Crypto Airdrops: Here’s Everything You Need To Know
A crypto airdrop is the distribution of digital assets from a cryptocurrency project to several wallets. To raise awareness of the project, coins or tokens are usually distributed to current or potential users. These tokens are distributed for free, but some airdrops require users to complete certain tasks before claiming them. Crypto airdrops became popular during the 2017 ICO boom, and you would be surprised many crypto projects still use them as a marketing strategy today.
How Exactly Do Crypto Airdrops Work?
There are various crypto airdrops, but they all involve distributing a small amount of cryptocurrency to multiple wallets. Although it is less common, there are projects that distribute NFTs instead of regular cryptocurrency.
Some projects will distribute without asking for anything in return, while others will require you to complete certain tasks before claiming. Following social media accounts, subscribing to a newsletter, or keeping a certain amount of coins in your wallet are common tasks these projects have potential receivers to do. It should be noted that receiving the airdropped tokens is not always guaranteed.
In some cases, airdrops are only given to wallets that have interacted with the project’s platform before a specific date.
What do Crypto Projects Gain From Performing Airdrops?
As previously stated, blockchain projects distribute free tokens in order to gain wider adoption and expand their network. A greater number of holders are frequently regarded as a positive metric, as it makes the project more decentralized in terms of token ownership. Crypto airdrops also encourage users to use and promote the project. This can aid in the development of an initial user base before the project is listed on cryptocurrency exchanges.
Airdrops, on the other hand, may give the impression of growth. As a result, other factors must be considered when evaluating adoption. For example, if hundreds of thousands of addresses hold a certain token, but no one is actually using it, the project is either a scam or has failed to captivate the community.
Types of Crypto Airdrops
As we’ve seen, various methods for carrying out a cryptocurrency airdrop exist. Aside from the standard airdrop, which simply transfers cryptocurrency to multiple wallets, there are a few other types. Bounty, exclusive, and holder airdrops are common examples.
A bounty airdrop requires users to complete specific tasks, such as tweeting about the project, joining the project’s official Telegram, or creating an Instagram post and tagging a few friends. To claim a bounty airdrop, you’ll almost certainly be required to fill out a form with your wallet address and provide proof that you completed the tasks.
An exclusive airdrop only sends cryptocurrency to specific wallets. The recipients, such as active community members or early supporters, typically have a long history with the project.
Holder airdrops are free tokens given to people who have a certain amount of digital currency in their wallets. On a regular basis, the project team takes a snapshot of users’ crypto holdings at a specific date and time. If the recipient’s wallet balance meets the minimum requirement, they can claim free tokens based on their holdings at the time of the snapshot.
How Does One Claim an Airdrop?
As previously stated, the process will differ from project to project. However, the most important requirement for claiming an airdrop is a cryptocurrency wallet. MetaMask is a popular and simple-to-use cryptocurrency wallet. Following that, you can check to see if your wallet received free tokens. If not, you will almost certainly have to interact with a website in order to claim the airdrop.
How Can You Avoid Airdrop Scams?
It can be difficult to tell whether an airdrop is legitimate or a scam. Before signing up for any airdrop, you should always DYOR, especially if you need to connect your wallet to a website. Scammers will sometimes airdrop tokens into multiple wallets, but when you try to transfer these tokens to a crypto exchange or another wallet, your wallet will be drained.
In other cases, scammers will announce a phony airdrop that will direct you to a phishing website. They will dupe you into connecting your wallet to a website that looks exactly like the original. Other tokens will be removed from your wallet as soon as you connect your wallet and sign a transaction. This is common with fake Twitter and Telegram accounts that look identical to the official ones.
Some airdrop scams ask you to send cryptocurrency to an unknown wallet address in order to receive your free tokens. Legitimate airdrops will never request money or your seed phrase. Use caution when sending airdrop emails or direct messages.
To avoid being duped, investigate the project’s official website and social media channels. Save the official links and double-check if an airdrop event is taking place. If unfamiliar with the project, you should conduct additional research to learn what the crypto community is saying. If you can’t find enough information, it’s probably better to ignore the airdrop.
For extra protection, you can set up a new wallet and new email address dedicated to receiving airdrops only. This can protect the funds in your personal wallet from phishing attempts related to airdrops. Most importantly, never give out your private keys to anyone.
Crypto airdrops can be a fantastic way to build your portfolio, but it also exposes you to scams. You should do the necessary checks and research before submitting your wallets for these drops or clicking on foreign links.