The grand scheme of things for cryptocurrencies right now may have appeared a bit impossible a decade ago. However, the new digital currencies have shown how they can change finance with better advantages. A few Bitcoins, which must have fetched a thousand dollars ten years ago, can make you a millionaire today. The lucrative returns in crypto investments, albeit with the risks of volatility, have spiked interest in cryptocurrencies.
Interestingly, the question of “What is a Crypto Airdrop” is a significant one for people who want to get on the crypto train now. Crypto airdrops are basically free token giveaways, which have become a common highlight in the field of cryptocurrencies. The following discussion offers a detailed understanding of the basics of cryptocurrency airdrop and its purpose. You can learn about the different types and examples of crypto airdrops, along with the potential risks associated with them.
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What Are Crypto Airdrops?
Cryptocurrency airdrops practically involve distribution of free crypto tokens to people who showed an early interest in decentralized applications, new blockchain services or cryptocurrency projects. What is the purpose of airdrops crypto? One would assume that they are a flexible way for someone to get their hands on cryptocurrencies.
However, the airdropped tokens can also serve many other utilities and, most important of all, play a vital role in protocol governance. Various new DeFi projects and crypto projects have served governance tokens to their community members. Considering the value of the governance tokens going up to thousands of dollars, being an early member of crypto projects definitely seems like a lucrative opportunity.
The details of crypto airdrops explained for beginners would also emphasize its role as a marketing tool for new protocols to draw in more users. Free airdrops can easily encourage more users to fuel activity on the new protocols, which have not come up with their native tokens. Many crypto enthusiasts have also capitalized on free airdrops for scaling up their returns with considerably limited upfront investment. It is clearly evident that crypto airdrops have gained notorious popularity in recent times for valid reasons.
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Primary Goals of Crypto Airdrops
The overview of cryptocurrency airdrop basics suggests that their primary objective is the promotion of a new blockchain solution, project or startup. Distribution of tokens through an airdrop helps the new protocol or project start-up, alongside ensuring fair allocation of tokens within the community.
In most cases, airdrop tokens feature promises of incentives for raising awareness regarding a project. When the token of the project has been listed on an exchange and reaches a broader audience, the token holders can reap the rewards. The growing interest in a specific crypto project or decentralized app would play a vital role in increasing the price of its token.
New projects promote their airdrops through launching their website or promotions on social media and cryptocurrency forums. It is just like a new business sending a promotional email with a discount offer. You visit the store and get your discount while the business gets a new customer and encourages you to promote the store to earn more rewards in the future.
Most people wonder about how to get crypto airdrops while escaping any potential scams. For starters, you must remember that legitimate crypto airdrops would never ask their users to make investments. A better understanding of the mechanisms behind crypto airdrops would ensure that you stay safe from scams.
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Working of Crypto Airdrops
The working of crypto airdrops is an obvious highlight in any introductory guide on them. Most of the crypto users who frequently interact with existing and new platforms could receive airdrops at any point in time. Developers behind the blockchain-based projects distribute free tokens in the airdrop among the community members.
However, that does not explain how crypto airdrops work, as it basically informs the primary goal behind them. Do the developers give out free tokens to anyone randomly? The working of crypto airdrops depends on certain important tasks. Crypto projects airdrop their newly minted tokens to multiple users to increase their awareness and engagement with the projects.
The airdrops are generally issued to users in return for completion of certain tasks. Early members of a blockchain or crypto project are more likely to receive airdrops. However, new marketing strategies with airdrops might involve other tasks, such as following a particular social media account.
Similarly, crypto airdrops can also be rewarded for sending or receiving a transaction using the concerned crypto platform. You can also find answers for ‘how to get crypto airdrops’ in sharing the posts for a new project or solution on social media. Some tasks as simple as creating your account on a dApp could also help you earn crypto airdrop rewards.
New crypto projects can also conduct automatic distribution of tokens at a particular instance of fulfillment of specific conditions. For example, free airdrops for every user with a balance of 1 ETH or higher. Another possible example of the working of crypto airdrops involves taking blockchain snapshots at a particular date and distributing airdrops through smart contracts.
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Types of Crypto Airdrops
The detailed answers to “what is a crypto airdrop” and their working unravel a lot of information about them. On the other hand, the basics only cover a small surface of the massive scope of crypto airdrops. Did you know that crypto airdrops have multiple categories with distinctive traits? Most crypto projects perceive airdrops as a vital marketing tool they can use for growing further by increasing awareness.
Some projects release airdrops as a reward for the first members of the community. Therefore, the goals of a crypto drop play a vital role in determining the type of airdrop. The common types of cryptocurrency airdrops include standard airdrop, holder airdrop and bounty airdrop.
One of the most common variants of cryptocurrency airdrop is the standard airdrop, which does not require users to perform any tasks for the airdrop. Users can get a standard airdrop just by creating an account and offering the wallet address. On the other hand, crypto projects allocate a trivial share of their tokens for standard airdrops.
Users must have to hurry up before the airdrop finishes. Standard airdrops are popular due to the ease of participation and the opportunity for earning free crypto. Therefore, you don’t have the guarantee of receiving crypto in a standard airdrop.
The second variant of crypto airdrops explained in detail would refer to the holder airdrop. Holder airdrops guarantee cryptocurrency tokens for users holding a specific amount of tokens of another cryptocurrency. The mechanism of holder airdrops involves taking a snapshot of your crypto wallet on a fixed date or over the course of a certain period. Depending on the number of tokens in your wallet, the holder airdrop would reward you with a specific amount of cryptocurrencies.
Another assured method for obtaining crypto airdrops would refer to the bounty airdrops. Bounty airdrops could help users in receiving rewards in return for completing the necessary tasks. The tasks generally involve work, and you can earn bounty airdrops only by investing time and effort. However, you don’t have to deal with any complicated tasks to obtain a bounty airdrop. On the contrary, the tasks for bounty airdrops are simple yet crucial for the concerned crypto project.
Therefore, bounty airdrops are not only a solution to ‘how to get crypto airdrops’ but also a proven tool for crypto projects to expand their popularity. Some of the common tasks for which users can receive bounty airdrops include signing up for newsletters or following social media channels. Promotion of projects on social media platforms, sharing content, and active membership of communities on a Discord server or forums can also guarantee bounty airdrops.
Exclusive airdrops are an important highlight in the quest for answers to “What is the purpose of airdrops crypto?” as they reward crypto to selected wallets only. The objective of exclusive airdrops focuses on rewarding the loyalty of first users who have had a strong connection with the project since its early days.
One of the popular examples of an exclusive airdrop is Uniswap airdropping 400 UNI tokens to wallets that had interacted with the protocol before a specific date. Now, the governance tokens could allow the recipients to vote on the different decisions pertaining to development of projects in the future.
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Examples of Cryptocurrency Airdrops
The cryptocurrency landscape has witnessed many crypto airdrops in recent times, which have served many surprising highlights for users. A closer review of the different examples could help you understand how crypto airdrops work and help in broadening the crypto industry.
One of the popular examples of crypto airdrops in recent times would refer to OpenDAO serving the SOS token airdrop to NFT creators, enthusiasts and collections to users who had conducted transactions on OpenSea. The recipients did not have to carry out any tasks and could manually claim them from the website. With the airdrop, OpenSea was able to grow its Twitter followers to more than 60,000, with over 120,000 different addresses claiming the token.
The GAS DAO has also conducted an airdrop on the Ethereum blockchain recently. It distributed GAS tokens to anyone who had paid $1599 or more worth of gas fees on Ethereum. Almost 57,000 addresses qualified as recipients of the cryptocurrency airdrop and claimed their rewards from the website. GAS tokens offer voting rights in the GAS DAO, which can emerge as a representative of the active users of Ethereum network.
Another example of crypto airdrops would refer to the efforts of LooksRare team in the LOOKS airdrop. Users gained eligibility for the airdrop if they had more than 3 ETH in terms of transaction volume on OpenSea between June 16 and Dec 16, 2021. In addition, users had to complete the task of listing an NFT for sale on the LooksRare marketplace to obtain the LOOKS airdrop. The LOOKS token guarantees a share of trading fees on the LooksRare platform. In addition, users could also rely on LOOKS tokens for staking and earning more tokens in reward.
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Is Crypto Airdrop Safe?
A detailed understanding of the fundamentals, working, and how to get crypto airdrops could help in identifying the potential risks associated with cryptocurrency airdrops. The problem with crypto airdrops is that they seem too appealing to miss. At the same time, any unsuspicious beginner would never figure out possibilities of a scam. Some of the common scams associated with airdrops include private key theft, referral risks and data theft. Here is a brief overview of the risks associated with crypto airdrops.
Data theft is possible when hackers entice you with the promise of a free crypto airdrop in exchange for opening malicious links and pages. The malicious pages or links could help in collecting personal information such as email addresses, social media accounts and passwords.
Different businesses use crypto airdrops as referral schemes for promoting their new projects and coins. The referral schemes in airdrops can help in ensuring special discounts for new users. Scammers can try to collect your personal information and use it in referral schemes for earning crypto airdrops.
Private Key Theft
The excitement of receiving free crypto through airdrops can land you up with risks of private key theft. You have to use private keys for accessing your wallet and must never disclose it to other users. If you want to learn about the working of crypto airdrops, you must know that the developers or organizers would ask for your public key to claim the airdrop rewards.
You can stay safe from airdrop scams by identifying the details of crypto airdrops explained with an overview of risks. Scammers could announce fake airdrops and compromise the private information of users. Therefore, the best way to avoid airdrop scams would be to look for your own research.
You must dive into the details of the official website of a project and its social media channels. Verify the authenticity of the accounts of the project on social media sites such as Telegram, Twitter and other platforms. Double-check the details of the airdrop from community members and learn whether the project is authentic or a scam.
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The detailed review of cryptocurrency airdrops and the answers to “What is the purpose of airdrops crypto?” shows that you can grab free crypto with proper research. You must check the official details of a particular project before participating in an airdrop. A detailed overview of the different types of crypto airdrops would show you how you can get free crypto rewards. The objective of cryptocurrency airdrops largely refers to marketing and increasing awareness regarding a crypto project or decentralized application.
The benefits of crypto airdrops can motivate anyone to find how to get crypto airdrops, albeit with possibilities of risks. Every crypto airdrop has a distinct objective, and you must practice caution at each stage. Never disclose your private key or personal information, as you would never find crypto airdrops asking for your private information. Therefore, a free opportunity to earn crypto does not come easily. You must learn about crypto airdrops in detail and their underlying mechanisms for ensuring the best results.
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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!