A crypto airdrop is a case whereby a cryptocurrency project sends free tokens to an audience. Just imagine some company that has just launched its new digital coin; instead of selling it, they decided to give small units out to create buzz, build a community, or encourage participation in their project.
Airdrops are crypto projects' one way of advertising themselves and giving you a small piece of their product for free. These usually come in small portions of some new cryptocurrency, which get airdropped to selected users' wallets. In return, the recipient may be asked to perform simple tasks, like following the project on social media, signing up for a newsletter, or referrals.
Why Would Any Project Give Away Tokens for Free?
Well, there are several reasons as to why projects do this:
Marketing and Promotions: Nothing does a better job than airdrops for the latest cryptocurrencies in town. They increase the interest in the project from its early stages, blasting information about it to every corner of people.
Building Community: An active community is key to any Web3 project's success. Airdrops are a way to introduce fresh people into it and such participants become part of its journey.
Loyalty Rewards: People get rewarded with airdrops just for remaining loyal to a project. For example, after having held a cryptocurrency for some time, you can also get tokens for free in another related project for being loyal.
Decentralization: The whole heart of Web3 is decentralization; the spreading of power and control from a single entity to many participants. Airdrops do this quite well, since they give out tokens far and wide, making the owners of the tokens many.
How Do Crypto Airdrops Work?
The first thing a project will do is announce their airdrop. This may be on social media, in some crypto forum, or officially via their website or Discord group.
The announcement typically includes additional criteria on who can participate. At times, you may need to hold a specific amount of another cryptocurrency in your wallet. In other cases, you might be asked to complete specific tasks, such as sharing a tweet or joining a Telegram group.
To get an airdrop, you need to have a crypto wallet to receive such tokens. It is usually a wallet compatible with the blockchain the project is on, like a Cardano wallet for tokens of Cardano-based projects. During the period of an airdrop, the tokens are distributed automatically among the listed wallets. By that moment, users can check their wallets and find the new tokens in them for free.
Types of Crypto Airdrops
These are common forms of airdrops in the crypto space:
1. Standard Airdrops: The most basic form of an airdrop. Here people are usually offered coins/tokens without having done anything much that may be considered as a requirement except maybe signing up for new updates or newsletters.
2.Bounty Airdrops: This requires that certain tasks be done by users before they become eligible for it. Some may be asked to follow on Twitter or share posts with others so that many people are aware of the project.
3. Holder Airdrops: When you have tokens from various projects, you may discover that new ones from a new project have been deposited into your wallet through a holder airdrop.
4. Exclusive Airdrops: Occasionally, projects arrange airdrops that target only the most committed or initial fans. Basically, these tend to be stringent and are only given to those who have been around for a long time or the first adopters.
The Recent Rise of Airdrops
Airdrops have recently become much more popular, particularly with the latest rise of DeFi. In 2020 and in 2021, a number of highly publicized airdrops were done where participants received tokens that quickly appreciated in price. For example:
● Uniswap's UNI: In September 2020, this decentralized exchange performed an airdrop where it decided to reward individuals who had used the protocol prior to the creation of UNI with 400 UNI tokens. Many individuals found these tokens to be worth thousands of dollars within a very short time.
● ENS (Ethereum Name Service): Last November, ENS performed an airdrop of tokens for users who had registered a ".eth" domain name. Those tokens quickly became valuable, providing users with some real financial windfall.
Due to such success stories, airdrops have become a key part of how new projects launch into the crypto space. They can be a means for new projects to build up their liquidity—the depth, or the number of tokens available to buy and sell—and increase their communities to widespread recognition in the crypto world.
Keep In Mind
Airdrops may sound like free money, but you should be prepared to watch out for scams. The crypto world, just like every other sector, has its own bad eggs. Some of such fake airdrops are cooked up to steal your information or even dupe you into giving away access to your crypto wallet. Only participate in airdrops by verified sources.
Also remember that not all airdropped tokens are worth a lot; some have very little to no value, while others may grow in value over time. Be patient and have a wait-and-see attitude regarding the project in general.
Conclusion: Why Airdrops Are Your Ticket to Web3
Airdrops are a very good beginner way to get into the world of cryptocurrencies and Web3: getting free tokens for being part of cool, upcoming projects, part of a growing decentralized economy, with no need to invest money in advance. Just remember to find out as much as you can so that you don't fall for carefully designed scams.
With more and more projects turning to airdrops as a way to launch and grow, there is no better time to get involved and learn how to start your Web3 journey!
Comments