What Is a free crypto Airdrop?
Airdrops involve crypto projects distributing free tokens to their communities en masse in an effort to promote adoption.
Eventually, crypto users who frequently interact with new and extant platforms are likely to receive an airdrop. As part of a larger marketing effort, airdrops involve blockchain-based initiatives and developers distributing free tokens to members of their communities.
Sending newly minted tokens to hundreds or thousands of various wallet addresses in the hopes that recipients will be more inclined to engage with the corresponding project – even if it’s just to learn how to convert the free tokens into something else – is the central concept.
This concept is analogous to receiving a complimentary discount certificate in the mail to encourage you to visit a nearby store. However, the primary purpose of a crypto airdrop is not to make the recipient spend money, but rather to raise awareness for new initiatives and services.
Typically, users receive a crypto airdrop in exchange for completing a specific assignment. Typically, these responsibilities include:
- Following a social media account.
- Sharing or reposting one of their tweets with hashtags.
Transmitting or receiving a transaction (using a specific cryptocurrency platform or wallet).
- Creating an account and registering for updates.
- There are also instances in which users may receive a crypto airdrop without taking any action, as we will detail below.
Why are crypto airdrops available?
The primary purpose of a free crypto airdrop is to promote a blockchain-based venture, initiative, or service. By issuing tokens to users, the team can immediately bootstrap its project and guarantee an equitable distribution of tokens among its community. In addition, recipients of these tokens are incentivized to raise awareness and assist the project in reaching a larger audience once the token begins trading on an exchange. The greater the token’s popularity, the more likely its price will increase.
Typically, free crypto airdrops acquire traction through promotion on a project’s website, cryptocurrency forums, and social media. This is identical to obtaining a HelloFresh voucher in your email with a discount code, as both initiatives are intended to attract more users to the platform through monetary incentives.
Airdrops of legitimate cryptocurrencies will never require consumers to make an investment. Instead, it is a method to distinguish yourself from competitors who have pursued external funding prior to token issuance.
How do free crypto airdrops operate, and are they secure?
There are numerous methods for conducting a crypto airdrop:
Users must accomplish one or multiple minor social duties in order to be eligible for the free crypto airdrop.
Distribute tokens automatically to proprietors of a specific asset or balance on the blockchain where the free crypto airdrop will occur. (For example, every address with a balance of at least 0.01 ether will receive the airdrop.)
Taking a snapshot of the blockchain at a previous date and allowing users to claim their airdrop tokens through a smart contract on the project’s website.
Despite their prevalence, free crypto airdrops are not always as risk-free as they initially appear.
There will be free crypto airdrops that are nothing more than pump-and-dump schemes because recipients receive “free money” in their purses. Specifically, the inventor issues a token and hopes that it will generate sufficient interest to be listed on an exchange. Once token trading begins, the creator sells a substantial quantity of tokens, causing the price to plummet.
The so-called polishing assault is another potential attack vector. A con artist will send a victim a minor quantity of cryptocurrency to compromise their privacy. The perpetrator will then trace down the transaction activity of the distributed wallet tokens in order to deanonymize the wallet owner.
Since airdrops are considered income by the Internal Revenue Service of the United States, whenever you receive a quantity of “free tokens” you will be required to pay taxes on them, regardless of whether you wanted the airdrop in the first place.
Illustrations of crypto airdrops
Recently, the cryptocurrency industry has witnessed a handful of free crypto airdrop that surprised users.
OpenDao’s airdrop of SOS tokens rewarded all non-fungible token (NFT) creators, collectors, and enthusiasts who had previously transacted on the OpenSea NFT exchange. The only task required of recipients was manually claiming the token from the website. OpenDao’s Twitter following increased by over 60,000 as a result of the airdrop, and over 120,000 addresses claimed the token.
The Gas DAO, which issued the GAS token on the Ethereum blockchain, initiated an identical effort. Anyone who has ever paid at least $1,559 in gas fees on Ethereum was eligible for the airdrop and could claim tokens through the website. Over 57 thousand addresses claimed the free crypto airdrop. The GAS token grants voting rights in the Gas DAO, which seeks to represent the active users of the Ethereum network.
The third instance is the LOOKS airdrop orchestrated by the team at LooksRare. After listing an NFT for sale on the LooksRare marketplace, users with over 3 ether in OpenSea transaction volume between June 16, 2021 and December 16, 2021 were eligible for LOOKS tokens. The LOOKS token entitles its holders to a portion of the transaction fees generated by the LooksRare platform. Moreover, users can stake LOOKS to earn additional tokens.
How do you qualify for a cryptocurrency airdrop?
As a crypto airdrop is primarily intended for promotional and marketing purposes, it can be difficult to assure future participation. Each free crypto airdrop has its own eligibility requirements, although the majority are simple to locate. Frequently, an airdrop involving a snapshot of a blockchain is communicated after the fact, making qualification difficult. However, there are additional alternatives to consider:
- Find dedicated crypto airdrop websites (you will typically receive an email notification) – comparable to signing up for promotions from a retailer you frequently shop at.
- Check the #airdrop hashtag on social media to see if anything new has occurred.
- Utilize various cryptocurrency-related services, products, platforms, and blockchains.
- Explore cryptocurrency-related forums and news websites for references to recent or forthcoming airdrops.
A cryptocurrency wallet with a balance is the primary requirement for receiving crypto airdrops. Airdrops cannot be received or claimed without a wallet address. The use of an exchange address is practical, but not appropriate for airdrops. Instead, users should investigate the various cryptocurrency wallet options available to them. MetaMask is one of the most prominent cryptocurrency wallets.