What is a cryptocurrency airdrop
WHAT IS A CRYPTOCURRENCY AIRDROP
Many crypto projects conduct free token distributions as part of their marketing campaigns. Airdrop is an effective strategy for attracting new users and publicizing the company. To receive a reward, users need to complete various activities, ranging from subscribing to the project's social media to testing the network's functionality.
Each startup has its own types of airdrops and, accordingly, requirements for receiving them. Every crypto project is interested in increasing its visibility. This is the main goal of conducting an airdrop.
Anyone can participate in an airdrop using their non-custodial wallets. (link here) Be vigilant because the emergence of airdrops has also led to an increase in crypto scams.
WHAT IS AN AIRDROP
An airdrop is a free distribution of a crypto project's coins to users for specific activities. Developers reward their users for their active participation in the project's life.
Airdrops became hugely popular back in 2017 and are still used as a promotion tool today.
Why give away crypto for free? An airdrop is both a distribution of tokens and a reward for community loyalty. By attracting a large number of people, the crypto project loses nothing. On the contrary, it increases its visibility and gains a much larger community than before the airdrop.
HOW DOES AN AIRDROP WORK
There are many types of airdrops. Generally, it works by distributing a certain issuance of cryptocurrency to users' wallets. Many crypto projects distribute NFTs instead of tokens, although this is a less common method of rewarding the community.
There have been cases where cryptocurrency was given away without any activities, but this is in the past as it is not profitable. Most often, you will be asked to complete tasks such as subscribing, leaving a comment, holding tokens in balance until a certain date, and so on.
!!! NOTE: Completing airdrop conditions does not guarantee token distribution. Keep this in mind when participating!
You can also receive rewards to your wallets by interacting with the project's platform. For example, performing swaps or using cross-chain bridges. In this case, you may even have to pay a network fee.
Typically, the project conducting the airdrop takes snapshots of active addresses at a specific period to check who met the airdrop conditions and then distributes the rewards to the community.
WHY DO WE NEED AIRDROPS
The cryptocurrency industry is highly competitive. 8 out of 10 crypto projects do not survive because no one hears about them. Even with a working utility and significant usefulness, there is always a risk of token devaluation and, consequently, bankruptcy if the startup does not gain mass recognition.
Airdrops motivate the community to use and promote the project in the media. This helps grow the user base and increases the likelihood of being listed on top exchanges (Binance, OKX).
!!! NOTE: Airdrops can often create an illusion of usefulness and popularity. It is essential to conduct your own research (DYOR) of the crypto project to have an alternative opinion.
TYPES OF AIRDROPS
There are different ways to conduct an airdrop, from the usual process where cryptocurrency is transferred to users' addresses to rewarding for holding a certain asset. Below are popular types of airdrops.
STANDARD AIRDROP
This type of airdrop involves distribution without any conditions. There is a separate type of earning where users create many wallets to receive as many rewards as possible.
BOUNTY AIRDROP
To participate in a bounty airdrop, the community is offered simple tasks aimed at promoting the crypto project on social networks. For example, subscribing to a Twitter account, leaving a review, etc.
Discord channels of crypto projects are currently gaining significant popularity. There, the community, by creating activity, earns points that later help get into the White List (a list of those who receive rewards).
EXCLUSIVE AIRDROPS
This program rewards early users. For example, in 2020, UNISWAP distributed a substantial amount of tokens to regular users, which at its peak was valued at over $100K per user! The interesting part is that there were no conditions for receiving them.
HARD FORK DISTRIBUTION
A type of airdrop associated with the technological features of the currency. For example, when a token splits into two chains, in other words, scales, a new coin appears. Those who held the original asset receive the same number of tokens in their wallets. This happened with Bitcoin.
HOLDER AIRDROP
A type of airdrop where rewards are given to long-term participants who hold a certain number of coins. In other words, users who meet the airdrop conditions just need to hold their assets. In this case, large investors benefit the most.
AIRDROP INSTRUCTIONS
The type of activity and sequence depends on the specific crypto project. In most cases, you need to create a non-custodial wallet. One of the most popular wallets is Metamask. Read this article on how to install and configure Metamask.
!!! NOTE: It is important to add the network and token to Metamask so that you can see the received reward in your address.
WHERE TO FIND CRYPTO AIRDROPS
To stay updated on new cryptocurrency airdrops, you need to:
- Actively follow projects on social networks
- Subscribe to newsletters
- Join communities, for example, on Discord
You can also track upcoming cryptocurrency airdrops through aggregated resources such as airdrops.io or airdropalert.com
Additionally, you can find specific Telegram channels dedicated to this topic.
!!! NOTE: When referring to any third-party resource, carefully study the reviews. Many scammers are eager to steal your assets. Be vigilant.
SCAMS IN AIRDROPS
Unfortunately, scammers are very good at disguising themselves, and it is often difficult to distinguish a reliable crypto project. You need to conduct your own research (DYOR) to reduce the risk of unwanted loss of funds.
Nevertheless, here are the rules to follow:
- Check resources. Scammers often issue phishing links as official sources.
- Never share your SEED phrase or private keys. Remember, only scammers request confidential data.
- Do not transfer your assets anywhere. Often, fraudsters pose as crypto project staff and ask you to transfer tokens to "special addresses".
- Learn the opinion of the crypto community when researching a crypto project.
- Do not use your main wallet where you store your funds. If a scammer gains access to your main wallet, you can forget about your money.
SUMMARY: SHOULD YOU PARTICIPATE IN AIRDROPS
Despite the potential for earning, airdrops are gradually losing their relevance. Many crypto enthusiasts create multiple accounts and take a large share of the emission intended for airdrops. This forces crypto projects to apply sanctions up to tracking IP addresses and devices from which interactions occurred to blacklist wallets.
Undoubtedly, if you want to try earning free tokens by helping startups gain visibility, airdrops look like an interesting industry. Just be vigilant and follow the rules we mentioned earlier.
