What is Crypto Airdrop- Everything you need to know
Airdrop, according to the dictionary, is a delivery of resources that was dropped off from thousands of feet in the sky through an aircraft during world wars in the 20th century. However, the term is more prevalent these days in the crypto space than ever before. The latest blockchain projects are inviting users from the crypto community to participate in their airdrops. With this article, let’s understand the concept behind airdrops, what they are, why airdrops are hosted, and how to avoid airdrop scams.
What is a Crypto Airdrop?
In layman’s language, how a newly opened bakery offers free cookies to the people in order to give a taste of their product, a blockchain project, following the same old practice, offers free tokens to the people to create awareness about their project. It is a marketing strategy/ stint where crypto millennials are invited to participate in the airdrops hosted by blockchain startups. It involves delivering an amount of the said project’s native tokens to the wallets of participants/ winners either free of cost or in return for a small promotional service.
Types of Crypto Airdrops
Based on the diversity in the crypto space, airdrops could be of different types. Let’s learn about the 4 commonly organized airdrops.
1- Standard Airdrop
Unlike how it sounds, a standard airdrop is not as common as the other airdrop types. Standard airdrops are hosted to increase the ownership of the project’s native token by giving it away to as many people as possible. Thus, in order to participate in a standard airdrop, all a user mostly requires is a crypto wallet on which the cryptos can be dropped off. Popular for their simplicity, Standard airdrops are mostly time sensitive.
2- Bounty Airdrop
Bounty airdrop is a point based airdrop where participants are assigned a series of tasks. On accomplishing these tasks, participants earn points. Now based on the nature of how large the bounty is, a participant may have to earn a certain amount of points before qualifying for the airdrop. These tasks are mostly associated with basic promotional activities on social media to increase the awareness of the project. It may include retweeting a pinned tweet by the host, following the company’s instagram handle, joining the discord channel, signing up for the newsletter, or more.
3- Holder Airdrop
Unlike other airdrops, holder airdrops work a little differently as participants may not require to do any promotional activity but simply hold coins of the said cryptocurrency in their wallet. For example, if the airdrop is hosted for Ethereum holders, only those who hold Ethereum crypto in their wallet will be eligible to participate. Interestingly, the host can also decide the minimum amount of cryptos required to be eligible for participation and so the token distribution ratio per coin held. In order to participate, a user simply submits a snapshot, showing the number of tokens held in his wallet and the reward tokens are air-dropped. Holder Airdrops are mostly hosted to target the investors with large amounts of cryptocurrency in their wallet.
4- Exclusive Airdrop
An exclusive airdrop is sort of an internal airdrop which is held for the designated users that have stayed connected with the project since its early days and supported it. Such exclusive airdrops are a way of rewarding those users for their loyalty.
Why are Airdrops necessary?
Besides increasing the popularity of the project, the main purpose of hosting airdrops is to bring the native token of the project in circulation. No reason why the host wants more and more people to participate so the word goes around the crypto ecosystem. For once the project is launched, it is the value of the token that will speak for the growth of the project in the crypto world, therefore it must stay true to its value.
The value of a crypto token is largely driven by the number of people holding it. As the number of people investing in it soars up, and so does the volume of transactions, the token will gain value in the market. For instance, Sand, the native token of the popular NFT game Sandbox, started to trade at $0.05 before it climbed to the all time high of $7, gaining a growth of more than 140 times.
Beware of Crypto Airdrop Scams!
Since airdrops are one of the simplest and easiest ways to earn crypto, these events always attract a huge interest from the crypto community. On the other hand, scammers also keep a close eye on airdrops in order to dupe people. One such common scam is where perpetrators host an airdrop and send their malicious tokens to the wallets of participants. As the curious wallet holders search about the tokens or project on the internet, they end up landing on the website of the scammers.
The green signals for a genuine airdrop would be the authentic website of the project, their social media handles, the mention of their projects in news or magazines, and more. A user should always keep in mind that a genuine crypto-airdrop host will never ask for cryptocurrencies for enrollment in the airdrop or if the amount of cryptos they offer seem too good to be true. In the big picture, try to stay away from malicious projects and do your own thorough research before participating in any crypto-airdrop.
