To promote their project and token, crypto startups use the term “crypto airdrop” as a marketing strategy. This involves giving their native cryptocurrency away to potential or current users for free.
Users may need to do simple promotional activities, such as following the project on social media and sharing their posts.
Airdrops come in many forms and each project is different. However, most airdrops have the same goal: to increase awareness and overall interest in the projects. Some airdrops are directly into the wallets of users, while others require manual claims.
Anybody with a cryptocurrency wallet may claim or receive an airdrop. However, scammers are always a danger. Many fraudulent airdrops can be used to steal your wallet funds and transfer the tokens. Before you claim an airdrop, verify the legitimacy of the project. Be especially cautious if the airdrop requires that you connect your wallet to an online website.
Introduction
It’s becoming increasingly difficult for crypto traders and investors to keep up with all the new coins. Some crypto projects offer airdrops to help them stand out and increase their awareness. Although everyone loves free crypto, they are not always legitimate. Let’s find out how they work, and what you can do if you get scammed by airdrops.
What’s a Crypto Airdrop?
A crypto airdrop is the transfer of digital assets from one crypto project to multiple wallets. To increase awareness about the project, coins or tokens are distributed to potential or current users. Although these tokens can be given away for free, some airdrops may require that users complete certain tasks before they are claimed. Many crypto projects still use airdrops as a marketing strategy. They were popularized during the initial coin offerings (ICO) boom in 2017.
How Do Crypto Airdrops Work?
There are many types of crypto airdrops. They usually consist of a small amount distributed to multiple wallets (mostly on Ethereum or Binance Smart chain). NFTs are sometimes given out by projects, although they are less common.
While some projects will distribute the money without you having to pay anything, others will require that you perform certain tasks before you can claim. You may be asked to follow social media accounts, subscribe to a newsletter, or keep a minimum amount in your wallet. You are not guaranteed to receive the airdropped tokens.
Some cases grant airdrops to wallets that have interacted with the platform’s platform before a specific date. This method was used to support early adopters by 1INCH and Uniswap. These were not like common airdrops and could be worth thousands of dollars.
Why Do Crypto Projects Perform Airdrops?
To increase adoption and grow their networks, many blockchain projects offer free tokens. Higher token holders are often considered a positive indicator. This makes the project more decentralized and allows for greater ownership. Recipients are also motivated to promote and use crypto airdrops. This helps to build a user base before the project is listed on crypto exchanges.
Airdrops can also create a false impression that there is growth. It’s important to take into account other factors when evaluating adoption. If hundreds of thousands of people have a token but they are not using it, the project may be a fraud or have failed to attract the community.
Are Crypto Airdrop and ICO the Same Thing?
ICOs and crypto airdrops are two different concepts. An ICO, on the other hand, is a crowdfunding method that requires participants to invest.
An ICO is a token sale that the project team holds to raise funds from investors. ICOs became popular after Ethereum held a crowdfunding event in support of its development in 2014. The ICO boom was a huge success in 2017, with hundreds of projects adopting the technique. You can find out more about ICOs at What is an ICO (Initial coin Offering).
Types of Airdrop
There are many ways to conduct cryptocurrency airdrops, as we have seen. We offer a variety of airdrops. Examples include bounty, exclusive, and holder airdrops.
Bounty airdrop
To claim a bounty airdrop, users must complete certain tasks. These include sharing information about the project on Twitter or joining the Telegram group. You will likely need to complete a form with your wallet address, and proof of completion to claim a bounty.
Exclusive airdrop
Only designated wallets can receive crypto from an exclusive airdrop. The recipients must have a history with the project such as being active in the community or a supporter early on.
In decentralized exchange (DEX), Uniswap gave 400 UNI to all wallets that interacted with their protocol before September 2020. Holders of the governance token can vote on future development decisions.
Holder airdrop
Holder airdrops give away tokens to holders who have a certain amount of digital currency. The project team often takes a snapshot at a particular date and time of the users’ crypto holdings. Recipients can receive tokens for free if their wallet balance meets the minimum requirements.
New projects often airdrop tokens to holders of bitcoin (BTC), Ethereum (ETH), or BSC wallets. They have the largest community in the space. Stellar Lumens (XLM), for example, dropped 3 billion XLM to BTC owners in 2016. This airdrop was only available to Bitcoin network users.
How to Claim an Airdrop?
The process may vary from one project to the next, as mentioned. A cryptocurrency wallet is the most important thing to claim an airdrop. MetaMask, a popular and simple-to-use crypto wallet, is available. You can then check to see if your wallet has received any tokens. To claim the airdrop, you’ll need to contact a website.
Avoiding Airdrop Scams
It can be difficult to determine if an airdrop is legitimate or fraudulent. You should always DYOR before you sign up for an airdrop. This is especially true if your wallet needs to be connected to a website. Scammers may airdrop tokens to multiple wallets. However, if you attempt to transfer the tokens to a cryptocurrency exchange or another wallet, your wallet will be emptied.
Scammers may also announce fake airdrops that lead to phishing websites. They will try to trick you into linking your wallet to a website that is very similar to the original. Once you sign a transaction and connect your wallet, other tokens will be taken from your wallet. Fake Telegram and Twitter accounts can often do this, as they look very similar.
Airdrop scams may ask you to send cryptocurrency to an unknown address to receive your tokens. You will not be asked for your seed phrase or funds by legitimate airdrops. Airdrop emails and direct messages can be dangerous.
Avoid being conned by scammers and make sure you check the official website as well as social media channels. Save the official links to double-check that they are hosting an airdrop event. You should research more about the project if you don’t have any information. It’s better to ignore the airdrop if you don’t have enough information.
You can create a new wallet or email address to receive airdrops. This will give you extra security. This will ensure that your funds are protected from phishing attempts related to airdrops. Lastly, do not share your private keys.
Closing Thoughts
Crypto airdrops are a way for crypto projects to stand out in the crypto world and gain attention. This can be a great way for crypto enthusiasts and investors to increase their portfolios by investing in up-and-coming tokens. There are more scam airdrops out there than legit ones, so make sure you do your research before signing up.
