In the cryptocurrency landscape, airdrops are a marketing strategy that many crypto startups utilize to spread awareness and increase familiarity with their services and products. Here, the platform delivers their native crypto tokens for free to the user’s engagement with the platform.
Over the years, airdrops have become highly popular amongst the crypto community. Today, more than a hundred airdrop events are happening simultaneously on various platforms. While it might seem like a straightforward process of just interacting with the platform and waiting to withdraw your rewards.
There are certain things you should know to claim the airdrop. This article will give you a detailed overview of what airdrops are and how to participate in an airdrop event.
What are Cryptocurrency Airdrops?
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Cryptocurrency airdrops are a marketing strategy where a blockchain project or cryptocurrency exchange sends free or low-cost tokens to wallet addresses. Airdrop aims to create awareness about the project and to encourage early adoption. The airdrop rewards loyal and genuine users for their participation and for inviting others to participate.
Usually, airdrops are launched and promoted through the official website and the social media platforms of the project. Some users may also utilize cryptocurrency forums to promote airdrops. Typically the projects will allocate an airdrop budget in its token distribution, which will be divided among certain addresses based on their engagement with the platform or the coins held in the existing wallet.
The users might have to hold a certain amount of specific crypto assets in their wallets to receive the airdrop rewards and they need to link the wallet to the platform before the specified date to qualify for the airdrop.
Difference Between Airdrops and ICO
Airdrops and ICOs are the entry points of a blockchain project to the cryptocurrency market. Both airdrops and ICOs can be a good way to release new cryptocurrencies into circulation and create awareness about the project among the community. However, the fundamental goals of airdrops and ICOs are different.
The major goal of ICOs is to raise capital for the development of the project. Here, the participants need to pay either in cryptocurrency or fiat, the participants will get cryptocurrencies equivalent to what they paid for.
Whereas, in airdrops, the goal is to appeal to as many crypto enthusiasts as they can and spread awareness about the project. The participants usually receive crypto tokens for free, in return for completing some tasks specified by the project.
What is the Importance of Crypto Airdrops?
Airdrops are one of the marketing techniques that a cryptocurrency project uses, to encourage adoption of the services they can offer and to increase their awareness. But why would they give away crypto tokens for free? Here are some of the factors that make crypto airdrops important:
- To ensure longevity: Cryptocurrencies should have broad ownership to thrive and ensure longevity in the fast-paced world of cryptocurrencies.
- Gather attention: When a new blockchain project is introduced to the market, they can use airdrops to gain more visibility and encourage early adoption.
- Reward loyal users: One of the major advantages of airdrop is that it can reward loyal users for their contributions to the platform.
- Improve community engagement: Most of the airdrops, encourage users to join on the community pages and discussions. This can lead to the betterment of the platform and can attract more users.
Types Of Airdrops
According to the criteria needed to qualify for the airdrop, they can be divided into different categories such as standard airdrop, bounty airdrop, and holder airdrop. Let’s look at each category closer.
Standard Airdrop
Standard airdrops are the most straightforward airdrops where the user only has to show interest and submit their wallet address to collect their rewards. Here, the crypto projects will allocate a certain portion of the airdrop to each wallet.
Standard airdrops are usually used to circulate the cryptocurrency of a new blockchain project. Since it does not demand anything else from the participants, many take advantage of a standard airdrop by connecting several wallets themselves to drain out the airdrop. This is why we don’t see many standard airdrops that often anymore.
Bounty Airdrop
In a bounty airdrop mechanism, the user must complete certain tasks such as using certain platform features, following and sharing social media accounts, inviting friends, etc. The project will reward the users with points for completing these tasks. At the time of the airdrop, the users will get a share of the entire airdrop based on the amount of points they have earned.
Here, the user’s objective is to collect as many points as they can. Many modern airdrops will provide the option for purchasing point boosters with other cryptocurrencies to enhance your rewards. Users may also required to attain a certain amount of points to be eligible for the airdrop. The actual eligibility criteria may vary depending on the project.
Holder Airdrop
Holder airdrops rewards users who hold existing cryptocurrency in their wallets. The airdrop will be divided among the users based on how many tokens they hold. Here, a snapshot of the user’s wallet will be taken at a specific time to determine who qualifies for the airdrop. This method is used for recognizing loyal supporters, encouraging long-term token retention, and improving community engagement.
The most prominent downside of this method of holder airdrops is that the users who hold existing cryptocurrencies may not be interested in participating in airdrops. Additionally, a major share of the airdrop will go to elite investors who hold the most amount of tokens.
Crypto Airdrop Announcement
Firstly, when a blockchain-based platform decides it needs to host an airdrop event, it will announce it through its official websites, and social media platforms. The projects decide what kind of airdrop they need, depending on their marketing goals.
The companies will provide eligibility criteria, and the terms of the airdrop through documentation and social media to ensure transparency. The documentation may also contain the starting and ending dates of the airdrop. If the company is not sure about the ending date right away, it will be established later.
Usually, users know about airdrops, when they fuel up conversations on crypto community forums. Some websites specializing in news and reports related to the updates in the crypto market may also report airdrops. So, it is better to stay connected to cryptocurrency forums to know when the next airdrop announcement happens.
How to Participate in Cryptocurrency Airdrops
Once you get knowledge about a cryptocurrency airdrop, look at what the community is talking about. Make sure that the airdrop is legitimate before proceeding. You may also look at the audience engagements and comments on the social media profiles of the platform as well.
Once you have found a credible airdrop, examine its documentation and the eligibility criteria. It may include holding a certain preexisting cryptocurrency in the wallet, collecting points on the platform, staking your cryptocurrency, using certain wallets, etc. Ensure that you fulfill all the eligibility criteria.
If you are certain that the eligibility criteria are attainable, join the airdrop by connecting the specified wallet. Complete the tasks and earn as many points as you can on the platform by completing social events, referring to friends, and participating in other activities. Most of the modern airdrop platforms provide a transparent leaderboard to announce who is leading and what portion of the total airdrop supply can they expect.
When the airdrop ends, you can withdraw your rewards to the connected wallet. Here, you may be required to spend some cryptocurrency as a gas fee or transaction fee. Sign the transaction and receive your rewards in your wallet.
Airdrop Scams
Airdrop scams are fake giveaways that trick investors into giving away their cryptocurrency, personal information, or private keys: to unsuspecting individuals, especially the ones who are new to the cryptocurrency market. However, if you are not careful, years of experience in the crypto market wouldn’t be enough to avoid falling into these kinds of pitfalls.
While in authentic airdrops, the platform offers exciting rewards for completing tasks, the only aim of scam airdrops is to steal their personal information and private keys. There are various types of airdrop scams:
Phishing Airdrop
Here, the scammers create a website or mobile application that looks similar to the legitimate airdrops trending at the time. They circulate promotional messages with links to this fake website on social media and through email marketing to get users on board.
Advance Payment Scams
Some legitimate airdrops prompt users to pay a small amount of cryptocurrency to verify the wallet, or to pay the gas fees to receive the airdrop. But in airdrop scams, they wouldn’t deliver the airdrop tokens as promised even after the user made the advance payment.
Malware Airdrop Scams
Malware is all around the internet, and downloading it will compromise the data stored in your device. If sensitive data such as OTPs, passwords, and personal details are compromised, it can be fatal. Some fake airdrops trick users into downloading such malicious software to their devices.
How to Avoid Airdrop Scams?
As we mentioned above scam airdrops have plagued the internet. They use a multitude of techniques to lure unsuspecting individual and loot their cryptocurrencies. So, it is crucial to avoid them to protect your personal information and private keys from bad actors. We have curated a list of things you can do to help you stay away from possible airdrop scams. They are:
Ensure authenticity
Only open airdrop links that are listed on credible sources such as the official social media pages or the official website of the cryptocurrency project. Never, give out the personal information you found on an unverified airdrop platform even if they offer irresistible rewards.
Ask the community
Joining and being an active member of a cryptocurrency community can be highly beneficial for staying out of scams including airdrop scams. If you encounter an airdrop, it is better to discuss it in the forums with fellow members to ensure legitimacy. You can find such communities on various platforms including Reddit, X (formerly Twitter), and Quora.
Never expose your private keys
Your private keys are essentially the access card to the cryptocurrencies stored in that address. Legitimate airdrops will never need your private keys, seed phrases, or any other authentication information. If you encounter an airdrop that demands such credentials, it is better to stay away from it.
DYOR (do your own research)
It is a well-established slogan among the crypto community that all investors should do their own research before trusting any project. Legitimate airdrop projects will make all the necessary details such as the technology, its mission, the team behind the project, tokenomics, and more to show credibility. If not, they can be a scam.
These are just some of the things you can do to ensure the legitimacy of an airdrop. However, no method can be 100% foolproof. So, if you are interested in airdrops always be careful, use the most updated security features, and never expose your private keys to anyone.
Conclusion
Cryptocurrency airdrops are a marketing technique, a blockchain project utilizes for spreading awareness and incentivizing the adoption of their new technology. In airdrops, the participants will receive cryptocurrency tokens in exchange for completing certain tasks.
Majorly there are three types of airdrops namely standard airdrop, bounty airdrop, and modern airdrop. In this article, we have seen how an individual can participate in an airdrop and receive rewards. We have also covered some techniques to stay away from airdrop scams.
