Cryptocurrency airdrops are one of the most popular marketing strategies used by Web3 startups. The first crypto airdrop was in 2014 by Auroracoin, but this guerilla marketing trend took off in 2017. Blockchain-based projects use airdrops to popularize new cryptocurrencies or NFTs and boost platform publicity.
Read on to learn the basics of cryptocurrency airdrops.
What Is a Cryptocurrency Airdrop?
A cryptocurrency airdrop is a marketing strategy where blockchain-based startups send free new tokens en masse to user wallets. They are meant to promote new cryptocurrencies, increase awareness about a crypto venture’s platform, and encourage adoption.
Usually, the tokens are sent for free, but sometimes the team behind the blockchain project may require you to perform specific tasks.
Crypto airdrops aren’t limited to new crypto projects. Existing platforms also use the strategy to help guide the distribution of tokens and reward loyal community members.
How Does a Crypto Airdrop Work?
First, the team behind the project decides the number of tokens to airdrop to users. The next step is choosing a target demographic and platform they will use to distribute the tokens. They also set eligibility criteria for users that will receive the tokens. You can sign up for the airdrop once it is announced.
Projects are not limited in how many conditions they set for users to receive tokens. Still, most projects ask users to do small social tasks like following the project’s pages on social media, sharing and reposting their posts, or signing up for their newsletter. The tokens are meant to reward you for spreading awareness of the project and bringing attention to their pages. Projects may use this opportunity to collect your information, like wallet addresses, email addresses, social media handles, etc.
Some projects require Know Your Customer (KYC) verification for you to participate, while others only need you to sign up. After users are selected, the airdrop is executed through smart contracts, and the tokens are automatically distributed to their wallets.
There are instances where users get airdrops for interacting with the platform before a set date or holding a particular asset in their wallets. The requirements for crypto airdrops vary depending on the developer’s preferences; the bottom line is the new token gets as much publicity and adoption as possible.
Types of Crypto Airdrops
Project developers pick the types of crypto airdrops to execute based on their motives and the user demographic. Let’s look at the three main types of crypto airdrops.
In a standard airdrop, tokens are distributed for free; you only need to sign up by providing your wallet address. There is no additional information required. The airdrop is quick and easy, but the project developers set a limit on how many tokens every user gets. They follow a first come, first serve basis. However, nothing stops a user from entering multiple wallets and receiving more coins, draining the airdrop amount.
Bounty airdrops are service oriented and require users to engage in promotional activities. You pay for the tokens with energy and effort by interacting with the project’s posts, signing up for newsletters, joining a channel, and following the project’s social media pages. Users are given tokens as incentives to spread awareness and publicize the project.
Holder airdrops reward users holding a certain number of tokens of a specific cryptocurrency at the time of the promotion. The wallets are part of a distributed ledger that the developers can access and determines which users have met or surpassed the threshold and gifts them tokens. However, this method neglects holders will lower coin possession, and not all holders who meet the threshold will want to receive tokens.
How to Avoid Crypto Airdrop Scams
As much as crypto airdrops create opportunities for publicizing new projects, they also come with the rise of getting scammed. Let’s look at how you can avoid getting scammed with crypto airdrops.
- Do your research on every project before engaging with the token. Don’t interact with any new token you find in your wallet if you don’t know where it originated from.
- Study the team behind the project, read their public documentation, and see what the rest of the community thinks about the project. Stay alert for any exaggerated promises of high returns for minimal effort.
- Don’t connect to unfamiliar websites or put your wallet information on third-party sites. If you connect your wallet to phishing websites, scammers can access your wallet address.
Crypto airdrops are easy and accessible ways to earn cryptocurrency. However, always do due diligence by conducting your own research to ensure the airdrop is legitimate.