What are Crypto Airdrops?
Crypto Airdrops refer to the distribution of digital assets (tokens/coins) by new or existing projects to the public.
This distribution is for FREE. It is sent by the crypto project to the wallets of members of its community. Receivers include the project’s early users/believers, investors, and anyone who participated in a given task. Tasks may range from testnet to gleam contests, and so on, within a specified period.
Types of Crypto Airdrops.
The ever-increasing rise in cryptocurrencies has given way to different types of airdrops. There are many with different names, but we will discuss the most important and common types of crypto airdrop.
1. Holders Airdrop.
This is a simple airdrop activity in which users are to hold a certain token before or during a specified date and time, to be eligible for the airdrop. Tokens are sent to the holder’s wallet addresses without the user performing any activity.
EOS, Juno, and ETH gave out free tokens to holders when a new project launched on their blockchains. In August 2020, Binance announced that 4,000,000 SXP tokens valued at $16,000,000 at the time will be airdropping to BNB holders.
2. Standard Airdrop.
This rewards users with tokens for signing up for a newsletter or for creating an account and completing the KYC (know your customer) verification of a particular project or exchange. This is easy, and most people missed out on it because of the KYC.
3. Bounty Airdrop.
A popular type of airdrop largely done by “airdrop hunters”. Users are required to perform certain promotional tasks for the said project in order to be eligible for the airdrop.
These tasks are of different kinds. They include retweeting and tagging friends on Twitter. Another involves joining the project’s telegram community and inviting others to join. Participants interact with a telegram bot that monitors the activity. At the completion of the task, users have to fill out a form and submit their wallet addresses.
This is called bounty for it requires you to hunt for the airdrop.
4. Exclusive Airdrop.
This type of airdrop is exclusive to a certain group of users. The early stage users and believers of a protocol before a specified date earn tokens of that protocol.
UNI, ESN, and DxDy airdropped their respective tokens to users who interacted with their products before the snapshot.
Let’s Talk About Airdrop Distribution Mechanism.
- Stakedrops. This is a distribution mechanism by which early users are rewarded in proportion to the number of token holdings or stakes. Here, the more you stake/hold the more you’re airdropped.
- Fairdrop. It involves giving an equal amount of free tokens to all eligible users/stakers/holders. The quantity staked has nothing to do with the quantity you will receive, as long you’re eligible for it.
Reasons Project Gives out Airdrop.
Projects give out free tokens to show appreciation to the public, or as a generous act. It equally serves some good to the project itself.
Here are a few reasons blockchain projects give out airdrop:
- Marketing Strategy. New projects do this for public awareness. There are so many competitors in the crypto space. As such, new projects needs to draw the public’s attention to what it has to offer.
- To build and Learn about its community. Projects need a community that can believe and trust them. They need followers, those who can sing their praises to others. As such, they do give out airdrops to gain the support of the public. Projects want to know more about the community their likes, and dislikes, and what they want and need in other to serve them better.
- To reward Users. As a way of projects saying, thank you, users receive free tokens. UNI airdropped to all users of their platform at the early stage. The same act was done by the DyDx team recently.
- To decentralize the distribution of a token. It is fundamentally wrong to have the majority of a token distributed to an individual wallet. Hence, Airdropping tokens to the public make it easy for almost everyone to have a share of a project’s token. This helps the price of the token and reduces whale manipulation.
How to Spot Legit Airdrops.
The cryptocurrency industry is still unregulated. It is easy for anyone to come up with an idea, good or bad, and be rewarded. It helps to be familiar with these genuine airdrop guidelines.
- Have a Metamask/Trust wallet with no funds and a new Twitter and telegram account for airdrop use.
- When there’s an airdrop link, always do a simple Google search on it. It helps.
- Legitimate airdrop won’t ask for money to cover the gas fee after completing a given task.
- Airdrop doesn’t start and end on telegram, there must be a website and known handles that are attached to it. You’re not required to provide a private key or social media password.
Conclusion
Everyone loves being rewarded for doing something or for being in the right place at the right time. Airdrops worth hundreds of dollars will make you love crypto the more.
While getting airdrop, do well to protect yourself from the dark side of the crypto space.
