CryptoLenz | What is Crypto Airdrops: Deciphering the Concept
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What is Crypto Airdrops: Deciphering the Concept

Published On
12 Feb 2024 09:42

In the ever-evolving world of cryptocurrency, airdrops have become a mainstay marketing tactic to draw users and boost market visibility of cryptocurrencies worldwide. Yet, what are airdrops? How do they operate? This piece aims to demystify the world of crypto airdrops, offering an all-inclusive guide for those entering the vast expanse of cryptocurrency.  

What is a Crypto Airdrop?

A crypto airdrop, in simple terms, is a marketing strategy used by new blockchain ventures to kickstart a digital currency project. Let's imagine a scenario - you wake up one morning to find a pile of gold coins in your backyard, free of charge. Wouldn't that be great? This is what crypto airdrops are about. In a world where nothing comes free, crypto projects give you tokens, their digital equivalent of gold coins, for almost nothing. The reasons can be various - from fostering user engagement, sparking an interest in the project, or rewarding loyalty, airdrops serve multiple purposes.  

Types of Airdrops

In crypto, there are usually three types of airdrops 

  •     Retroactive Airdrops: Project gives airdrops to people who interact with its protocol: swap, adding liquidty, try testnet, doing quests, etc. 
  •     Holders Airdrops: Project give airdrop to people who hold or stake token’s or NFTs of another project 
  •     Bounty Airdrops: Projects give small amount of token or USD to people who interact with them on social through a promotional campaign such as: making stickers, making memes, sharing tweets, doing Q&A, etc. 

The Origin Story and Rise of Airdrops

Crypto airdrops, like superheroes, have an origin story. Our journey back in time takes us to 2014 when a project named Auroracoin made a bold move. Every Icelander received a gift of 31.8 AUR.  

Despite its fall, it inspired others to adopt this ingenious tactic, laying the foundation for modern airdrops.  

The storyline of airdrops truly escalated with the ICO (Initial Coin Offering) boom of 2017. Ever since airdrops have been the Robin to every crypto Batman, a trusty sidekick helping crypto projects attract users, build a community, and increase liquidity.  

In 2021, there were over $1 billion worth of tokens airdropped to users, and this trend is still on the rise because increased people in the world have started taking an interest in the world of crypto.  

How to do crypto airdrop

To conduct a crypto airdrop, create a plan, distribute free tokens to targeted users based on specific criteria such as holding a certain cryptocurrency, and promote the event through various channels to attract participants 

How to identify project which has potential to do big airdrop?

Identify projects with strong community engagement, active development, and transparent communication channels. Look for indicators like a clear roadmap, partnerships, and a history of fulfilling promises to gauge potential for significant airdrops. 

Where to find upcoming airdrops

Find upcoming airdrops on specialized cryptocurrency forums and social media channels dedicated to blockchain projects. Additionally, check airdrop aggregator websites that list upcoming token distributions. 

Which type of crypto airdrop is best?

The best type of crypto airdrop depends on individual preferences and goals. However, projects offering utility tokens with real-world applications and strong community engagement tend to be more valuable and desirable for participants. 

How to get free crypto airdrops?  

To get free crypto airdrops, join communities, follow official social media accounts of blockchain projects, and sign up for airdrop announcements on dedicated platforms. Participate in tasks like social media engagement or holding specific tokens to qualify for airdrop distributions. 


Airdrop historical data: top project with highest airdrop value, total airdrop amount? 

The top project with the highest airdrop value historically is often subjective and fluctuates. However, projects like EOS and Stellar have conducted notable airdrops with significant token distributions. Total airdrop amounts vary widely among projects, with some distributing millions or even billions of tokens to participants. 

How to avoid get hacked while doing airdrop?

To avoid getting hacked during an airdrop, ensure you're interacting with official channels and websites of the project. Never share your private keys or personal information and use secure wallets and tools for transactions. 

How much money do you need to do an airdrop?  

The cost of conducting an airdrop varies depending on factors such as the size of the distribution and the method used. It can range from a few thousand dollars to tens of thousands for larger-scale campaigns. 

Does crypto airdrop get taxed? 

In many jurisdictions, crypto airdrops are subject to taxation as they are considered taxable income or capital gains upon receipt. However, tax laws vary by country, so it's essential to consult with a tax professional to understand the specific implications in your area. 

What are the pros and cons of crypto airdrops to users/ project owner?  

Pros for users: Free tokens, potential for profit. Cons: Potential scams, dilution of token value. 

Pros for project owners: Community engagement, token distribution. Cons: Costly, potential for misuse or abuse. 

Is crypto airdrop profitable?

Crypto airdrops can be profitable for users who receive valuable tokens and sell them at a higher price later. However, profitability varies depending on the project's success and market conditions. 

How do crypto airdrop works?

Crypto airdrops distribute free tokens to participants who meet specific criteria, such as holding a certain cryptocurrency or completing tasks. These distributions aim to promote projects, increase community engagement, and decentralize token ownership. 

Identifying Scam Airdrops

As the popularity of airdrops increases, so does the risk of scams. Here are some red flags to look out for:  

    Requests for private keys: Your private keys are like your secret diary, do not share them with anyone! Airdrops asking for them might just be up to no good.  

    Guarantee of profits: An airdrop swearing guaranteed profits is selling you a pipe dream! Cryptocurrency is a volatile and unpredictable market, and no one can guarantee profits or returns.  

    Lack of information: Can't find details about the airdrop project? If it's legit, you will be able to find a ton of information from legit sources regarding this.  

    High entry requirements: If an airdrop starts sniffing for your social security number or passport details, it is a wolf in sheep's clothing. Beware of such freebies that come at the cost of your privacy!  

    Fake social media accounts: Beware, scammers love a masquerade! They will often create fake social media accounts to promote their snake oil. So, make sure to always check the legitimacy of the social media account before diving headfirst and claiming the airdrop.

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