Crypto Airdrops: All That You Need To Know

What are airdrops in crypto?

An airdrop in crypto is a promotional exercise adopted by a blockchain project for multiple reasons. It could be to raise awareness regarding their respective project, incentivise stakeholders, or drive adoption. This is done by sending crypto tokens or coins to the wallets of recipients who meet the required criteria. Due to their sustained popularity over the years, crypto airdrops are the go-to activity for any new crypto project to generate public attention and establish their initial community.

A crypto airdrop is also one of the primary ways of announcing a new network in the space. Numerous crypto projects have done this, which we will examine in detail in the sections ahead. 

In crypto, an airdrop is generally publicised through a project’s website, social media profiles, or other crypto-centric forums such as Twitter and Discord channels.

Participants of most airdrops in the past have been tasked with promoting the project online or have qualified by being existing token holders of a project. However, these requirements normally differ for every project.

So how does a crypto airdrop work?

As we explained, crypto airdrops could have different goals based on a project’s concerns. Three major user bases are typically targeted: new users, loyal existing users, the most active ones, or those who meet all three conditions. Based on these target groups, an airdrop in crypto is conducted in the following order:

• Once a project identifies the core objective of the crypto airdrop, the first step is to publicise the airdrop, its details, requirements, and all other data through the usual channels.
• Secondly, those interested in the airdrops apply for the event by submitting all the mandatory details like wallet addresses, contact information, etc.
• The most important step during crypto airdrop is when the project conducting it verifies the tasks completed by the applicants or checks if they accomplish the needed prerequisites. Crypto projects usually do it through a ‘snapshot,’ which observes the entire blockchain momentarily and records somewhat of a screenshot of all the wallets eligible for the airdrops. Further, smart contracts are leveraged to distribute the appropriate proceeds to each wallet.

Types of crypto airdrops

Crypto airdrops can be mainly classified into the following types:

Standard airdrop: These are the most basic crypto airdrops, where interested participants apply for the event with their wallet addresses. Standard airdrops commonly have a limited supply of tokens, which are distributed on a first-come-first-serve basis.

Bounty airdrop: These airdrops distribute tokens as a kind of ‘bounty’ among users who perform the assigned tasks, which generally concern marketing strategies for the project. Bounty airdrops could be regarded as ‘giveaways’ for completing  tasks.

Holder airdrop: In a holder airdrop, existing token holders of a project are rewarded with tokens for their loyalty and patronage. On the other hand, a crypto project could ensure that only holders of a minimum number of tokens qualify for the airdrop.

Exclusive airdrop: As its name suggests, an exclusive airdrop is meant for a selected group of users. These exclusive users could be identified irrespective of wallet balances and could depend on contributions, activities, or competence.

Raffle airdrop: In cases where the demand for tokens outstrips the supply, a project could conduct a raffle airdrop, which functions similarly to a lottery. In this process, lucky winners are selected to receive the airdrops.

NFT network airdrop: Holders of non-fungible tokens (NFTs) qualify for NFT airdrops in a project. Depending on the specified criteria, they are rewarded with additional NFTs or specific project tokens. 

Prominent crypto airdrops

A few examples of some popular airdrops include:

Uniswap: In September 2020, Uniswap conducted the biggest airdrop to date, distributing $UNI tokens worth $6.43 billion. At the time, $UNI tokens were also trading at very high levels, which contributed to the airdrop's huge value.

Arbitrum: The Arbitrum Foundation has conducted multiple airdrops, the most recent one being in 2023. $ARB tokens on the Arbitrum One chain were distributed to recipient crypto wallets according to a points system, with a goal to reward early adopters.

Bitcoin Cash: The Bitcoin Cash airdrop in August 2017 was meant for anyone who held Bitcoin (BTC) on 1st August 2017 at block 478558. Eligible candidates, for every 1 BTC owned, received 1 Bitcoin Cash (BCH).

Making money from an airdrop in crypto 

Airdrops can be an efficient way for retail investors to earn money. They can look for upcoming airdrops on sites like airdrops.io, airdropbob.com, and airdroplist.io.

Here are some of how they earn money from airdrops:

Selling: The easiest method to make money from airdrops is by exchanging your tokens for fiat currency on a token-listed exchange.

Holding: Long-term investors could hold their tokens received in an airdrop, with the expectation of a price appreciation in the future.

Referrals: Some crypto projects have incentive programs for existing token holders who refer others into their ecosystems. These incentive programs could pay out bonuses in crypto tokens.

Staking: Staking programs are also a very popular way of earning more tokens from the project. One could lock their airdrop tokens in a smart contract with the project and continue to earn more tokens steadily.

Scams in Airdrops

Unfortunately, the tremendous popularity of airdrops has also attracted the attention of fraudsters. There have been instances in the past, when imposters have created fake airdrops, or even imitated real airdrops, via deceptive websites or social media accounts. These scammers usually ask for sensitive details like private keys to crypto wallets and then attempt to drain their wallets.

In some cases, scammers could stage a ‘phishing airdrop scam’ by sending fake tokens or NFTs to one’s crypto wallet with instructions on claiming these rewards. These instructions or tokens could contain suspicious links that redirect the wallet holder to dubious phishing websites to steal their holdings.

Therefore, it is always advisable to do one’s own research before applying to airdrops or to take expert advice if one's crypto wallets receive tokens from anonymous addresses.

What does the future hold for crypto airdrops?

While crypto airdrops are useful for blockchain projects in several ways, they are also great for retail investors looking to earn extra money or just explore the crypto world. Airdrops have become the linking bridge for crypto enthusiasts and new or existing projects and will continue to be so. Remember though that airdrops tend to increase the token supply. Since these tokens are usually received for free, they are often sold quickly - which can lead to a depreciation of the token's value.

Explore India Crypto Research to know more about crypto!