If you’ve been paying attention to the cryptocurrency world, you may have heard about airdrops.
Airdrops are becoming increasingly popular and are an important tool for crypto projects to grow their token value. But what exactly is an airdrop and how do they work?
For a crypto investor, the aim of the game is always to earn a handsome return on their investments. With the crypto market being as volatile as it is, this can either happen in the blink of an eye or become a very slow process.
Enter crypto airdrops, a way for investors to earn free crypto and improve their returns.
With new airdrops cropping up almost daily, it is increasingly important to understand the inner workings of a crypto airdrop and to learn how to spot a scam so you can get the most out of every airdrop you participate in.
What are crypto airdrops used for?
A crypto airdrop is a marketing strategy where a blockchain project or company distributes free tokens or coins to the community. Crypto airdrops are primarily used as a way to grow a project's community and create awareness, but they can also be used to reward existing holders of a particular cryptocurrency.
For example, some projects will airdrop tokens to holders of another token as a way to incentivize them to use and hold the new token.
How do crypto airdrops work?
Crypto airdrops are usually held to promote a new cryptocurrency, but they can also be used to distribute tokens that are already listed on an exchange. For example, Ethereum’s native token, Ether (ETH), was distributed through an airdrop in 2014.
To be eligible for an airdrop, you will generally need to hold some of the currency of the blockchain that is hosting the airdrop. For example, if Stellar (XLM) is hosting an airdrop, you will need to have XLM in your wallet to be eligible.
However, there are some crypto airdrops that don’t require you to hold any currency. These are called “blind drops” and anyone with a compatible crypto wallet can participate.
Once you’re eligible for cryptocurrency airdrops, the airdrop tokens or coins will be sent directly to your crypto wallet. You will then be able to sell or trade them on exchanges.
When crypto projects decide to do an NFT airdrop, they will generate a list of NFTs that they want to distribute. This can be done by minting new NFTs or by selecting existing ones from a pre-existing pool. Once the list of NFTs is generated, the project will then distribute these NFTs to the addresses of participating crypto wallets. The distribution can be done randomly to a crypto wallet or based on some other criteria.
Types of crypto airdrops
There are different types of crypto airdrops that crypto projects might utilize, each of which has its own unique features. Crypto projects often use airdrops to market themselves and grow as a project.
The motive of a crypto project determines the type of airdrop used. Projects might want more brand awareness, to attract new users or find ways to reward early adopters.
Classic airdrop
A classic crypto airdrop, also called a standard airdrop, is when a blockchain platform, such as Ethereum or Tron, distributes free tokens to its users.
This type of airdrop is usually offered by startups that want to promote their projects and increase awareness about their brand. The standard airdrop is a popular crypto airdrop because it is easy for users to participate and earn crypto for free. The recipients of the tokens are usually chosen randomly from the list of eligible users.
To qualify for a classic crypto airdrop, you must typically have a wallet address on the relevant blockchain platform or create an account.
For example, in 2016, Stellar did an airdrop of 3 billion XLM (Stellar’s native cryptocurrency) to users with an authenticated Keybase account, guaranteeing monthly deposits of XLM into account holder wallets for nothing!
Bounty airdrop
Bounty airdrops are generally associated with having to complete some kind of task. The tasks can vary from simple surveys, referrals, social media interaction, content creation and more. In exchange for completing the task, users are rewarded with tokens or coins from the blockchain project in question.
Bounty airdrops are essentially a reward system used to promote a new blockchain project or business. It is an effective way to spread the word about a new venture and stimulate interest in its products and services.
A bounty airdrop is also a great way to generate hype around the project which can attract more investors and drive up the price of its associated tokens.
A recent example of an airdrop where the crypto project required action in exchange for free tokens as the reward is the Chains Airdrop. Users had to join the Telegram group and create a Chains account as well as follow, like and retweet a pinned Tweet in order to receive the free tokens.
Holder airdrop
A holder airdrop is a type of cryptocurrency airdrop where holders of certain cryptocurrencies are rewarded with additional tokens. The airdrop may be done by the project or network itself, or it may be done by a third-party service.
Holder airdrops are usually conducted in order to increase the token's usage and liquidity, as well as to reward loyal investors.
Exclusive airdrop
Finally, an exclusive airdrop refers to a crypto airdrop that is only given to selected members of the community. This type of airdrop is usually reserved for VIP members who have made significant contributions to the project, such as developers, influencers and early adopters.
Are crypto airdrops safe?
Crypto airdrops are safe if you take the necessary precautions. When you receive an airdrop, you are not giving away any personal information or money. However, you should never sign up for an airdrop with an exchange that you do not trust.
There have been cases of scams where people have pretended to be giving away free crypto when they are actually trying to steal your personal information. So, make sure that you only sign up for airdrops from exchanges that you trust. Also, be sure to read all of the terms and conditions before signing up for an airdrop. Below are some of the most common crypto airdrop scams:
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Phishing scams – Scammers try to get your personal information by pretending to be an official airdrop website and getting you to click a link or hand over personal information like your email address, phone number etc.
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Referral Risks - Some airdrops require you to refer friends or family in order to get the crypto. Be wary of any airdrop that requires you to share your account details with someone else in order to be eligible for the airdrop.
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Pump and dump schemes – Be aware of any projects that are hyping up their tokens to drive up their value and then dumping them after the airdrop.
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Private Key Theft - Beware of any airdrops that require you to provide your private key. If a project does ask for your private key, make sure that it is a trusted source.
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Dusting attack - Scammers may send you a very small amount of cryptos, known as 'dust', to your wallet. They do this in an attempt to get you to reveal your private key. Be aware of any transactions that are for a very small amount of crypto and never share your private key.
How to stay safe when joining a crypto airdrop
When joining a crypto airdrop, there are a few safety measures you can take to protect yourself and your investment. First, make sure you only sign up for airdrops from reputable sources. There are many airdrop scams out there, so it's important to do your research and only sign up for airdrops from a crypto project that you trust.
Second, be sure to read all of the fine print before signing up for an airdrop. Some airdrops may require you to provide personal information or install software on your computer, which could be harmful. So, it's crucial that you understand what you're agreeing to before moving forward.
Finally, remember that not all airdrops will be successful. Some may never launch, while others may not be worth your time or effort. So, don't put all of your eggs in one basket and diversify your portfolio by signing up for several different crypto airdrops. By taking these precautions, you'll increase your chances of higher returns and protect yourself from potential airdrop scams.
Where to find crypto airdrops
Now that we have hopefully answered your question of "what is a crypto airdrop?" and you understand how crypto airdrops work, you're probably wondering where to find one. To find out about upcoming airdrops, you can follow relevant crypto communities and watch out for announcements.
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Social Media: Social Media is one of the most common ways crypto projects share announcements about airdrops. Airdrops are usually announced on cryptocurrency forums, such as Bitcoin Talk, or on social media platforms, such as Twitter, Facebook and Reddit.
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Reddit: Reddit has several subreddit forums where crypto airdrops are announced and discussed. The most well-known is r/CryptoAirdrop.
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Telegram: There are many Telegram groups you can join to get announcements hot off the press. Telegram is a popular medium because it is considered more decentralized and secure than similar platforms.
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Airdrops.io: Airdrops.io is a user-friendly website you can use to receive alerts and search for new airdrops. You can filter by latest, hot, potential airdrops and holder airdrops with further filtering by social platform or token.
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AirdropAlert: It's important to act fast in the airdrop game because airdrops can run out quickly. Airdrop Alert lets you get push notifications so you don't miss out. There are many types of airdrops on the site, including DeFi, NFTs, and featured airdrops. Click through to the detailed page to find out how to claim your tokens. You can see the latest airdrops using the pulldown menu at the top.
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AirdropKing: The newest airdrops are right on AirdropKing's home page. You can sort by Best-Rated or High-Value airdrops, as well as those that are coming up soon, with an easy-to-navigate tab system. AirdropKing displays fewer airdrops than similar alert sites, but it clears out expired drops so you can focus on the actionable ones.
Some well-known crypto airdrops in the past have been from projects like Ethereum, NEO, Stellar Lumens and Tron. To make sure you don’t miss out on any crypto airdrops, you should register to receive notifications from the above websites or use the AirdropAlert bot on Telegram.
Closing Thoughts
Crypto airdrops are an innovative way to distribute tokens and coins to the public. By leveraging smart contracts and decentralized networks, these airdrops can be sent out to many users quickly and securely.
A crypto airdrop is also beneficial for the crypto project as it allows them to raise awareness of their project while growing their community with new users who may start using their token or coin.
Whether you want to learn more about cryptocurrencies or gain access to free tokens and coins, then participating in cryptocurrency airdrops is definitely worth considering.
