With the aim of promoting acceptance, crypto projects distribute free tokens in large quantities to their communities.
An airdrop will probably be sent out to cryptocurrency users who utilize new and existing platforms often. As part of a bigger marketing campaign, airdrops involve blockchain-based projects and developers giving away free tokens to members of their communities.
Sending newly created tokens to thousands or even hundreds of wallet addresses is the main idea, with the aim that receivers will be more likely to interact with other relevant projects, even if it's just to figure out how to exchange the free tokens for anything else.
This idea is similar to getting a free discount card in your mailbox to urge you to go to a nearby new store. However, the prime objective of a crypto-airdrop isn't to get the recipient to spend money, but to make them understand new projects and services.
In most cases, users receive a crypto airdrop in return for completing a certain task. These tasks frequently include things such as:
- Following an account on social media.
- including hashtags, sharing or retweeting one of their posts.
- Sending or receiving a transaction (using a particular crypto platform or wallet).
- Creating an account and subscribing to receive updates.
There are various circumstances in which users may receive a crypto airdrop without having to take any action, as we will outline below.
What is the purpose of cryptocurrency airdrops?
Promoting a blockchain startup, project, or service is the main goal of a crypto airdrop. The team may bootstrap its project and guarantee a fair distribution of tokens among its community from day one by releasing tokens to users. Additionally, once the token starts trading on an exchange, those who get it are motivated to raise awareness and support the project in reaching a wider audience. The token is more likely to increase in value as there is greater interest in it.
By advertising the launch on a project's website, cryptocurrency forums, and social media, airdrops frequently gain traction. This is similar to receiving a HelloFresh coupon in your email with a discount code because both of those initiatives aim to increase platform usage by offering a financial incentive.
Genuine cryptocurrency airdrops never require users to make any kind of investment. Instead, it is a strategy to distinguish oneself from rivals who pursued outside funding before releasing their tokens.
Are crypto airdrops secure and how do they operate?
A crypto airdrop can be carried out in a variety of ways:
- Users can become eligible to receive the airdrop at a later date by completing one or more small social tasks.
- Distribute tokens automatically to owners of a specific asset or balance on the blockchain where the airdrop will take place. (For instance, the airdrop is given to all addresses with a balance of at least 0.01 ether.)
- Using a prior blockchain snapshot and allowing customers to use a smart contract on the project's website to claim their airdrop tokens.
Cryptocurrency airdrops, despite their popularity, aren't always as risk-free as they seem.
There will be airdrops that are nothing more than pump-and-dump strategies because recipients get "free money" in their wallets. In more specific terms, the token's inventor believes that there will be enough attention about the token to get it listed on an exchange. As soon as tokens are traded, the inventor sells a sizable number of them, which drives down the price.
The so-called dusting attack is another possible attack vector. An unsuspecting user will receive a little quantity of cryptocurrency from a scammer in order to compromise their privacy. In order to identify the individual or business managing the wallet, the attacker will then follow the transaction activity of the tokens distributed for the wallet.
The U.S. Internal Revenue Service considers airdrops to be income, thus whether or not you desired the airdrop in the first place, you will still need to pay tax on any number of "free tokens" you received.
Various crypto airdrops examples:
A few crypto airdrops that recently occurred in the cryptocurrency market caught users off guard.
All non-fungible token (NFT) producers, collections, and enthusiasts who had previously conducted trades on the OpenSea NFT marketplace received rewards from OpenDao's airdrop of SOS tokens. The only need for recipients was to manually claim the token from the website. As a result of the airdrop, OpenDao's Twitter following increased to over 60,000, and the token was claimed by more than 120,000 addresses.
The Gas DAO, which launched the GAS token on the Ethereum blockchain, took a similar action. The airdrop was open to everyone who had ever used Ethereum and paid gas fees of at least $1,559; tokens may be claimed via the website. Over 57,000 addresses registered for the airdrop. The Gas DAO, which strives to represent the active users of the Ethereum network, grants voting rights through the GAS token.
The third instance is the LooksRare team's LOOKS airdrop. After putting an NFT for sale on the LooksRare marketplace, users with over 3 ether in transaction volume on OpenSea between June 16, 2021, and December 16, 2021, were eligible for LOOKS tokens. A portion of the trading commissions made by the LooksRare platform go to users who possess the LOOKS token. Users can also stake LOOKS to gain additional tokens.
How do you qualify for a cryptocurrency airdrop?
It can be challenging to make sure you are qualified for upcoming events because a crypto airdrop is primarily intended for marketing and promotional activities. Although the majority of them are simple to find, each airdrop has certain eligibility requirements that must be met. Qualification is challenging when an airdrop involving a blockchain snapshot is announced after the fact. There are, however, other choices to consider:
- Find specific crypto airdrop websites (you will often receive an email notification), similar to what you'd do when signing up for promotions at a store you frequently shop at.
- Look for the hashtag #airdrop on social media to see if anything has happened.
- Use various cryptocurrency services, products, platforms, and blockchains actively.
- Look through news sources and forums devoted to cryptocurrencies for references to current or planned airdrops.
The primary condition for getting cryptocurrency airdrops is having a wallet with a balance. An airdrop cannot be claimed or received without a wallet address. While convenient, using an exchange address is unsuitable for airdrops. Users should instead research the many cryptocurrency wallet options available to them in order to store their money. One of the most widely used wallets is MetaMask.
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