As the crypto landscape becomes more saturated with a barrage of new tokens and digital assets, companies have tried many ways to stand out. One such marketing tactic is known as “airdropping”. Many different types of airdrops have taken place from bonus tokens to entirely new lines of NFTs. But what is an airdrop and how does airdrop work?
What Does Airdrop In Crypto Mean?
A crypto airdrop is a marketing tactic that involves sending digital tokens directly to users’ wallets. This may be for free or in return for performing some small task like following the company account or retweeting a post. The end goal is to increase the awareness and availability of a token in the general public.
These airdrops are usually performed before the ICO(Initial Coin Offering) goes live. The goal is that more users know about the crypto token and trade it when it gets listed on a crypto exchange.
How Do Crypto Airdrops Work?
Airdrops may be conducted in several ways
- Automatically distribute tokens to wallets that contain a minimum balance of another asset. For example, a project may airdrop tokens to any wallet address with 0.1 BTC or more.
- Some projects may also take snapshots of the blockchain at a particular date. Any users with balances at that time may be considered eligible for the drop.
Apart from this, users may also be able to receive airdrops with no strings attached simply by claiming them.
The purpose of any airdrop is increased adoption. The platform will determine which method to use based on how many users with airdrops will interact with it.
What are the Types of Airdrops?
|Type of Airdrop||What are They|
|Standard Airdrops||Interested participants can avail Standard Airdrops by showing interest through the project’s official media handles|
|Bounty Airdrop||Users must perform simple tasks to win a Bounty Airdrop|
|Holder Airdrop||Getting a Holder Airdrop depends on the existing Crypto assets that a user owns|
This is the simplest form of an airdrop where participants communicate their interest in receiving the tokens. This may be through the project’s website or their Twitter page. Users must only provide their wallet address for most such airdrops.
Such airdrops are the most popular among users as there are no requirements they must complete. In essence, they are free crypto tokens. But since they are popular, a limited amount of tokens is made available through this method. You may have to enter a lucky draw and be picked to receive these tokens.
Unlike standard airdrops, this method involves the user completing some tasks. However, the tasks are usually not very hard and require only engagement with the project’s community. For example, you may need to sign up for updates from the project, follow their social media channels or be an active participant in their forums.
The tokens are not as free as the ones from standard airdrops as you pay with your privacy or your time. However, it still makes you eligible to earn the tokens you are interested in.
This type of airdrop is based on your holding of another crypto token. Sometimes it may be done because having another token in your wallet is an indication you are an active crypto user. However, this is most commonly done when a crypto project launches a new coin and wants to reward its long-time supporters who already own old tokens from the project.
For example, Yuga Labs – the creators of Bored Ape Yacht Club – airdropped a new token called “Mutant Serum” to all holders of BAYC NFTs. This new token interacted with their held tokens to create a new kind of NFT called Mutant Ape Yacht Club (MAYC).
How to Get Crypto Airdrops?
There are several websites or Twitter accounts that post about upcoming airdrops in the crypto space. Following such sources is a reliable way to find out about ongoing and future airdrops you may be interested in. This also allows you to research the project in advance before you must sign up for the airdrop.
The process for receiving the airdrop is usually straightforward. When you sign up for a drop, you include your wallet address and some other relevant information. If you are selected to receive the tokens by the project, the airdropped coins are automatically added to your wallet without having to accept them.
Airdrop Crypto Scams
Types of Airdrop Scams
- Phishing Attack – Sometimes, malicious actors may announce fake airdrops that lead to fraudulent websites. Entering your information on such websites may give scammers access to your crypto wallet and lead to you losing your funds.
Read more: What is a Phishing Attack in Crypto?
- Dusting Attack – In a dusting attack, scammers send a very small amount of funds to your account in a token of their choice. They then track the transaction activity of your wallet to try and break your privacy and find the wallet owner’s personal information.
How To Avoid Airdrop Scams?
- Always be wary of any random funds added to your wallet. If you have not signed up for any airdrops then this random addition may be a scam.
- Do your own research on any project or company before linking your account for an airdrop.
- Never share your seed phrase or private keys with anyone online.
- Some scams may ask you to send a small amount of crypto to their account to qualify for an airdrop. Legitimate airdrops will never require any tokens from you to complete the airdrop.
- Try creating a new account to accept airdrops. Keeping your primary account separate may help you diversify your risk.
- Always double check offers which promise “ Earn free Crypto” or “ Win free Crypto”
Read more: What are Crypto Scams?
Can You Make Money From Crypto Airdrops?
You usually cannot make a lot of money through crypto airdrops. These airdrops are only intended to increase public awareness of the token as a marketing strategy. Therefore, the amount you receive during the airdrop is very small.
Crypto Airdrop Pros and Cons
|Enables users to be part of an exclusive club||Some airdrops can pose security threats to user information if users link their accounts to websites with malware|
|It is a great way to increase outreach and awareness of a newly released Crypto token||Exclusive airdrops may be beyond the reach of ordinary investors in some cases|
|Rewards users who have been contributing to a project. For example, the creators of the Bored Ape Yacht club airdropped tokens called “ Mutant Serum” for holders of BAYC NFTs||Some Airdrops may be difficult to sell because of lack of liquidity|
Are Crypto Airdrops Safe?
As long as you do adequate research on any project before linking your wallet or participating in their airdrops, they are safe. It is essential to perform your due diligence and ensure the safety of your information and finances online.
Crypto airdrops are a unique way to bring more attention to your token offerings before they go live. Similar to giving out free samples of your product or coupon codes in the mail, airdrops act as advertising. Moreover, exclusive airdrops lets a user be part of a group which can help reflect one’s social status. However, it is crucial to research any project thoroughly before engaging with their drops. This ensures that your wallet and your private information remain secure.