What is Crypto Airdrop? Your Guide to Free Digital Assets (2023)

What is Crypto Airdrop?

TLDR

A crypto airdrop is a marketing strategy blockchain projects use to distribute crypto tokens to users’ wallets.

Types of crypto airdrops include:

  • Standard airdrop
  • Bounty airdrop
  • Holder airdrop
  • Exclusive airdrop
  • Raffle airdrop

Introduction

Crypto airdrops involve sending “free” digital currency to the wallet addresses of blockchain community members.

Blockchain projects use crypto airdrops to generate interest and hype the project. Some companies also utilize crypto airdrops to remain on the minds of investors and token holders as a buzz is created.

cryptocurrency airdrops.
Cryptocurrency airdrops.

Users often must complete specific activities before gaining from a free airdrop. Some activities include engaging on social media platforms or joining the project’s Telegram or Discord channel.

Popular airdrops such as the Auracoin airdrop, BTT airdrop, and UniSwap airdrop have given users massive wealth. How? Let’s find out.

What is a Crypto Airdrop and How Does it Work?

What is a Crypto Airdrop?

A crypto airdrop is a method crypto projects use to spread awareness about their project. It involves distributing free tokens to active users of the blockchain community after a condition is met.

Cryptocurrency projects use this strategy to keep themselves relevant and attract new users. Usually, the requirement includes using the protocol or holding a specific token.

There are new crypto airdrops daily, but be aware of fake airdrops. So you have to be careful to avoid getting scammed. One popular crypto airdrop is the Initial Coin Offering boom in 2017.

How it Works

A crypto airdrop begins with a crypto project or company. At the start of cryptocurrency airdrops, projects select how the airdrop will proceed and the participants eligible.

The project will select a suitable type of airdrop to use when facilitating the airdrop. It could be the standard, holder, or exclusive. Once a suitable type is selected, the company will highlight the eligibility criteria.

The criteria could be holding tokens or liking a post on Instagram. After that, the company will launch a public campaign for the airdrop.

How crypto airdrops work.
How crypto airdrops work.

During the public campaign, the company will collect information from interested participants, such as their crypto wallet and email addresses. Most crypto airdrops don’t require more information than this.

Some airdrops select participants using a capture of certain criteria. For example, the company might select a snapshot of participants holding 300 tokens in their wallets at a specific date.

After selecting participants for the airdrop, the company will send out tokens, usually with their treasury wallet. Most projects use smart contracts to facilitate airdrops so they remain secure. The crypto project will often publicize the transaction block so the airdrop is transparent and for everyone to see.

Airdropped assets usually enter wallets directly without the owner having to accept the drop, and this can be a disadvantage sometimes. Some projects also don’t announce the criteria to participate in the airdrop beforehand.

There are no rules on how to conduct an airdrop. Each project can find creative methods on how to organize their airdrops.

How To Participate In Crypto Airdrops

Here are some steps to participate in crypto airdrops using Trust Wallet.

Step 1: Install a Wallet (Using Trust Wallet as Example)

Before you can gain from cryptocurrency airdrops, you need to have a crypto wallet. It would be best to have a wallet that supports the specific token from the airdrop.

Some reputable crypto wallets that support multiple tokens include MetaMask and Trust Wallet. Once you’ve installed the application, create a multi-coin wallet to receive tokens.

Install a wallet.
Install a crypto wallet.

Step 2: Copy the Wallet Address

After creating a multi-coin wallet, copy the wallet address. That is what you will use to receive tokens from the airdrop.

To copy your wallet address on Trust Wallet, select the blockchain you want to copy its address. For example, if you need an ETH wallet, click on Ethereum.

After that, click on [receive], and then you can copy the address.

Step 2: Copy the Wallet Address
Install a crypto wallet.

Step 3: Visit CoinMarketCap’s Airdrop Page

Visit the CoinMarketCap airdrop page on your device and sign up if you don’t have an existing account. You will see a list of incoming, ongoing, and ended airdrops on the page.

To participate in an airdrop, your focus should be on the ‘ongoing airdrops’ section.

CoinMarketCap airdrop page.
CoinMarketCap airdrop page.

Step 4: Select and Join an Airdrop

In the ongoing airdrops section, select a crypto airdrop to participate in. It is best to pick an airdrop ending soon to get your free tokens quickly.

Click [Join This Airdrop] on the token collection page to participate.

Step 5: Follow The Criteria

After joining the airdrop, the next thing to do is follow the instructions to participate. You will often have to follow a social media account or retweet a post on Twitter. The activities usually don’t take long and can be completed in minutes.

How to participate.
How to participate.

Step 6: Paste the URL and Wallet Address

Before you can get tokens from an airdrop, the project’s developers need to verify if you completed the tasks. You will be prompted to input your social media handles so the project can verify. You can also input the post’s URL instead. After that, paste your wallet address into the dialogue box to add it to the list of potential receivers.

Step 7: Add The Token

You must add the token you expect to your wallet before it drops. To do this on Trust Wallet, copy the token’s contract address from the CoinMarketCap website, then tap the filter icon on your Trust Wallet. Search for the token name in the search bar and tap the toggle button to add the token to your wallet.

Add token.
Add token.

If you still don’t see the token, click [Add Custom Token] and then input the name and symbol of the token.

Types of Crypto Airdrops

There are several types of cryptocurrency airdrops. Each type is suitable for specific marketing purposes. The types of crypto airdrops are:

1. Standard Airdrop

A standard airdrop is the most basic form of cryptocurrency airdrop. For standard airdrops, participants have to show interest to qualify for the airdrop. You will also need to provide a valid wallet address. It’s that easy. Often, crypto projects don’t request additional information from participants when they express interest in standard airdrops.

A standard airdrop usually has a limited number of tokens to distribute. There is also a set amount every individual can receive. This is to prevent a single person from hogging all the airdropped tokens. A standard airdrop can sometimes be time-restricted since tokens are limited. This type of airdrop is quite popular in cryptocurrency forums due to its simplicity.

2. Bounty Airdrop

Bounty airdrops require participants to perform certain activities or “bounties” before getting free tokens. The tasks usually include creating social media awareness, such as liking or retweeting posts about the crypto project on Twitter or Discord. You can also receive referral bonuses and finder’s fees from bounty airdrops if you recruit other participants for the company’s channel.

After performing the set tasks, participants will receive points equivalent to the bounty airdrop they will get. For some bounty airdrops, users have to reach a certain threshold of bounty points before they qualify for the airdrop. You can be listed for the airdrop once you get the required number of bounty points.

Types of airdrops
Types of airdrops.

3. Holder Airdrop

Holder airdrops are automatic airdrops. They are called automatic because they are based on the holders of an asset and the number of tokens held. Only investors holding the specified amount of tokens can benefit from this type of airdrop. Hence, if you are not holding up to the required amount at the time of the airdrop, you will not qualify for the holder airdrop.

Regarding holder airdrops, the distribution of tokens to existing wallets is fully transparent. That means every participant can see the distribution of airdropped tokens to wallets. Some holder airdrops only benefit the individuals holding the lion’s share of the tokens.

This type of airdrop sometimes applies when general members hold a specific amount of tokens. One downside to this airdrop is that some holders might want to refrain from participating but will still receive airdropped tokens anyway.

4. Exclusive Airdrop

An exclusive airdrop is like a holder airdrop, but it is more specific. It involves selecting only a specific number of people as participants for the cryptocurrency airdrop. The difference between the holder and exclusive airdrops is that the criteria for airdrop recipients don’t have to be the number of tokens held or holders.

Some criteria you can expect from exclusive airdrops include the time spent on the project, the number of posts on social media, and the most money spent on non-token activities. This type of cryptocurrency airdrop is centralized and can airdrop crypto to wallets that don’t hold any tokens as long as you meet the requirements.

5. Raffle Airdrop

Raffle airdrops integrate some other types of crypto airdrops. In the case of raffle airdrops, crypto projects will indicate the number of airdrop tokens they intend to distribute and then encourage users to get a raffle ticket. You can earn raffle tickets by holding tokens, earning points, or indicating interest in the project.

Most times, crypto projects only utilize raffle airdrops when the number of participants exceeds the number of tokens for the upcoming airdrop. Hence, a raffle is set so they can randomly pick participants for the airdrop. Bounty and exclusive airdrops can utilize the raffle system.

Pros and Cons of Crypto Airdrop

Pros

  • Spreads awareness on a company or crypto project
  • It rewards early users with a stake in the project
  • It helps newly minted tokens adapt quickly to the crypto market
  • It is a unique way of sending tokens across multiple-user wallets

Cons

  • It sometimes ends as a pump-and-dump scheme.
  • It might become worthless if the airdropped token has no liquidity on crypto exchanges.
  • It poses some security risks to wallet holders.
  • Some free airdrops enter your wallet without needing you to accept.

An example of a popular crypto airdrop is the Auroracoin airdrop, where the project put half of its AUR tokens into the drop in 2014. It is the first crypto airdrop. Some other notable examples of crypto airdrops include.

Bitcoin Cash Airdrop

Bitcoin Cash had its airdrop in 2017 when it split from the Bitcoin network. This is one of the first major forks in the Bitcoin network. Bitcoin Cash distributed one BCH token per BTC during the hard fork airdrop. Hence, every holder was compensated equivalently. At the peak of the airdrop, Bitcoin Cash’s value was over $4,300.

UniSwap Airdrop

UniSwap.
UniSwap airdrop crypto.

Another iconic airdrop in the crypto world is the UniSwap airdrop. In this airdrop, the governance token UNI was distributed to DEX users in 2020. The project awarded over 250,000 early users with the UNI airdrop. Only individuals who had completed at least one transaction on the platform were eligible to participate in the drop. Two days after the airdrop, the token’s value upgraded by 160%.

Steller Lumens Airdrop

The Steller Lumens airdrop is one of the largest crypto airdrops ever. The company joined hands with Blockchain.com to airdrop $125 million XLM tokens to people using blockchain wallets. The airdrop marked the beginning of several other blockchain airdrops. This airdrop increased the rate of wallet usage.

How to Avoid Crypto Airdrop Scams

The only way to avoid airdrop scams is to be cautious. Most scams in crypto airdrops need you to input your wallet information on a phishing site to be successful. Hence, it is important to participate only in legitimate crypto airdrops, as participating in fraudulent airdrops can lead to a severe loss of assets. Here’s how you can avoid falling victim to airdrop scams.

Beware Of Unreasonable Airdrops

It is best to avoid any airdrop campaign that offers an astronomical amount of tokens for little effort. Most times, it will be a scam. It is normal for scammers to lure people to fraudulent sites using airdrops as bait. Hence, you should always be careful of airdrops that seem too good to be true. Find out if a project is legitimate before joining.

Do Your Research

Another thing that can help prevent scam attacks is proper research. It is crucial to research the legitimacy of any airdrop before participating. Find out information about the project’s team, background, and previous projects. That way, you can tell which airdrop is legit.

It is probably a scam if the team is anonymous and there is little past information on the project. Most legit crypto projects are transparent about their plans.

Verify The Campaign

Some scammers mimic legitimate airdrops, so it is hard to tell the difference. That is why you must verify every campaign before joining. Check the project’s official social media page and website to confirm if they announced any airdrops. If the company’s website says nothing about an airdrop, it is likely a scam.

Don’t Share Private Keys

Scammers sometimes request your personal information or private key, disguising it as a requirement for airdrop participation. It is important to remember never to share your private key with anyone, as it can lead to scam attacks. Legitimate airdrops only request your crypto wallet address and not your private details.

Avoid crypto scam

Conclusion

Crypto airdrops are a way for companies to draw awareness to themselves. It is also a way for crypto industry members to earn free tokens. Many projects or companies use this marketing strategy in times of a hard fork or to attract investors. There are several types of crypto airdrops, including standard, holder, exclusive, and bounty airdrops.

Crypto airdrops are a profitable way to add to your crypto portfolio. However, you must be careful of airdrop scams. Only some airdrop campaigns are legitimate. Find out if an airdrop is legitimate before participating. A popular example of an airdrop is the Everipedia airdrop in 2018, where holders got 5.1 IQs for every EOS.