What Are Cryptocurrency Airdrops And How Do They Work?

With over ten thousand currencies listed in the crypto industry, new cryptocurrency projects hoping to lure traders and enthusiasm will need to use some extremely creative strategies to stand out among the other 10,000 projects out there. While it is a given that crypto programmers endorse their token projects actively through media platforms, press releases, and cryptocurrency blogs, other marketing tactics are also investigated. This Crypto Airdrops review will cover everything about it in the following discussion.

Then there are airdrops. Airdrops, once regarded as an outlandish kind of guerilla marketing, have surged in popularity in the crypto sector since 2017, with numerous projects employing the approach to accelerate adoption, motivating the community to assist promote a project, or reward loyal followers.

An airdrop could also happen in the event of a hard fork, like when BTC owners obtained a 1:1 airdrop of Btc in 2017.

Crypto Airdrops and How Do They Work?

A cryptocurrency airdrop is a marketing strategy that involves the free issuance of crypto tokens in order to raise publicity and build a community quickly. It can also serve to establish an early value for a token by allowing recipients to exchange their airdropped coins. As a result, airdrops are frequently used by businesses wishing to fund their crypto initiatives. The announcement of a forthcoming airdrop is frequently made on a cryptocurrency project’s website, Medium site, or 3rd party airdrop trackers, and then disseminated across social media channels where a large number of cryptocurrency fans can view it.

An airdrop includes the distribution of tiny amounts of newly created cryptocurrency to members of a certain blockchain platform. For instance, crypto firms may distribute money to NEO, Eth, or BTC wallet holders. In some situations, in order to become eligible for an airdrop, a receiver may be needed to hold specific coins or retain a minimum balance. TRX holders, for example, will remain to get BTT airdrops until February 2025.

In other circumstances, individuals may be required to complete little tasks, such as sharing information about an initiative on social media. Note that cryptocurrency airdrops are not the same as initial coin offerings (ICOs), which are designed to seek investments from users and are classified as securities offerings in the United States, whereas airdrops are often used to increase awareness. An airdrop is frequently backed by an ICO or other types of token fundraising.

Why Do Crypto Enthusiasts Love Airdrops?

Airdrops are popular among cryptocurrency enthusiasts, particularly those with modest or no cryptocurrency holdings because they are free coins. And, in other situations, these free funds may grow over time or spike unexpectedly, resulting in massive gains with no initial investment.

Airdrops typically benefit the issuing corporation more at first, but beneficiaries of the free coins may be in for a surprise later on. It’s a win-win situation for everyone. Here are three great examples of airdrops that worked.

What types of airdrops are there?

Although their main purpose is to incentivize users, cryptocurrency initiatives may give out free cryptocurrency in a variety of conditions.

The following are the most prevalent types of airdrops:

Airdropping as is

  • Airdrop of a bounty
  • Exclusive airdrop
  • Holder airdrop

As a marketing tool, a traditional crypto airdrop distributes a certain number of tokens to current wallets. It’s normally done to market the brand and urge more people to embrace the asset, which happens to be the case during the asset’s initial coin offering (ICO). Simply set up an account and enter your wallet during the distributing event.

A Bounty Airdrop

Bounty airdrops are likewise a marketing approach, but in order to obtain the digital tokens, potential receivers must participate in some form of promotional activities.

The following are examples of activities:

  • Facebook or other social media sites to share an article about the cryptocurrency
  • Subscribing to the project’s newsletter through email
  • Joining a discussion forum to talk about the project and engage in it
  • A bounty airdrop requires a little more effort than a regular airdrop, but the tasks are often not difficult.

An Exclusive Airdrop

An exclusive airdrop is when a group of people that follow an air-dropping aggregator receive cryptocurrency. These third-party websites disseminate information about promising cryptocurrency projects and anticipated airdrops.

A Holder Airdrop

A holder airdrop is exactly what it sounds like. People who have a certain quantity of another currency in their wallets are eligible for holder airdrops. Typically, the cryptocurrency project captures an image of cryptocurrency holdings on a certain date and then allows participants to claim an airdrop depending on their possession at that moment.

Stellar, for example, is a 2014 cryptocurrency initiative. As a gesture of gratitude to the Bitcoin network, its founders declared in 2016 that they will airdrop $19 billion worth of XLM, its native money, to existing bitcoin (BTC) owners. You would have to confirm your BTC assets in order to obtain the XLM from the Stellar airdrop.

The Best Way To Get Crypto Airdrops

Crypto airdrops are a terrific method to diversify your cryptocurrency portfolio without needing to spend any money. The following are some methods for locating cryptocurrency airdrops:

  • Looking for cryptocurrency airdrop chances on a regular basis on the internet
  • Sign up for special airdrops by following airdrop aggregators.
  • Registering up for the new platform in order to benefit from any basic airdrops they have available
  • To be ready for bounty airdrops, keep an eye on upcoming initiatives.
  • It’s primarily a matter of staying on top of things and seizing opportunities as they occur to take advantage of an approaching airdrop.

Three Profitable Crypto Airdrops

  • Airdrop from Uniswap (UNI)

Uniswap, the world’s most prominent decentralized exchange, deployed its own cryptocurrency, UNI, to all crypto-wallets that used its service and completed at least 1 transaction before September 1, 2020. The base asset was distributed to qualifying accounts in the amount of 400 units. UNI traded hands for $2-$4 throughout the event, as most receivers instantly unloaded their airdropped token.

Those that “held on for dear life” (HODL) saw their persistence and loyalty rewarded handsomely as the swap token’s value climbed along with the rest of the DeFi ecosystem, rising from $2 to $30 as from April 2021. As a result, those of you with steely hands now have a lovely little nest egg of 12,000 USD from just UNI.

  • Airdrop of Ontology (ONT)

Ontology airdropped its own money, ONT, to NEO holders in 2018, as well as 1,000 ONT to those who simply subscribed to its newsletter. Part of the goal of the event was to thank NEO blockchain enthusiasts for their assistance during the fundraising process. The entire quantity of airdropped tokens was 10 million, valued at $42 million at the time and traded at $4.2 per coin. The cryptocurrency later soared to over $11 in the midst of a deepening bear market, valuing the airdropped tokens at $100 million. Regrettably, that was the busiest period for sales, kids. ONT has now tried to trace to a more decent attempt, holding slightly below $2.

  • 1 Inch Airdrop

The 1inch DEX distributed 90 million 1INCH coins to over 55,000 recipients in December 2020. An address had to have exchanged at least $20 or completed four transactions before the air-dropping day to be eligible. 1INCH cost around $2.7 when it first came out. In April 2021, the coin is valued at slightly more than $6.

As a thank you for your support, one specific account received a whopping 10 million coins (9,749,686) during the airdrop day. In April, the cache was valued at $60.4 million, a gain of nearly $33 million in very little than 5 months.

Reason To Use Airdrops

Since they’re the main beneficiaries of such activities, crypto projects dish out large rewards through airdrops. Let’s take a look at the main reasons why crypto firms run airdrop campaigns.

  • Obtaining Investors

In most situations, cryptocurrency airdrops are accompanied by token offerings, such as ICOs, IEOs, IDOs, and so on. Airdrops, which are linked to raising awareness, are a great approach to improve funds collected without investing too much in advertising.

When a startup opens and executes an airdrop, the resulting excitement helps to drive prices of a coin upwards, since most beneficiaries will promote projects that provide them free money.

Major investors, or “whales,” use these data analysis as an asset weathervane to evaluate a project’s long-term prospects, particularly in today’s digital financial system, where every communication metric can be assessed and then used to entice investors, like Google search words, social media activities, and community media presence tally on Twitter and other platforms. As a result, an airdrop that considerably improves community engagement could significantly enhance the firm’s capital for only a small percentage of tokens given to the airdrop.

  • Rewarding Users

Many cryptocurrency investors, unfortunately, are simply interested in maximizing their ROI and are unconcerned with a project’s long-term viability. As a result, they jump from one initiative to the next, dropping their large bags after a push and profiting handsomely from new investors without adding any actual benefit to the protocol. In reality, this type of activity can be detrimental to a cryptocurrency platform.

To combat this, several businesses arrange airdrops in which they offer free coins to loyal customers who either utilize their services or save a certain amount of coins in their wallets for a certain period of time.

  • Decentralizing Token Distribution

Deep-pocketed investors may be able to take benefit of their different wealth and acquire bargain pricing during the initial periods of a coin, enabling them to hold a considerable portion of its circulation quantity. The issue is that putting a huge amount of currency in the hands of a few people leads to centralization, which is now one of Dogecoin’s biggest flaws.

In such instances, projects can choose to undertake airdrops to even out the issuance of a token.

  • Increasing Public Awareness

The major purpose because blockchain startups do airdrops is to raise public awareness. ICOs were a big deal in the early stages of crowdfunding. However, issues occurred quickly. During the gold rush, a torrent of startups flooded the market, many with only a weak and largely copied white paper in their hands, flooding the market and driving investors away.

In addition, some nations, like China, have explicitly outlawed ICOs, and regulators, such as the Securities and Exchange Commission (SEC), have begun to target ICOs that deal with local U.S. investors. New initiatives soon required a more appealing and lawful way to generate buzz.

The solution was straightforward. Simply give away free coins. Because of the prominence of airdrops, many cryptocurrency enthusiasts went on a shilling binge, endorsing initiatives in order to receive airdrops and “pump their bags.” Anyone who follows the cryptocurrency sector on social media knows that airdrop winners are among the most vocal supporters a venture can hope for. It was a perfect match for cryptocurrency firms, as it enabled them to actively develop their network by simply handing out a small fraction of their coins.

  • Getting to Know Its Community

Airdrops also allow programs to acquire data from the cryptocurrency world since some of them demand receivers to fill out a form with personal information like their email address, social network accounts, and opinions on cryptocurrency projects. A project’s staff can create targeted advertising efforts using this data.

Other “Free Crypto” Resources to Consider

Airdrops and cryptocurrency faucets aren’t the only ways to receive free cryptocurrency. For example, holding some currencies like ONT and NEO will allow you to receive free native gas coins like ONG and GAS at regular periods.

To gain cryptocurrency incentives of networking rewards or governance tokens, you can also use DeFi strategies like staking cryptocurrency or yield farming. When it comes to signing up for new exchanges, there are a number of websites that give crypto promo codes and sign-up incentives.

While all of these incentive mechanisms offer “free” money, you must first invest in and possess particular assets or make the first payment to a regulated market or trading application. If you’re willing to spend your money in cryptocurrency, on the other hand, these tools will help you enhance or even quadruple the worth of your initial cost while avoiding danger. Remember that after the value of your upfront outlay has multiplied, you can sell half and keep the other half as a risk-free “freeroll,” to use poker lingo. This is not an investment suggestion, and you should conduct your own homework before investing.

What are crypto airdrops’ advantages and disadvantages?

Crypto airdrops could let you diversify your cryptocurrency holdings without having to purchase them. They may also be able to assist you in gaining access to a new platform’s early stages.

Assets dropped from the sky, on the other hand, could be worthless. You could spend some time hunting for and claiming airdrops only to have the value of the airdropped coin decline before you can sell. Furthermore, there’s the risk of handing over money or private details to a bogus website. If you’re a cryptocurrency enthusiast who likes to stay up with new advancements and handles your investment on a regular basis, airdrops are more likely to be worthwhile.

  • Airdrop Alert: Phishing and Dusting Attacks Are on the Rise!

Hackers use free cryptocurrency ways to exploit and steal, as anybody who has to check the comments on an Elon Musk Twitter post knows. In 2021, cryptocurrency hacks and frauds will become increasingly sophisticated, catching even the most experienced investors off guard. When looking for any cryptocurrency exchange or venture on Google, please exercise extreme caution. To attract victims, fake websites frequently pay for advertising on social media and SEO websites. Even unintentionally mistyping an exchange’s exact URL can lead to a cloned site.

How to Manage the Risks of Airdrops

Airdrops aren’t always helpful. As a result, be cautious about which airdrops you register for. To begin with, any airdrop that needs you to send money to the initiative is almost probably a scam. It’s not a good idea.

Secondly, many airdrops are merely means for obtaining personal information from you, and “dusting” assaults, in which you get a fractional quantity of cryptocurrency into your wallet and so give your personal information to a scammer or hacker, are frequent. Once a firm has this information, its users can use blockchain explorer tools to examine your portfolio.

If you have a significant number of digital currencies on that digital wallet, you could be the subject of phishing, SIM swapping, and other hacker attacks, as well as real-life blackmail.

As a result, it’s advisable to make a second wallet just for airdrops. This is a straightforward procedure. To get airdrops, simply create a new address on MetaMask or MyEtherWallet, as most airdrops occur on the Eth network as ERC-20 tokens. This will also allow you to distinguish between “house money” and coins that you have really paid for.

Conclusion

Airdrops are a relatively harmless marketing ploy designed to provide community rewards for future initiatives and their early investors. While they may appear insignificant at first, they may end up being extremely valuable to crypto newbies or enthusiasts eager to get in on the ground floor of potential initiatives without having to invest any money.

In fact, Decred, Bitcoin Cash. Oyster, Minereum. Stellar, and BitTorrent, if you had gotten these 6 airdrops by now, you could have made a stunning $500,000. So, how long are you going to wait? Always be wary of scam sites, bookmark reliable websites, use separate wallets for different airdrops, and never send money to get an airdrop.

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