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What is a cryptocurrency airdrop? | CryptoWiki

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What is an airdrop?

Cryptocurrency airdrop is a marketing tactic common in the crypto industry, which is aimed at attracting attention to the project by giving away its tokens/coins for free.

To participate in the airdrop and receive a reward, you need fulfill a certain condition. For example, subscribe to the project pages in social networks, be a holder of a certain crypto asset or an application user.

How have airdrops evolved?

Token airdrops became popular during the heyday of ICOs in 2017. Then the organizers of tokensales offered small amounts for small activities in social networks. Thus, it was possible to spread information about the ICO among the mass audience.

This type of marketing activity has become widely used by DeFi projects, which use it to distribute management tokens to users of decentralized protocols and applications. In this way they try to quickly increase their community.

How do cryptocurrency airdrops work?

Developers send free tokens according to certain criteria or when certain actions are performed. Often, startups resort to the support of well-known resources in the crypto industry.

For example, the Coinbase exchange has a special Earn section where you can watch a series of short videos about cryptocurrency, then take a test and, by answering the questions correctly, get some coins.

Today, most startups simply accrue crypto assets to user addresses according to some criterion. For example, early adopters of a decentralized exchange can get its governance tokens for free. This is how DeFi project teams distribute tokens among active members of their community and attract the attention of the industry.

What are token airdrops?

Each cryptocurrency project has its own requirements for airdrop participants, but there are several main types.

Classical

You can get cryptocurrencies for performing certain actions. These can be messages in the chat, registration on the site, a post on various social networks. Each action has its own cost. In addition, the participant must record their actions and then transfer this information to the representatives of the project.

After the organizers confirm that the user has completed the required actions, they credit the earned tokens to his wallet. This is a traditional method, but today it is rarely used, since it requires a lot of effort from both the organizers and the participants.

Airdrop for users

Tokens can also be credited for free to those who use a particular blockchain application. Such an airdrop is most common in the field of decentralized finance.

For example, a command of some protocol credits its management tokens to all registered users or those who have performed certain actions. This is how she rewards her community.

Also, such an airdrop can be the result of a collaboration between a crypto project and a well-known service in the crypto industry, such as a wallet.

Airdrop for cryptocurrency holders

As large ecosystems formed in the crypto industry, tokens began to be distributed to owners of native coins of “infrastructure” projects. For example, a startup that runs on the Ethereum blockchain distributes its tokens to all ETH holders.

How to take part in the cryptocurrency airdrop?

Regardless of the type of distribution, its participant must have a relevant address on the network of the coin or token that he wants to receive – a non-custodial wallet is required, the keys to which the user always keeps (for example, MetaMask or Trust Wallet). An exchange account for an airdrop will not work in most cases.

Some projects organize promotional campaigns and openly announce the terms of participation. Unfortunately, in most cases these are little-known companies whose tokens are of low value and are not traded on major exchanges.

Other startups announce airdrops unexpectedly in order to reward a certain group of loyal users and prevent easy money lovers from giving away. This is usually done by popular or hype projects that give away a considerable amount of tokens, the price of which can rise significantly. However, it is almost impossible to predict such events.

Airdrop examples

In 2018, the foundation that develops the Stellar blockchain distributed its XLM coins worth about $125 million to Blockchain.com wallet users over the course of several months.

Decentralized exchange Uniswap unexpectedly gave away 400 UNI tokens to everyone who used it at least once in September 2020. The price of one UNI at the beginning of trading reached $7.

In 2022, the team of the largest NFT project Bored Ape Yacht Club held an ApeCoin (APE) airdrop among holders of non-fungible tokens from the Bored Ape and Mutant Ape collections.

We talked about the most profitable cryptocurrency airdrops in 2021 in a special article.

Easy money: the most profitable airdrops of 2021

Where can I find information about airdrops?

There are many resources on the Internet about current and future distributions of coins.

Popular sites include CoinMarketCap, CoinMarketCal and Airdrops.io, as well as Twitter channels Airdrop, DeFi Airdrops and Cosmos Airdrops.

We announce the most important airdrops in our Telegram channel.

What are the risks of participating in airdrops?

Novice investors see cryptocurrency giveaways as an easy way to get money.

However, participating in an airdrop either requires a lot of effort or comes with risks.

Here are some tips on how to protect yourself from scammers:

  • Never share your wallet private key or secret phrase (seed phrase) to restore your wallet to anyone.
  • Be careful and independently check each project in which you want to participate. Look for information about him on the Internet and on trusted resources – for example, ForkLog. If there is very little information about the project, the risks increase.
  • Be especially careful if you are promised fast and high income for participating in an airdrop.
  • Never share personal information about yourself, login data for personal accounts.
  • If you are asked to transfer a small amount of coins, and in return they promise to send more, these are scammers. Airdrops are a free distribution of cryptocurrency, you do not need to buy it.

There are cases when scammers sent a fictitious token to a wallet. It is impossible to detect a fake until the user decides to sell it or exchange it. Typically, the response is an error message urging you to visit a malicious phishing website. The interface of the page looks similar to a decentralized application (dapp) that offers to connect a wallet. The user confirms the transaction and unknowingly approves the transfer of their tokens to the scammers.

Source: forklog.com

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