Byteball is a cryptocurrency built on directed acyclic graph (DAG) technology. The DAG design claims to address some of the scalability issues you find in traditional blockchains. IOTA, another well-known cryptocurrency, also employs a DAG as their underlying technology.

There’s much more to the DAGs and Byteball as a technology, but here we are focused solely on another interesting area: Byteball’s airdrop distributions.

Since December 2016, Byteball Bytes (GBYTE) have been distributed in a series of nine airdrop events to any Bitcoin holders seeking to participate. Since airdrops represent a potential source of passive income for Bitcoin holders, I set out to quantify the yield these airdrops offer.

Investigating Byteball’s airdrop distribution ended up being more difficult than expected. While I applaud the founder’s efforts in distributing the GBYTEs freely to Bitcoin holders, contradictory and hard-to-find data on the distribution complicated the task.

I believe airdrops are a novel paradigm in cryptoasset distribution, one that can potentially solve some problems posed by ICOs. Ownership in ICO tokens can be hyper-concentrated, especially in capped sales. For a pseudonymous network, having a few tokenholders control a large portion of the tokens makes tokenholder votes less meaningful, compromises decentralization, and occasionally results in a wealth transfer to the well-heeled few, especially if staking is involved.

I also suspect that ownership concentration is inversely related to price volatility, although that is just a theory for now. Airdrops are therefore a useful tool to acquire a larger userbase, and they are becoming more popular.

Here we run the numbers to determine how Bitcoin holders can quantify their yield from Byteball, and discuss the unfortunate effects of poor distribution documentation.

Part I: Determining Byteball’s Yield

At the time of this writing, there have been nine rounds of Byteball airdrops. Since the prices of BTC and GBYTE varied at these nine rounds, calculating the yield is a bit challenging.

Additionally, the quoted exchange rates differ from the actual ones. In practice, GBYTE holders are compensated for holding continuously, by having GBYTEs earned in previous rounds compound over time in subsequent airdrops. This means that the exchange rates only make sense if you assume that bitcoin holders hadn’t participated in previous rounds; in practice, this isn’t the case, as since signing up once guarantees you future distributions.

The quoted rate — amounting to roughly 0.00625 GBYTEs per BTC in the latest round — only applies to people linking their BTC for the first time. In actuality, 1.3m BTC had been linked in the previous 8 rounds, so the average yield was generally much higher. I summarize this in the below table.