What are cryptocurrency airdrops?

If you think free cryptocurrency tokens are too good to be true, think again. Many projects, particularly those that haven’t been around for very long, now offer free tokens to lucky supporters through a process called airdroping. This is typically used to promote awareness of a new token during the early stages of its launch, but more established projects do use them, too.

Before you rush off to look for the latest airdrop, however, it’s important to understand what they are in more detail, as well as how they work. It’s also critical to avoid airdrop scams, which are becoming increasingly common in the cryptocurrency industry. In this AAG Academy guide, we’ll explain everything you need to know, including how to find new airdrops before it’s too late.

One of the biggest challenges for new cryptocurrencies is garnering enough support to keep the project running beyond the first few weeks and months of its inception. Cryptocurrencies simply cannot survive without users and investors who can help fund their development, and what better way to attract them than by offering free tokens that might one day be very valuable?

One of the most popular ways to do this in recent years is with a process called airdropping, in which tokens are deposited into the wallets of lucky supporters free of charge — or in exchange for completing small tasks that typically involve promoting the project in some way. There are a number of different types of airdrops used today, which we’ll cover in more detail later on.

How do cryptocurrency airdrops work?

The airdrop process is relatively simple and easy to understand. It starts when a project decides to launch an airdrop as a marketing strategy, usually to attract new users or to incentivize existing investors. The type of airdrop is chosen, and then a campaign is launched to promote it. This usually involves posting on social media and the project’s official website.

Those who are interested in participating in the airdrop provide the project with any necessary details — this usually involves just a wallet address, but sometimes an email address as well — then complete any tasks they need to carry out to make them eligible for selection. Eventually, the project compiles a list of airdrop recipients or winners.

Finally, the airdrop is facilitated through the use of smart contracts, at which point those who have been selected get tokens deposited into their cryptocurrency wallets. These tokens will often come from the project’s treasury, and other users will be able to see the transaction on the blockchain. Some projects publish this information to demonstrate the airdrop’s equitability.

It’s important to note that this process may vary slightly depending on the type of airdrop used. We should also bear in mind that participating in an airdrop doesn’t guarantee that you will receive tokens, even if you complete all the tasks that have been asked of you. There is usually a limited number of tokens available and a far greater number of users hoping to receive them.

What are the most common types of crypto airdrop?

As we touched on above, not every airdrop is carried out in exactly the same way. Depending on the project’s goals, the user requirements for participating in an airdrop and being eligible for a reward can vary. Here are five of the most common types of airdrop used within the cryptocurrency industry today:

Standard airdrop
With a standard airdrop, participants simply express their interest in receiving tokens and provide their wallet address. No additional effort or information is required, though there is usually a deadline on when the airdrop will end, so you’ll need to sign up before then. Users are then chosen, often at random, to receive the tokens up for grabs.

Bounty airdrop
A bounty airdrop requires users to perform certain tasks. This might include a variety of things, but they typically revolve around project promotion. Examples include posting on social media and retweeting or sharing promotional messages, encouraging others to sign up for the project using referral links, and joining a project newsletter, Discord, or other social channels.

In exchange for completing these tasks, users will sometimes be awarded points. The more difficult the task, the more points you get. You may be required to earn a certain number of points to be eligible for the airdrop, or it may be that those with the most points are chosen.

Exclusive airdrop
With an exclusive airdrop, only certain individuals qualify for the reward. These are usually carefully chosen and can be based on a wide range of factors, such as how many tokens the individual holds or how much money they’ve spent on investing into the project, how much time they’ve spent inside the project’s forum or Discord channel, and more.

Holder airdrop
A holder airdrop means that only those who already hold the project’s token are eligible, and in most cases, those who hold the most have a better chance of receiving more. There may also be a minimum token requirement, and some projects may state that tokens purchased after a certain date are not counted. This is done by taking an earlier snapshot of the blockchain.

Raffle airdrop
Some of the airdrop types above may be combined with a raffle system, so rather than automatically qualifying for a reward, individuals receive a raffle ticket that is entered into a draw. A certain number of winners is then chosen at random. This may mean that even if you hold the most tokens, or complete the most tasks, you may still lose out in the end.

Are cryptocurrency airdrops safe?

Cryptocurrency airdrops that are administered by safe and trusted projects are perfectly safe. In most cases, the only information you need to hand over is your wallet address, which is already public information that’s visible on a blockchain. However, it’s important to bear in mind that cryptocurrency airdrops are often carried out by illegitimate, scam projects as well.

The best way to avoid being scammed is to simply ensure you carry out proper research before participating in an airdrop. Find out as much as you can about a project to ensure it is legitimate and safe before you trust it. And, most importantly, never give your wallet’s seed phrase or password to anyone — not even if they claim to be an official project team member.

Your wallet seed phrase simply isn’t needed for an airdrop, so there is no genuine reason why this information would be required. Sometimes, scammers claiming to be support staff will contact unsuspecting individuals and claim they need access to their wallet to deposit tokens. This is not true and you should not believe it.

Airdrops that require users to invest in a project should also be avoided, as should those that ask individuals to transfer tokens to different wallets. It’s also critical that you avoid connecting your wallet to untrusted DApps, which can steal any assets you hold. Again, this should not be necessary for participating in an airdrop, so if you’re asked to do it, you should be suspicious.

How can you find crypto airdrops?

The best way to find out about cryptocurrency airdrops is to follow the crypto industry. Look out for news on new projects in particular and follow their social media channels to find out when an airdrop is launched. More established projects with lots of users don’t tend to use airdrops very often because they don’t need the exposure so much, but it does happen occasionally.

You can also search for cryptocurrency airdrops on Google, or on social media networks like Twitter, where they are heavily promoted. When doing this, however, it’s important to be extra vigilant about scam projects, as we mentioned above. If you’re following cryptocurrency news, ensure you’re using reliable, reputable sources like well-established websites.

Some of the most popular cryptocurrency news sources include Cointelegraph, CoinDesk, Crypto News, and Crypto Potato.

How do NFT airdrops work?

NFT airdrops work in much the same way as cryptocurrency airdrops, except instead of being rewarded with coins or tokens, you receive NFTs. The same airdrop types we outlined above are often used, which sometimes means that you’ll need to be holding a certain cryptocurrency token, or you’ll need to complete certain tasks to be eligible for selection.

References

• Airdrop cryptocurrency
• What is a crypto airdrop and how does it work
• What is a crypto airdrop