What is a crypto airdrop and how does it work?
Crypto airdrops are a marketing strategy used by startups to give tokens to existing cryptocurrency traders for free or in exchange for minimal promotional work.
For most crypto investors, there is nothing more important than making a return on their investment. Thanks to the volatility, this can be done quickly or it can be a hugely difficult task. That’s why crypto airdrops are an inexpensive way to make additional returns on your portfolio. After all, airdrop tokens are free and never hurt, right?
Almost daily there are new crypto airdrops, with some easier to obtain than others. Not every airdrop is equally reliable. Crypto airdrops always seem very lucrative at first, but they can also cause problems. To make sure you can profit from crypto airdrops, but also see through any pitfalls, you can read all about crypto airdrops and how they work in this article!
What is a crypto airdrop?
A crypto airdrop is a method by which you can earn free crypto from a crypto project. There are several ways to receive these tokens. Many times an airdrop is associated with free cryptocurrencies, but this is not necessarily true. You have to put in time and effort or you may have to deal with transaction fees. However, it is also possible to participate in an airdrop for free!
Related: What is cryptocurrency? A beginner’s guide to digital currency
You’re probably wondering; how do crypto airdrops work? Crypto projects have a certain amount of available tokens that they give to people who meet eligibility requirements. By completing tasks, you can become eligible for these tokens. There are several ways to participate in crypto airdrops. Often you have to sign up for an airdrop or perform other actions. After completing tasks or winning the tokens, you can claim them or they will be deposited into your wallet.
Examples of crypto airdrops
There have been hundreds of airdrops in the past, including the airdrops of leading crypto projects. There are therefore a huge number of examples of crypto airdrops. Airdrops have been occurring for years in the crypto world. The first airdrop ever took place back in 2014. Back then, a crypto project even handed out 50% of all tokens during an airdrop.
The crypto project, called Auroracoin, has its cryptocurrency token, known as AUR. The project had plans to make AUR the national cryptocurrency of Iceland. Therefore, the entire AUR airdrop went to Icelandic citizens, who could receive a total of 31.8 AUR per individual.
Many airdrops also followed in the years after the Auroracoin airdrop, including those of slightly more well-known cryptocurrencies. For example, in 2016 and 2017, respectively, Stellar Lumens (XLM) and Bitcoin Cash (BCH) organized cryptocurrency airdrops, distributing their airdrop coins to Bitcoin owners. Bitcoin Cash gave away one Bitcoin Cash token per Bitcoin, which was worth thousands of dollars at its peak.
Another well-known crypto airdrop is UniSwap’s airdrop, in which the governance token UNI was given out to users of the decentralized exchange (DEX) in 2020. In total, over 250,000 accounts received 400 UNI per account, which totals thousands of dollars per person! A very lucrative airdrop if you can sell your UNI tokens at the right time.
Different types of crypto airdrops
There are several different types of airdrops, all of which have unique characteristics. Crypto projects often see airdrops as a marketing tool where they try to grow as a project through the airdrop. For example, projects may be looking for more brand awareness and new users or they may want to reward their first users.
The motive of a crypto project is of course related to the type of airdrop. There are a few types of crypto airdrops that are common, namely:
In a standard airdrop, tokens are distributed for free and you do not have to perform any particular actions. All you have to do is create an account somewhere and then give your wallet address. There may be only a certain amount of tokens available for the airdrop, so you need to get there early.
These crypto airdrops are hugely popular because you can participate easily and it is free crypto because of this. To distribute the tokens fairly, the distribution can take place via a draw. In this case, you have a chance to win free crypto, but you are not guaranteed to win the airdrop.
With bounty airdrops, you can receive rewards for completing tasks. These tasks take a fair amount of work, so the price you pay for free cryptocurrency tokens consists of energy and effort. Often the tasks are not difficult but are valuable for a crypto project. This is why new projects are increasingly choosing this method of token airdrops. Some examples of the activities are:
With a holder airdrop, you can receive cryptocurrency tokens if you hold a certain number of tokens of another cryptocurrency. The amount of your airdrop is determined based on a snapshot. At a certain moment, a snapshot of your crypto wallet is made. This moment is often a fixed date, but it can also be during a certain period. Based on the amount of tokens in your wallet, you can expect to receive a certain amount of cryptocurrencies.
How can you find upcoming crypto airdrops?
You can find upcoming crypto airdrops in several ways. Of course, you can consult search engines like Google, and several websites have mapped out the current airdrop offerings. Often you can find not only airdrops in progress, but also upcoming airdrops.
Some websites do not show questionable airdrops in advance because they do not want to risk their reputation. Some platforms indicate the extent to which they trust the airdrop in question. Regardless of the opinion of an airdrop website, it is still wise to do your research and pay close attention to an airdrop.
In addition, there are often crypto platforms that launch airdrops for people who have used the platform in the past. These people then become eligible, without knowing it beforehand. To qualify for possible airdrops, you can start using swap platforms. When you use swap platforms that are built on a blockchain with low transaction fees, you can qualify for an airdrop very cheaply.
How do NFT airdrops work?
Most airdrops are about cryptocurrencies, but there are also airdrops where you can get nonfungible tokens (NFTs). Just like crypto airdrops, NFT airdrops can be organized for promotional purposes. If you want to qualify for an NFT airdrop, there are several ways to accomplish this.
Related: How to store NFT assets — A beginner’s guide
Sometimes you have to perform certain tasks, just like with the crypto airdrops, but the token issue can also be done through a lottery. In addition, you may also need to own another nonfungible token from a particular NFT collection to qualify for the airdrop. For example, owners of a Bored Ape Yacht Club (BAYC) NFT received ApeCoin tokens as airdrops. NFT airdrops can also involve risks, as airdrop phishing also occurs at NFTs. Therefore, always make sure that you only participate in reliable airdrops and never share your data.
Are crypto airdrops safe?
Often crypto airdrops seem harmless and safe, but this is not always the case. Scammers have also found ways to scam people through airdrops. They have found ways to harm crypto enthusiasts by taking away cryptocurrencies or private keys.
Stay alert and pay close attention to airdrops, especially when high amounts are promised that are too good to be true. It is important to remember that it is never wise to connect your crypto wallet to an untrustworthy party or give up your private keys.
There have even been fraudulent airdrop actions where scammers deposited cryptocurrencies. These tokens turned out to be fake and were unsaleable. To make sure you don’t become a victim of a scam, it can be useful to research the team behind the crypto project and find out what others think.