What is Cryptocurrency Airdrop?
Cryptocurrency airdrops are a marketing strategy that involves sending tokens or coins to wallet addresses free of charge. Small amounts of the new coins or tokens are sent to the wallets of active blockchain community members for free or in return for a small service, such as maybe retweeting a post sent by the company issuing the coin.
The ultimate goal of a cryptocurrency airdrop is to promote awareness and circulation of a new coin or token.
Most airdrops are generally promoted on the company’s website, social media, and sometimes cryptocurrency forums. Coins or tokens are sent only to specific wallets based on the blockchain network or coins held in existing wallets or via previous interactions with the coin’s ecosystem.
To qualify for the airdrops, a recipient may need to hold a minimum quantity of a particular crypto coin in their wallet. Alternatively, they may need to perform a specific task, such as posting about the coin on a social media forum, connecting with a particular member of the blockchain project, joining a Discord server, or writing a blog post.
Types of Crypto Airdrops
- Standard Airdrop
- Bounty Airdrop
- Holder Airdrop
- Exclusive Airdrop
- Raffle Airdrop
Standard crypto airdrop has to do with participants showing interest in order to receive the airdrop. The individual need to provide a valid wallet address and some airdrops require no additional information beyond this.
This kind of airdrop often has a set amount of tokens or coins to distribute with a limit on how many tokens each individual can receive. Therefore, some standard airdrops are time-sensitive, you delay and it’s gone. This type of airdrop is popular due to its simplicity, there is nothing stopping a single user from creating multiple wallet accounts to quickly drain the airdrop amount, so it might be more difficult to obtain such.
In Bounty airdrops, users perform certain tasks to get the tokens or coins. These tasks usually entail raising awareness for the project by posting on social media and tagging or mentioning the company or retweeting a recent tweet about the project. There may also be referral bonuses for individuals who recruit other users to the project, follow the project’s Twitter account, or join the project’s Discord channel.
Users often receive points that correspond to how large of a bounty airdrop they will receive. Users may also be required to get a certain amount of points before they qualify for the airdrop. For example, a user may be eligible for a bounty airdrop after earning about 300 points with each item mentioned above being worth 100 points.
Holder airdrops are a kind of airdrop that occur automatically based on who is holding existing coins or tokens and how many tokens they hold. Due to the fact that wallets and blockchain information are part of a publicly distributed ledger, all users of blockchain have full transparency into the wallets and the distribution of the coins or tokens.
Well, though this kind of airdrop is done automatically, it also has a downside – holder airdrops ensure that only the largest, most invested crypto individuals receive the benefit. Some holder airdrops may only award the airdrop if members are holding a certain amount of the coin.
Just as the name implies, this is a more specific type of holder airdrop, an exclusive crypto airdrop occurs when specific people are individually selected or picked for the airdrop. The only difference here is, they may be selected not based on the amount of coins they have but based on other elements such as time spent on a project website or platform, most money spent on a non-token activity, or the number of posts in a forum specifically for the project. This is an even more centralized way of rewarding those closest to the project and may give the airdrops to wallets that may not hold any tokens at all.
A raffle airdrop may be combined with Some of the types of airdrops mentioned above. Moat times, a project might state the number of airdrops they intend to give out and encourage individuals to earn a raffle ticket for it. This ticket may be earned by holding tokens, earning points, or simply expressing interest in the airdrop.
Ultimately, why it’s called a raffle airdrop is that the number of individuals interested in the airdrop often exceeds the number of airdrops the company wishes to give out. Therefore, a raffle occurs and a limited number of wallets are randomly picked to receive the airdrop.
How Does Crypto Airdrop Process Begin?
The cryptocurrency airdrop process begins with the company deciding the need for an airdrop for its project. This may be in response to market strategies, a hard fork in the network, or to incentivize existing investors. The initial stage is to select how the airdrop will be facilitated and who will be eligible.
The next step for general airdrops is to launch the public campaign. This might include collecting information from interested parties; this is sometimes limited to just wallet addresses, though some companies may also gather e-mail addresses to grow their contact list.
Other types of airdrops may rely on taking snapshots. This is a capture of an instance that identifies who possesses certain criteria. For example, the project may perform a snapshot to identify all addresses that held at least 500 pieces of the tokens as of midnight on November 23rd. Any transactions occurring after the snapshot will not qualify for the airdrop.
Once the lists of airdrop recipients are selected, the airdrop is facilitated often through the use of smart contracts. The company may choose to use its Treasury wallet to facilitate the airdrop, and the company often publicizes the transaction block to demonstrate the equitability of the airdrop. The transaction will show the airdrop leaving the company’s wallet and distributing it to the recipients.
Airdrop recipients often directly receive the tokens or coins without having to accept the tokens. Some may need to add the token or coin along with its address to their wallet to appropriately view their wallet balance with the token.
Cryptocurrency airdrops are a way for projects and companies to raise awareness of their token or coin. Though airdrops have value and may be considered free money, there are also significant risks if users are not aware of potential scams relating to crypto airdrops.
Web Developer, Content creator, Blockchain enthusiast. I share ideas and solutions in the Blockchain ecosystem about Web3, crypto trading and blockchain technology.
Well detailed blog post. You really explained what airdrop is all about to even a common newbie