What You Didn't Know About Crypto Airdrop

Crypto airdrop is a marketing strategy used by crypto startups to promote their projects and new tokens. The native cryptocurrency of the project is distributed free of charge to existing and potential users. Sometimes, users need to complete some simple promotional activities such as following the project on their social media accounts and sharing their posts in order to receive the tokens or coins.

There are different types of airdrops and each crypto project may have its own terms. But most airdrops are aimed at the same goal: to increase awareness and general interest in the project. Some airdrops are made directly to users' wallets, while others may require receiving cryptos manually.

Anyone with a crypto wallet can get an airdrop, but beware of scammers. There are many airdrops to defraud users that steal funds from your wallet when you receive or transfer free tokens. Before receiving an airdrop, you should always check that the project is genuine. If you need to link your wallet to the airdrop website, it's worth being extra careful.

What is a crypto airdrop?

A crypto airdrop refers to the transfer of digital assets from one crypto project to multiple wallets. The main idea is to distribute the coins or tokens to current and potential users to raise awareness for the project. These tokens are distributed free of charge, but some airdrops require users to complete certain tasks before receiving the token. Crypto airdrops were popularized in the initial coin offering (ICO) boom in 2017, but are still used as a marketing strategy by many crypto projects today.

How do crypto airdrops work?

There are different types of crypto airdrops, but usually a small amount of crypto is distributed to multiple wallets (usually on Ethereum or Binance Smart Chain). There are also projects that deploy NFTs instead of standard cryptos, though less common.

Some projects distribute without demanding anything in return, while others may require you to perform certain tasks so that you can receive the cryptos. Often these tasks include following social media accounts, subscribing to a newsletter, or keeping at least a certain amount of coins in your wallet. However, it is not always guaranteed that you will receive airdropped tokens.

In some cases, airdrops are only made to wallets that interact with the project's platform before a certain date. 1INCH and Uniswap are popular examples using this method to support early users. But unlike ordinary airdrops, thousands of dollars worth of distributions were made in these.

Why do crypto projects airdrop?

As we mentioned earlier, blockchain projects distribute free tokens to grow their networks and be adopted by more people. The high number of token holders is a positive measure. At the same time, the project becomes more decentralized in terms of token ownership. Crypto airdrops also encourage free token recipients to use and promote the project. This could help the project build its initial user base before being listed on crypto exchanges.

On the other hand, airdrops can also give the wrong impression of growth. Therefore, it is important to consider other factors when assessing the rate of adoption. For example, if a particular token is held by hundreds of thousands of addresses but is not actually used by anyone, then the project is either a scam or has failed to attract the attention of the community.

Are crypto airdrop and ICO the same thing?

Crypto airdrops and ICOs are different concepts, although both involve new cryptocurrency projects. Airdrops do not require any investment from participants, while ICO is a method of community funding.

In ICO, the project team organizes a token sale to raise funds from investors. ICOs became popular in 2014 when a community funding event was held to support the development of Ethereum. In 2017, there was an ICO explosion in the crypto world, with hundreds of new projects using this method. If you want to learn more about ICOs, What is an ICO (Initial Coin Offering)? You can read our article.

Airdrop types

As we mentioned before, it is possible to airdrop cryptocurrencies in different ways. There are a few other types besides the standard airdrops that transfer cryptos to multiple wallets. Some common examples include reward airdrops, private airdrops, and airdrops to token holders.

Award airdrop

Reward airdrop requires users to complete certain tasks. Examples of these tasks are sharing a post about the project on Twitter, joining the project's official Telegram channel, or creating a post on Instagram and tagging a few friends. In order to receive a reward airdrop, you will likely be asked to fill out a form stating your wallet address and provide proof of fulfillment of the tasks.

special airdrop

A private airdrop only sends crypto to certain wallets. Usually, recipients have a background in the project, such as being an active community member or being among the initial supporters of the project.

In September 2020, decentralized exchange (DEX) Uniswap airdropped 400 UNI to all wallets that interacted with its protocol before a certain date. This governance token gives token holders the right to vote on decisions regarding the future development of the project.

Airdrop for token holders

Airdrops for token holders distribute free tokens to people who hold a certain amount of digital currency in their wallet. The project team usually takes a snapshot of users' crypto holdings at a specific date and time. If the wallet balance meets the minimum requirement, buyers can receive free tokens based on their savings at the time the snapshot was taken.

Many new projects airdrop tokens to bitcoin (BTC), ether (ETH) or BSC wallet holders because they have the largest communities in the crypto world. For example, Stellar Lumens (XLM) distributed 3 million XLM to BTC holders in 2016, and the airdrop was made exclusively for users on the Bitcoin network.

How to get an airdrop?

As we mentioned before, the process may differ from project to project. But the most important thing to get an airdrop is a cryptocurrency wallet. MetaMask is a popular and easy to use crypto wallet. Once you have a wallet, you can check if you have received free tokens here. If you haven't received the tokens, you will probably need to interact with a website to receive the airdrop.

How to avoid airdrop scams?

It can be difficult to determine if an airdrop is genuine. You should definitely do your own research (DYOR) before participating in an airdrop, especially if you need to link your wallet to a website. Sometimes scammers will airdrop tokens to several wallets, but when you try to transfer these tokens to a crypto exchange or another wallet, they will withdraw funds from your wallet.

Sometimes, scammers can advertise a fake airdrop that redirects you to a phishing site. They may try to trick you into linking your wallet to a website that is very similar to the original site. As soon as you link your wallet and sign a transaction, they withdraw the other tokens in your wallet. These types of scams are often found on fake Twitter and Telegram accounts that look a lot like official accounts.

Some airdrop scams require you to send crypto to an unknown wallet address so you can unlock your free tokens. Genuine airdrops never ask for your funds or your bailout. You need to be wary of airdrop emails and direct messages.

In order not to be a victim of fraud, be sure to review the official website and social media channels of the project. Bookmark the official links and check if the project actually has an airdrop event. If you don't know anything about the project, you need to do some extra research to find out what the crypto community has to say. If you can't find enough information, you're probably better off ignoring this airdrop.

For extra protection, you can create a new airdrop-only wallet and email address. This way, you can ensure that your funds stay safe in your personal wallet from phishing attempts associated with airdrops. And most importantly, you should never share your private keys with anyone.

source: https://academy.binance.com/