Crypto Airdrop: A Giottus explainer
By: Sruthi Menon
It is challenging for crypto investors and traders to keep track of all the new projects with the ever-increasing number of new coins.
This brings us to understand what a crypto airdrop is. It is a type of marketing approach used by crypto businesses to promote their project or new token. A crypto airdrop refers to the transfer of digital assets from a crypto project to multiple wallets. This entails giving away free copies of their native coin to current and potential consumers.
Different sorts of airdrops exist where each crypto project has its unique set of requirements. However, in simple terms, most airdrops have the same goal: to raise project awareness and interest. Some are sent automatically into users’ wallets, while others require a claim to be submitted manually.
However, not everyone can get these tokens for free. Some airdrops require users to complete activities like promotional actions (following the project’s social media account and sharing their postings, etc) before they can stake claim.
How does it work?
There are numerous kinds of crypto airdrops, but they all involve distributing a tiny amount of crypto assets to multiple wallets. There are also projects that give away NFTs instead of normal crypto, however, they are less frequent.
Some projects may distribute without asking for anything in return, while others will require you to do a particular activity before you stake claim.
Following social media profiles, subscribing to a newsletter, and keeping a certain number of coins in your wallet are all examples of these tasks.
However, receiving the airdropped tokens is not always guaranteed.
A crypto airdrop is largely intended for promotional and marketing purposes and ensuring your eligibility for future events can be difficult. Each airdrop has its own set of criteria for determining eligibility, however, most of them are simple to locate.
One could find specialised crypto-airdrop websites and sign up for promotions. Checking relevant airdrop hashtags on social media could help see if anything new has happened in the crypto domain. Use various Bitcoin services, products, platforms, and blockchains regularly. Moreover, having a crypto wallet with a balance is the most important criterion for receiving crypto airdrops. Without a wallet address, it is impossible to receive or claim an airdrop.
Different types of airdrops
A Bitcoin airdrop can be done in a variety of ways. In addition to the traditional one that simply delivers Bitcoin to many wallets, there are a few other kinds of airdrops. The most common types of airdrops can be classified as standard airdrop, exclusive airdrop, bounty airdrop, and holder airdrop.
A standard airdrop transfers an amount of native coin or token into existing wallets as part of a marketing strategy. In most cases, you only need to create an account with the new project and enter your wallet address during the distribution event.
An exclusive airdrop distributes crypto assets to a group of users that subscribe to an airdrop aggregator or designated wallets. Generally, the awardees have a history with the project, such as being an active part of the community or an early sponsor.
In bounty airdrop, users must accomplish certain actions to receive an airdrop, such as posting a tweet about the project, joining the project’s official Telegram, or publishing an Instagram post and tagging a few friends. This is also a marketing strategy, but potential recipients must engage in some promotional activity to receive the digital asset. You will most likely be required to fill out a form with your wallet address and confirmation that you accomplished the activities to claim a reward airdrop.
Holder airdrops give away free tokens to people who have a particular amount of crypto assets in their wallets. People who have a certain quantity of a certain crypto in their wallets are eligible for holder airdrops. Typically, a crypto project takes a snapshot of crypto holdings on a given date and then allows users to claim an airdrop depending on their ownership at that moment.
In any case, the most significant need for claiming an airdrop is the possession of a crypto wallet. A few other methods of receiving airdrops are searching for crypto airdrop opportunities regularly on the internet, signing up for special airdrops by following airdrop aggregators, signing up for new platforms to take advantage of any regular airdrops they have available, and keeping an eye on up-and-coming projects.
Crypto airdrop and ICO
During the 2017 initial coin offering (ICO) boom, crypto airdrops became widely popular. This brings us to think if an initial coin offering (ICO) and a crypto airdrop are the same. Well, no. Both the concepts include new crypto ventures, but crypto airdrops and ICOs are distinct.
An ICO is a type of crowdsourcing that does not need any investment from participants. A token sale is held by the project team in an ICO to raise funds from investors. When Ethereum held a crowdfunding event to support its development in 2014, ICOs became popular. Hundreds of new enterprises used the ICO strategy in 2017, resulting in a surge in the crypto market.
Crypto airdrops help crypto projects stand out and acquire traction in the market. It can also be a useful opportunity for crypto aficionados to diversify their holdings by investing in new tokens. But it could all come with a pitfall.
There will be airdrops that are nothing more than pump-and-dump operations because users receive free money in their wallets.
More specifically, the developer creates a token in the hope of generating enough interest for it to be listed on an exchange. When tokens begin to trade, the inventor of the coin sells a large chunk of their holdings, causing the price to plummet.
Another possible attack could be to compromise a user’s privacy, as a scammer could transmit a little amount of crypto to them. The attacker could next follow the wallet tokens’ transaction behaviour to identify the person or entity behind the wallet.
However, there are likely to be more fraud airdrops than legal ones out there, so be cautious and conduct one’s own research before signing up.