In order to promote newly launched projects to attract investors, developers often use different token distribution methods. One such popular method for token distribution is Airdrop. In this article, we will thoroughly explore what Crypto Airdrops are, how they work, and why projects use Airdrops. So, if you are interested then let’s dive in!
What Are Crypto Airdrops?
In 2017, when the Initial Coin Offering (ICO) became one of the primary sources of selling newly launched tokens/coins, the idea of Airdrops gained significant momentum, and was used to reach out to a broader audience.
Airdrops in crypto refer to a marketing strategy initiated by newly launched blockchain projects, to distribute their native tokens or coins to a wide range of users who meet specific criteria, set by the team behind the project, in crypto communities.
Airdrops are often given free to users, but some do require specific tasks to complete before users can claim them.
This varies from promoting the project through social sharing, inviting other users to join the project community channels, or following social media handles.
How Do Crypto Airdrops Work?
Before Airdropping tokens, projects often specify their criteria for users to participate in the campaign. Then, eligible users participate in Airdrop activities, which can vary from joining a telegram channel, to following project social media handles and subscribing for specific services. Once requirements are met, users can claim their tokens and transfer them to their specified wallet. However, it’s worth noting that these are not the only methods projects can use to Airdrop tokens. There are many examples in which platforms have surprised their users by Airdropping tokens/coins before announcing it.
Why Do Projects Perform Airdrops?
Airdrops are used because they are one of the easiest ways to reach potential investors. They also improve the overall adoption of projects by giving recipients an opportunity to benefit from the crypto free of cost.
Crypto Airdrops are often distributed by newly launched blockchain projects to raise awareness about their platform utility and services amongst crypto communities, in an effort to attract investors. But it’s not the only purpose behind why crypto projects perform Airdrops. Platforms usually also distribute tokens for reasons such as:
- To ensure that the initial token supply is spread across the blockchain, in different wallet addresses and people, thus, lessening the chance it is monopolized by a few whales.
- To incentivize active users and holders.
Since 2021, Coin-Labs.com has partnered with Bybit and is few of the highest-ranking of affiliate program contracts.
Therefore, if you sign up for Bybit through the button above, you will get the most discounted fee benefit and participation in a bonus event offering up to $500.
Benefits of Participating in Crypto Airdrops
Token Distribution
As explained above in the article, by participating in token distribution, users can earn free tokens without spending any penny from their own pocket. In the case of project success, these free coins/tokens can be worth a couple of dollars that later you can exchange for fiat currencies like USD, GBP, and EUR, through listed trading platforms.
Discovering New Projects
Apart from free rewards, as a professional trader always hunting for new projects, you can get a chance to learn about emerging blockchain projects and invest before it goes mainstream.
Building a Portfolio
In order to succeed in financial markets especially markets like crypto, which is highly volatile, building a strong, diversified portfolio is very important. By continuously learning about new projects and investing in the early days while the market cap is low, you can build a better, more diverse portfolio, and increase your chances of profit potential.
Community Engagement
By participating in Airdrop activities, individuals can get a chance to become a part of an active community, where they can share their thoughts, talk to project teams, and access new futures on a priority basis.
Types of Crypto Airdrops
Standard Airdrops
In this type of Crypto Airdrops, tokens/coins of a particular crypto project are distributed amongst participants who meet specific requirements and complete tasks, which can vary, as previously explained, from social sharing to joining community channels and more.
Holder Airdrops
These types of Airdrops are common in crypto, and often are distributed by well-established blockchain platforms as an appreciation gesture to all existing users. However, it is worth noting that such types of Airdrops are often distributed based on holding power. In other words, the more particular cryptocurrency a user has during a snapshot period, the more tokens he or she stands to receive.
Referral Airdrops
Referral Airdrops are pretty much similar to standard activity Airdrops. Here users are incentivized with free tokens based on their referral activities. The more successful, legit referrals you have, the more you’ll be able to earn.
Bounty Airdrops
This type of Airdrop involves performing specific tasks such as content creation, reporting a bug to earn tokens, or promoting new cryptocurrency on a larger scale. Such types of Airdrops are primarily used to strengthen the security of platform and promote transparency.
Crypto Airdrop vs. ICO
Both Crypto Airdrop and ICO concepts gained popularity back in 2017, and are used for a single purpose, which is the distribution of tokens. But both have significant differences when it comes to distribution mechanisms.
Airdrops offer users a chance to earn tokens for free without spending any hard-earned money and are solely distributed for promotional purposes. On the other hand, ICOs are known as a crowdfunding method and are used by projects to raise initial funds to support the project’s future development. Unlike Airdrops, in Initial Coin Offerings (ICOs) traders invest funds to acquire tokens.
How to Get Crypto Airdrops
Set Up a Crypto Wallet
Setting up a crypto wallet is one of the first things as a newbie you must do in order to participate in any type of Cryptocurrency Airdrop.
When creating a wallet, make sure it supports the specific blockchain network in which you are going to participate.
There are many online hot wallets available, like Trust Wallet, SafePal Wallet, and MetaMask, that support multiple blockchain networks, from Ethereum to Binance Smart Chain, Solana, and more. So, choose whichever you prefer and set up a private wallet for free.
Research Projects and Requirements
Once your wallet is set up, research new projects through social media platforms like Twitter. When you encounter an Airdrop opportunity, make sure to conduct thorough research and understand requirements to ensure that it’s a legit project and aligns with your interests.
Protect Your Privacy and Security
Privacy and security are two of the major things you should be cautious about when participating in such types of activities because scam Airdrops are often designed to steal users’ personal information.
By conducting thorough research and avoiding engagement with unverified Airdrops, users can mitigate privacy and security risks.
Task Completion
After conducting thorough research and verifying that it’s a legit Airdrop, participate in required activities and complete all your tasks to stand a chance to win free tokens/coins.
Claim Your Airdrop Tokens
When a user completes all tasks as per the guidelines of a project, he/she becomes eligible to claim their Airdrop tokens. In order to claim free tokens/coins, navigate through Airdrop’s official website and claim your rewards by transferring them to your designated address.
Portfolio Management
Once the claimed amount of free tokens/coins of a particular cryptocurrency are reflected in your wallet, keep track of them in your portfolio, and consider their long-term potential for better investment strategy.
Stay Updated
Staying updated with the latest trends in the market is very important to survive in the Crypto Industry. This is because prices can dramatically increase or decrease depending on how positive or negative news is about a specific blockchain project or market in general.
Risks Associated with Crypto Airdrops
Scams
Unfortunately, in the crypto industry, Airdrops scams are common and usually drain all the funds in your wallet once you connect your wallet with the indicated site to claim your Airdrop. The only way to deal with scams is to verify the legitimacy of Airdrop before participating in it.
Token Value
It’s worth remembering that while Airdrops provide a chance to earn free tokens. There is no guarantee that these free tokens will be valuable in terms of price or success value.
Regulatory Considerations
Laws and Regulations surrounding free Crypto Airdrops vary in different jurisdictions. Before participating make sure to check the legal status of crypto and Airdrops in your region.
How to Find Legitimate Crypto Airdrops
Official Websites
Generally, legit Crypto Airdrops are announced by platforms through their official website and social media handles. So, before participating in Airdrop activities, make sure to go through official websites to find out more about the legitimacy of it.
Crypto Forums and Communities
If you are not a researcher or don’t have time, then joining Crypto Forums and Communities is one of easiest ways to discover Airdrop opportunities, with little to no effort.
Airdrop Aggregator Platforms
Plenty of dedicated Airdrop Aggregator Platforms are available online, such as AirdropAlert, AirdropsMob, and more, that enable users to find legit Airdrop event lists in the crypto market.
Project Announcements
By following projects’ official social media announcement channels, such as Telegram or Twitter, you can stay informed about any upcoming Airdrop updates.
Future of Crypto Airdrops
According to the Finance Analysis expert team at Coin-Labs, future outlook of Crypto Airdrops seems bright. The reason being is because it’s the only way for new projects and already-established blockchain platforms to spread awareness about their platform and newly launched services.
Conclusion
In the end, I would say Crypto Airdrops are a good way to earn free cryptocurrencies, especially for newbies. However, before participating you must be aware of the risks associated with such activities. To be on the safer side, both in terms of privacy and security, make sure to conduct thorough research and follow our best practices discussed above.
FAQs
Are all Crypto Airdrops legitimate?
It’s important to understand that not all Crypto Airdrops are legit. Some are announced for the sole purpose of scamming user funds and stealing personal information. Before participating, it is important to do your due diligence and verify Airdrop authenticity.
Can I sell the Airdropped Tokens immediately?
You may not be able to immediately sell Airdropped tokens due to the unavailability of the token public listing or liquidity. However, if a cryptocurrency is already listed and has liquidity then yes, you can sell.
Are Airdropped Tokens always valuable?
There is no guarantee that the tokens Airdropped will be valuable or that the project will succeed. However, by doing thorough research and verifying the legitimacy of a project, you can better guess whether or not tokens will be valuable for you.
Can I participate in Airdrops if I don’t have a crypto wallet?
Unfortunately, no, it’s not possible to participate in Airdrops without having a Crypto wallet. Because in order to receive free tokens, you must have a crypto wallet that supports a particular blockchain network where an Airdrop opportunity exists.
How can I avoid Airdrop scams?
By taking precautions, such as conducting thorough research about a project, and verifying the legitimacy of an Airdrop, users can mitigate the risk of getting scammed.
