually, it will be possible to use bitcoins to encourage Russian soldiers to lay down their armsAnonymous hackers are already trying to do this , and Ukraine is also offering money to Russian deserters. To what extent that will make the soldiers forget that desertion is punishable by death is another question.

In the medium or long term, this financial aid to Ukraine can play a major role. It can help the country stock up on food and military equipment to hold out longer in an ongoing conflict. Should the country be conquered, it can use crypto holdings to fund a resistance in a way that even Russian control of Ukraine’s banking system cannot stop. Resistance financed in this way could also bribe the Russian occupiers to their side.

Should Ukraine resist the attack, or should Russia leave the country after a peace agreement, the crypto donations could help with reconstruction.

Downsides

Despite all the appropriate solidarity with Ukraine, one thing should not be forgotten: it is one of the most corrupt and criminal countries in Europe. And this crime does not stop at cryptocurrencies either.

If the government is currently demonstrating how competent and innovative it is at soliciting crypto donations, it could also be an indication that the shady, often bordering on the fraudulent, ICO and token economy has gained a very wide foothold here, perhaps even into the heads of the digital ministry.

I remember, anecdotally, that several years ago, Ukrainian PR agencies specializing in ICOs were well represented in the Bitcoin conference audience. Of course, this is not yet fraud, but in many cases it is knowingly or unknowingly assisting in it.

It is also conceivable that whoever controls the official Ukraine account – presumably Digital Minister Fedorov or one of his allies – will save the coins so that they can arrive abroad well-padded in the event of an escape. Or simply to enrich themselves when the world’s attention migrates to the next crisis.

Finally, one should also not forget that Putin’s constant references to “Ukrainian Nazis” are not entirely built on hot air. Combat units with neo-Nazi roots, such as the Azov regiment, are particularly common among combat troops in eastern Ukraine, where Come Back Alive donates military equipment. According to reports, ultra-nationalist combat groups in Ukraine are also attracting militant neo-Nazis from all over the world, including Germany. Do you really want to support these people just because it’s against Russia?

However, these comments – or rather: assumptions – should not obscure the essentials: Ukraine is amazingly creative and innovative when it comes to raising funds through cryptocurrencies. It is years ahead of the rest of the world in this respect. If it survives the invasion, it could become one of the most progressive countries in the world.

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Ethan Hunt

Bitcoin Maximalist and Toxic to our banking and monetary system. Separation of money and state is necessary just like the separation of religion and state in the past. Also, pro-local, pro-global and anti-national.

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