Cryptocurrency is an independent digital currency that was introduced to the world in January 2009 and we are still in awe of it.
Many of us might have not thought about the potency of ‘Airdrop’ within crypto until recently it was announced by the SVP of customer success Grregpry Keogh that by using crypto airdrop, the desired “item would be magically there.”
According to him, a crypto airdrop is much similar to getting a “birthday present” sent to our homes.
Now with the unmatched progress in fintech, it was quite expected that a small feature would compile the excitement around cryptocurrency projects, to help make people aware of what is new in cryptocurrency. And that is a crypto airdrop for you.
What Is A Crypto Airdrop?
A crypto airdrop is a standardized marketing strategy that deals with sending tokens and coins to wallet addresses. There are multiple ways to get your token, but it should be noted that an airdrop will not always be associated with free cryptocurrencies.
You may either have to put in some effort and time in exchange for enjoying a relatively better experience in crypto and maybe sometimes, you may also have to pay a negligible amount of transaction fees. But that doesn’t sound like a big deal as what you get in return is way better than what you have to offer.
However, if you turn out to be lucky, then you may also get a chance to participate in an airdrop for free.
Once you complete your task, small amounts of the recently created virtual currency would be sent to your wallet, only if you are an active member of the blockchain community. That is exactly how they promote awareness of the newly emerged coins or tokens in the market.
In better words, crypto airdrops are designed to make a better understanding of a start-up company or its product, ultimately increasing the adoption of its native token.
The CEO of WeMeta, Winston Robson explained that he believed it to be an “exciting way to launch the network,” which is also bringing potential “early adopters” to the marketplace.
In addition to it, Robson elucidated that crypto airdrops do not only root for emerging projects, but are also used as a tool to encourage existing community members.
For example, the Ethereum Name Service recently awarded several tokens to long-time ENS domain holders, by checking how long their individual domains survived in the market.
Why Do Crypto Airdrops Exist?
Crypto airdrops enable blockchain start-up projects and services to get initial exposure in the market, by sending their tokens and coins to active users, either for free or in exchange for easy favors like retweeting a post shared by the budding company or so.
By doing so, the team can ensure a better future for the start-up company as well as for their coins and tokens to become lucrative in the long run.
Moreover, the recipients are also benefited from the process as they get incentivized for increasing awareness among the other users, apart from adding to their earnings when the coins become traded on an exchange. The more demand for the token, the more value it will possess.
Generally, airdrops invite public attention by sharing the launch information on the project’s website, social media, and cryptocurrency forums.
You might be able to relate the entire process with the offer vouchers that frequently hit your email, as those campaigns are intended to make people aware of them as much as possible and a crypto airdrop is no different.
However, no authentic crypto airdrops will ask their clients to make any initial investment as the primary objective of a start-up project will certainly be to stand out from the existing competitors to make their own space within the market they are concerned about.
How Do Crypto Airdrops Work?
When a start-up project makes up its mind to actively move forward with the airdrop system, then it should immediately consider launching a public campaign. The company usually earns its desired outreach through social media platforms like Twitter and Discord.
Once they manage to keep up with the hype, the next is to enlist capable token recipients. It is done in two ways: by collecting the wallet addresses of interested recipients or by selecting the qualified users by considering certain metric-based criteria.
At times, companies might also look for the email addresses of their potential recipients to expand their contact list.
After spotting the first batch of recipients they facilitate airdrop through a self-executing program that will automate transactions. Now, this program will be free of complications as it will transfer tokens to the selected customers from the company’s treasury wallet, with or without any action done by the recipients.
Once all these procedures are over, the company publishes the end results to show the world that an airdrop actually happened.
Why Is There An Airdrop In Crypto?
Crypto airdrops are one of the best ways to make new projects able to withstand the existing ones, by increasing awareness rapidly. Tim Haldorson, The CEO of Lunar Strategy, developed airdrop from scratch. As per Haldorson, there is a trick for curbing their audience from flipping coins.
Since airdrop is structured in a way to spot only existing members, who are highly engaged in the blockchain community, it is inevitable for the company to feel pressured to find a way where they can target more potential audiences and evoke a desire in them in learn more about the launched project.
So in order to make the future easier, the company tracks down users who engage in similar activities and considers them as their ideal audience who would be an asset in the long run when properly stimulated.
It is believed so because these users are likely to contribute more to the project after learning about its tokens and coins through the airdrop.
“However, a team with a clear vision can only make a (virtual) project successful,” said Haldorson.
Different Types Of Crypto Airdrops
Crypto airdrops are varied based on different crypto projects. While some are focused on making the first customers feel taken care of, others must be aimed at creating lasting customers who are capable of coming out as their forever community.
Although the future of the budding cryptocurrency is uncertain, it all depends on how well the audience accepts the deal. Fortunately, there is a string of airdrops available to parachute guaranteed tokens to the wallets of active users.
- Bounty Airdrop
Bounty Airdrop is a service-oriented airdrop that requires specific voluntary legwork from the recipient’s end. Such favors are usually a walk in the park as to the very far extent they might ask the users to interact with the project’s social media posts.
Anything like signing up for the newsletter, following the related social media accounts, or simply logging on to a live forum are some of a few low-lift promotional works in exchange for which rewards are guaranteed.
Lately, the Foodie NFT platform One Rare shared a plethora of conditions including following the company’s pages across social media and tagging others as well as adding the accounts to a watchlist, exclusively for a $75,000 giveaway. And ostensibly, it was a huge success.
- Standard Airdrop
Just like what the name implies, Standard Airdrops are unarguably standard with only a one-step-requirement, which is an easy-peasy tap of your finger on the sign-up button.
But it works on the motto “first-come-first-serve,” which naturally creates hustle. Therefore, the key here is to make your move quickly, or else the slots would be filled.
This type of Airdrop was used by the decentralized exchange “RabbitX” which relied on it to reward the users who claimed it before it was late.
- Hard Fork Airdrop
When a protocol branches off into two separate platforms, the individual developers airdrop the fresh coins to convert the users on a trail.
In an event termed The Merch, ETHPoW, which was a proof-of-work chain went separate ways from Ethereum after it transitioned to a proof-of-stake system. However, a user must have the original token under their custody to be the recipient of a Hard fork Airdrop.
- Holder Airdrop
Holder Airdrops are only available to customers who are holding tokens at the time of promotion. The company ensures it by taking a community-wide snapshot that determines whether a user is holding or has accumulated tokens during a pre-set time span. The fixed reward is then sent to the users who have met the conditions.
The NFT Sudoswap is yet to launch its next token, SUDO, and when it does, the first batch of recipients to consider would be those holding NFTs of Oxmon, its sister application.
- Exclusive Airdrop
Exclusive Airdrop encourages the user’s efforts rather than complimenting their wallet worth. They reward in exchange for the time each customer spent on a project as well as by taking a quick run-down to the level of involvement they had within the forum. In short, this airdrop reaches those with empty wallets but with a fuller extra-curricular investment.
Once in a while, Uniswap appreciated their long-standing users with a generous airdrop of 400 UNI tokens, regardless of their holding status.
- Raffle Airdrop
This type of Airdrops chooses to implement a lottery mechanism when the response to the pre-announced rewards is overwhelming. So based on the response, the mechanism might select winners in a random manner. Raffle Airdrops can either be considered as a standalone airdrop or it can also be merged with any other aforementioned airdrops as an “add-on.”
Gaming platforms Phantom Galaxies, Wolf Game, and Revv recently gave out some of their native coins to 100 randomly chosen winners.
How To Become Eligible For A Crypto Airdrop?
Crypto Airdrops are structured in a way that only focuses on marketing efforts and promotional activities and that is the exact reason why it is quite tricky because the upcoming projects need to ensure a promising future ahead and so they will look for each factor to check whether a user is eligible for an airdrop or not.
However, not all airdrops are measured on the same balance and likewise, not all airdrops have similar eligibility criteria.
But in most cases, the criteria are similar and easy to find. There are multiple ways by which you can determine whether you can qualify for their hunt or not.
- Check all the available social media platforms, especially Twitter and Discord to find the newly araised news about airdrops by searching with hashtags.
- Explore different crypto airdrop websites that provide legitimate information and make sure the notification is turned on so that you won’t miss any good deal.
- Always stay updated. You can either rely on news portals or cryptocurrency-related forums to check for any updates on any upcoming airdrop.
Moreover, the major criterion to become eligible for a crypto airdrop is to always maintain an impressive crypto wallet. Nobody can claim a crypto airdrop without a proper wallet address.
Although using an exchange address is recommended at times, it is not the perfect solution and you cannot be eligible for a crypto airdrop with that. Instead, you must make sure you have an active crypto wallet like MetaMask to be considered by initiating projects when they call for promotion.
Also Read:- Chime Bank: Everything You Need To Know About
Are Crypto Airdrops Safe?
Airdrops usually stuff your wallet with free money and most of them are nothing but a dump and pump program that enhances a company for a predetermined period.
In other words, creators engage themselves in hopes of building hype around the newly emerged tokens and coins before they list them on exchange. Once the trading begins, creators crash the price by selling their sizable portion of holdings.
However, there is still a slim chance for a crypto airdrop to be a fraud. Sometimes, scammers would randomly choose an unsuspecting user and send them a small amount of cryptocurrency just to invade their privacy.
With the information leaked, they will track down each move made within the wallet and attack either the customer or the company operating the wallet by staying behind the bars.
But such cases happen once in a blue moon but the real tragedy behind a crypto airdrop is that they are taxable even if you accept the offer or not- and it is because airdrops are generally considered as IRS ( International Revenue Service) income.