A cryptocurrency airdrop is a process through which new or existing projects send out portions of their tokens to the wallet address of a lot of users who qualify to receive them. Some projects require users to do some particular task before they qualify for an airdrop. Other projects conduct a holder airdrop, a process in which crypto tokens are sent to existing holders or users of an application. In most cases, airdrops are usually free.
The only task involved in some airdrops is for the user to claim the airdrop on the official crypto project platform manually. In most cases where users have to spend something to get the airdrop, it usually involves the small amount used to cover transaction fees.
What is the aim of crypto airdrop?
It is a way of integrating the token and the project behind the token. The aim is to boost interaction with the token as well as the underlying protocol if any. The token tends to increase in price while the platform attracts more users if the airdrop strategy is successful.
How Do Crypto Airdrops Work?
Crypto airdrops are a marketing strategy used to attract the attention of a lot of people.
More also, it is sometimes created to reward early users of the decentralized application, such as the DeFi protocol. In the course of an airdrop, eligible users receive a portion of new tokens from a project.
Now, how exactly do they work? To understand this, let us talk about how they are distributed.
Whenever a new token is created, its developers look for users to interact with the token by buying, selling and holding it. Since the token is new and mostly unknown to the general crypto market, the developers may decide to distribute the token to users who meet a particular requirement.
For instance, they can program the coins to be delivered to the wallet addresses of users holding a minimum of a certain existing coin, say 0.01 ETH or 0.1BTC.
The developers can specify another parameter at other times, such as distributing the tokens to anyone who has expended a specific amount of transaction/gas fees. An outstanding example of this is the GAS DAO that airdropped tokens for Ethereum users who spent up to 1559 ETH or more on gas fees.
Another common way airdrops are distributed is through social media campaigns. This involves developers getting users to carry out specific tasks, such as advertising the token on various social apps, with the reward of receiving tokens into the wallet addresses provided when the airdrop takes place.
In this method, referral contests are prominent. Users stand a chance to receive more tokens when they refer more people to join the campaign. If there is sufficient hype around the airdrop or an attractive use case, it may see the support of giant investors and possibly get listed on cryptocurrency exchanges.
What Is The Aim?
When the airdrops have been distributed to the customers who are meant, the goal is that the owners of the new token will interact with the token long enough for it to witness a huge price increase. If the token price increase over time, then the objective of the token developers has been achieved.
Series of the airdrops are also created to attract users to a platform. A platform example is a LooksRare airdrop for users of a major competitor of a significant competitor OpenSea. Below are some other examples of popular token distributions.
Examples of Landmark Crypto Airdrops
Ever since the first cryptocurrency airdrop in 2014, many other crypto airdrops have followed over the years. Some of these airdrops have become successful, while others have lost value. Here are some examples of landmark crypto airdrops:
Auroracoin is the first crypto airdrop to be a conductor. It was created for living in Iceland when the country faced a financial crisis. Its creator used the pseudonym Baldur Friggjar Óðinsson. The asset was designed to serve as an alternative currency to Icelandic króna and even digital currency Bitcoin, enabling users to perform cross-border transactions.
Unlike many crypto airdrops taking place today, the auroracoin was airdropped to holders of Iceland’s national ID. In the first phase of supply, half of its 21 million total asset supply was pre-mined and allocated to the citizens in 2014. This meant that all 330,000 Icelandic citizens at the time were eligible to receive the token.
In 2015, the second supply phase saw 318 auroracoins distributed to each user. In that same year, a third phase supply was conducted where each user received double of what was distributed during the second phase, 636 auroracoins.
Despite its usage of the case, the auroracoin did not thrive, as government authorities contributed to crippling its adoption among Icelanders. The asset saw an all-time high (ATH) of $97.84 shortly after it was airdropped in March 2014. Ever since then, it has been on a continuous downtrend. At the time of writing, the auroracoin sat at a trading price of $0.08.
Another noteworthy example of a crypto airdrop was conducted by an Ethereum-based decentralized autonomous organization (DAO) dubbed OpenDAO.
Users who had transacted on the non-fungible token marketplace, OpenSea, before December 23rd 202, were qualified to receive OpenSea’s airdrop of its native token dubbed SOS.
OpenDAO airdropped 50% of its 100 trillion total supply to qualified users on OpenSea. To redeem the airdrop, users had to connect their crypto exchange wallet, like MetaMask, to the project’s official website. The reward for each user is dependent on the amount of ether spent on transactions on OpenSea.
As stated by the company’s website, users have until June 30, 2022, to claim the airdrop, after which OpenDAO will deposit any remaining balance in the project’s treasury. At the time of writing, analytics platform Dune recorded more than 305,000 wallet addresses that had redeemed their airdrop of SOS tokens.
Until now, the identity of OpenDAO’s creator remains unknown. The only connection tied to the project is its core contributor with the Twitter handle @9x9x9eth. At the time of writing, $SOS is trading at $0.000005.
§ Gas DAO
A week after the OpenDAO $SOS airdrop, another Ethereum-based project dubbed Gas DAO launched. This project, however, came with a different plan.
The developers are behind GAS DAO and its native token, dubbed GAS, airdropped the token to Ethereum users who had transacted up to 1559 ETH and above to cover gas fees. Some 650,000 Ethereum users were eligible for the airdrop, but only about 80,000 wallet addresses have claimed the airdrop.
Despite the project’s claim to be “the voice and the heartbeat” of active Ethereum users, the token has not garnered enough hype to boost its price. Since its launch last December, it has been on a continuous downtrend. At the time of writing, $GAS was trading at 0.000007, representing about a 96% decrease from its ATH.
In September 2020, the trading Ethereum decentralized exchange platform UniSwap launched its governance token, UNI. UniSwap airdropped 400 UNI tokens worth 1200 dollars at the moment to historical users of the platform, including persons that performed failed transactions.
Notably, several users gained more than 400 UNI as the distribution was based on the number of addresses interacting with the protocol before the snapshot date.
Solend is a decentralized protocol on the Solana blockchain, allowing leanding and borrowing services to users. the protocol permits investors to earn interest yields on borrowed crypto assets. Solend airdropped the native token for the protocol ($SLND) to users that interacted with the project after its launch in June 2021. The airdrop took place on November 15, 2021.
As stated by the firm, 200,000 Solend tokens were allocated for the airdrop. Following the criteria for qualification, 3795 wallet addresses were qualified to claim the airdrop. The tokens were distributed evenly, with each address receiving 52.700922 SLND.
Since its launch, Solend has attained an ATH of $16.72. However, at the time of writing, SLND is trading at $1.06.
ApeCoin is a landmark crypto airdrop that made its debut in March 2022. It is the governance and utility token for the top NFT project Bored Ape Yacht Club (BAYC).
All owners of the BAYC NFTs were eligible to claim the ApeCoin ($APE) token. Other users eligible for the airdrop were holders of the Mutant Ape Yacht Club (MAYC) NFTs.
From its one billion total supply, 15% was allocated to the BAYC and MAYC holders, where each holder is eligible to get 10,094 APE. Over 96% of eligible users claimed the airdrop out of the 15,677 eligible addresses. Since its release, the APE token has experienced a massive level of interaction, attaining a height of over $40. At the writer’s time, APE is presently trading at $8.2.
How to Get Crypto Airdrops (and Get Rich From Them)
With new crypto projects coming up and existing ones devising means to bolster their adoption, we will continue to see crypto airdrops. How can you qualify to receive a crypto airdrop and even get rich from them?
§ Look for Potential Crypto Airdrops
A basic way to get something you are looking for is to look for it. When a project conducts an airdrop, beneficiaries are early adopters in most cases. If you are early enough to actively engage with a crypto-related project that has no tokens yet, you can benefit from a potential airdrop in the future. There are various places where you can get updates about such tokenless projects. We found the following resources helpful:
You stand a better chance of getting qualified for potential airdrops when you spread your net across other blockchain sectors aside from cryptocurrencies such as NFTs, GameFi, and DeFi. This makes it vital that you gain knowledge across these sections.
Regularly interact with the project. After seeing a lot of potential crypto airdrops, you need to follow up with them. Keep up with the updates shared by the project on official blogs, Twitter handles, etc. If the project requires adopters to perform some tasks, do not hesitate to carry them out.
§ Interact Actively With New Projects
Once you have done your necessary research and found a project that seems promising, you can qualify for any future airdrops by using the protocol or application. Frequently, you are eligible by simply depositing on the platform staking cryptocurrency, doing token Swaps if offered, or other forms of interaction.
You can learn about new and upcoming projects by monitoring projects that win hackathons organized by the blockchain ecosystem. These projects often win based on merit and have the potential to get big when they eventually launch. Hence, you can qualify for future airdrops by being an early user.
§ Buy and Hold NFTs
When you buy, mint, and hold the NFTs of notable projects, you stand a chance of receiving crypto tokens if the projects should introduce a native token in the future.
An excellent example of a project that has done this is the BAYC NFT project, where holders were automatically eligible to receive its governance token, ApeCoin.
Various famous NFTs today is expensive, but it is yet possible to join the bandwagon. Join the community, perform tasks set out by the NFT projects, and
Many famous NFTs today is expensive, but it is still possible to join the bandwagon. Join the community, perform tasks set out by the NFT projects, and get whitelisted. You can achieve this by following up with upcoming NFT projects and getting whitelisted. You can achieve this by following up with upcoming NFT projects.
You can also apply for jobs on various crypto-related projects and help build the projects. As the project rises, you can be a key beneficiary of any potential NFT or crypto airdrop it performs.
Rarity. The tool is a platform with insights on upcoming NFT projects.
§ HODL Airdropped Tokens
It is tempting to sell the tokens you receive from a crypto airdrop immediately. After all, it’s free money, and the asset’s market value tends to decline as many other recipients head for the exit. However, this is not the ideal strategy, especially if you want to get rich from airdrops. Like other cryptocurrencies, holding airdropped tokens over a certain period might significantly increase the price, especially if the project delivers on its roadmap.
Pros and Cons of Crypto Airdrops
Crypto airdrops, like every other business, have their pros and cons. Let us outline them:
- Crypto airdrops serve as a good strategy for crypto-related projects to promote their applications.
- Users who claim crypto airdrops get rewarded for the time and effort they have put in to support a crypto-based project.
- If the airdropped tokens see a price increase, holders will have their cryptocurrency portfolio
- crypto airdrops enables users to key into crypto projects and their communities from an early stage.
- Crypto airdrops can enable a crypto project to garner enough traction to be listed on exchange platforms.
- Crypto airdrops are susceptible to the “pump and dump” scheme – a process of hyping a token till the price increases and immediately selling off the tokens in large quantities, resulting in drastic depreciation of the token price.
- There is a risk of fake airdrops requesting sensitive information or money from users.
- Unsuspecting users could fall victim to scam airdrops using a dusting attack. This is a process where an attacker sends a minimal amount of cryptocurrency to a wallet address. While the attacker cannot steal the funds in the wallet, they have access to the transactional activities in the account, thereby intruding on the privacy of the wallet holder.
How to Airdrop Crypto
After acquiring knowledge of crypto airdrops, you might now be wondering how you can set your crypto airdrop. Below are the processes
Build an Idea Behind the Project
The first process to create your airdrop is to make a use case for your token. What does this entail? It would be best to create the token with a utility, such as solving a real-world problem, acting as the governance token for a large project, performing lending and borrowing services, or other purposes.
Create a Team of Developers
After getting a unique use case(s), you need to set up a team. This team will include core developers, digital marketers, writers, etc. The team will collaboratively create the tokens, set up an official website, and prepare marketing for the general public.
Select a Suitable Token Distribution Scheme
When creating tokens, consider the blockchain to build on. Many startups create their tokens on the Ethereum blockchain. Others utilize blockchain like Solana, Avalanche, etc.
While creating the tokens, establish a total supply to enable the developers to manage the scarcity of the tokens in the future. The team also needs to establish the number of tokens to be distributed and a mechanism to distribute the rest of the supply.
Read Also: What Is Ethereum? Simple Guide for Beginners
Finally, a scheme of distribution is needed. The team must establish what criteria users must meet to be eligible for the airdrop. Some projects have airdropped tokens to users who have an available balance on a particular blockchain. Others have distributed tokens to holders of certain NFT or digital assets.
Build a Social Media Presence
This is an essential aspect of getting your airdrop embraced by adopters. Building a social media presence involves creating official accounts and forums on popular social platforms like Twitter, Discord, Reddit, Telegram, etc.
Sharing news about the firm on these platforms builds users’ trust in the firm. A date for the airdrops will also be announced on these platforms and the criteria for it.
partnering With Companies
The final step to getting your crypto airdrop live is to partner with other existing companies with similar goals. Such partnerships aim to boost both businesses in one way or the other. It also expands audience coverage when you airdrop your crypto tokens.
Is Airdrop Crypto Safe?
Yes and No.
Crypto airdrops are safe when you know how to identify legitimate ones. If, on the other hand, you are unable to detect the illegitimacy of a crypto airdrop, you are susceptible to falling victim to a potential airdrop scam from bad actors.
Fake airdrops can mandate users to claim airdrops by sending a small portion of a token or coin to a particular address. Be wary of these kinds of airdrops. No legitimate crypto airdrop will require users to send any token to an address.
Others may utilize phishing attacks by impersonating official airdrop sites and accounts, creating a fake airdrop website, and convincing unsuspecting users to connect their wallets to fake sites. The danger here is that these bad actors can steal the users’ funds.
Top Safety Tips for Cryptocurrency Airdrops
After seeing the dangers of falling victim to fake cryptocurrency airdrops, it is therefore crucial that you adhere to the safety tips that will make your airdrop experience a good one. Here are the top safety tips for airdrops:
- Do your research (DYOR). At all times, ensure you do adequate research before participating in a crypto airdrop. Make findings on the background of the company behind the airdrop. Ensure they have an active social presence because their popularity will help the token thrive in the long run. Find out the project’s use case.
- Ensure you are visiting the official pages of crypto projects to avoid falling victim to bad actors.
- Create a separate crypto wallet used for airdrops, different from your main wallet. You are less likely to suffer huge losses should you fall victim to an airdrop scam.
- NEVER share your private keys or seed phrases with anyone or websites claiming to distribute crypto airdrops.
Commonly Asked Questions (FAQs) About Crypto Airdrops
Where Can I Find Upcoming Crypto Airdrops?
You can find upcoming crypto airdrops on platforms and forums dedicated to regular updates about crypto airdrops. There are also social accounts dedicated to sharing upcoming crypto airdrops.
For instance, in this platform, including the airdrops page of Coinmarketcap and DeFi Llama. An example of a social account that shares airdrop updates is a Twitter account with the handle @DeFiAirdrop.
Can You Make Money From Crypto Airdrops?
Yes, you can make money from crypto airdrops. It could be instant or take some time as some token might take time to rise significantly. You can also amass several tokens with the hope they become valuable in the long term.