By
Grace
November 22, 2022
4 Min Read
The cryptocurrency world has gradually given rise to new and creative ways of exchanging assets, but has also enabled social, cultural and technological progress. It has reached far beyond its initial capacity to even enable diverse advertising opportunities for businesses. One such example is cryptocurrency airdrops, which are already gaining popularity among the crypto community.
Put simply, a cryptocurrency airdrop is the process of blockchain-based projects and developers sending free, newly minted tokens or coins to user wallets. The initiative is usually an attempt to popularize new cryptocurrencies by making the community aware of the coins or tokens.
In some cases, the creators behind the blockchain project may ask the recipient to perform a certain activity in return for the airdrop. These activities could include filling out a user form, retweeting a post about the coin or project or creating an account on a certain platform.
Ultimately, the main objective of a crypto airdrop is to boost awareness and encourage more participants to get involved with the project.
To organize a cryptocurrency airdrop, blockchain-based projects go through different stages of planning and preparation.
Usually, a company decides to conduct a crypto airdrop to incentivize investors or because of a hard fork in the network. Every company or crypto project decides on how many available tokens they have for an airdrop. Next, it’s important to choose how the airdrop will be facilitated and select users who will receive the tokens based on eligibility requirements.
Eligibility requirements are often based on users having to sign up for the airdrop or perform certain tasks. In other cases, the criteria could be that users own a certain amount of tokens prior to the airdrop. During the assessment of user eligibility, the blockchain project may collect user information like email addresses, wallet addresses, and more.
After the users have been selected, the airdrop is conducted via smart contracts. Recipients will receive the sent coins directly in their wallets.
It’s important to note that not all crypto airdrops are the same. They can be divided into the following types.
Standard airdrops are rather straightforward. Users only have to express their interest in participating in the airdrop by providing their wallet address. In most cases, there is no additional information required. The blockchain project will usually set a maximum amount of coins that can be sent to an individual and a cap on the number of tokens available for the airdrop altogether.
The main concern with standard airdrops is that users can easily use multiple wallets to evade the token limit per individual and receive more coins, draining the airdrop amount.
Holder cryptocurrency airdrops take into consideration the number of existing coins the user already possesses. This information is easily accessible thanks to the transparency features of the publicly distributed ledger.
The drawback of this type of airdrop is that users with the highest token possessions are privileged, while those with fewer tokens are neglected. Furthermore, not all users with substantial coin ownership may want to participate in the airdrop to receive more tokens.
Bounty crypto airdrops are more sophisticated and require users to take part in certain activities in order to be eligible for receiving free tokens. Such tasks could include promoting the project on social media. In most cases, participants are incentivized to spread the word to others by receiving bonuses for sign-ups to newsletters or other channels.
The performance of the participant is measured in points that represent the number of coins they are eligible to receive in the airdrop.
The cryptocurrency landscape is becoming increasingly competitive, and new blockchain startups can find it difficult to grow and develop, if they’re lacking proper promotion. Crypto airdrops is a creative way to enhance marketing efforts and quickly raise awareness for new coins and tokens.
In addition, they enable blockchain projects to show their appreciation for loyal participants in a network by rewarding them with free coins.
As beneficial as crypto airdrops may be for promoting awareness of new tokens and crypto projects, there are also several challenges to consider.
First, crypto airdrops create opportunities for scams, where users are misled to share their wallet addresses with phishing websites or malicious parties. Once the user connects their wallet and provides their secret phrase, they will receive a micro amount of crypto assets from scammers and become part of what’s known as the dusting scam.
The scammers can then gain information on the transactional activity of the wallets and attempt to deanonymize the wallet holder. By gaining access to data about the target, hackers can perform identity theft, blackmail, phishing attacks and more.
Furthermore, some airdrops require participants to acquire certain assets, like NFTs, to increase their chances of being airdropped rare coins or items. Scammers can take advantage of this by enticing users to invest in illegitimate assets.
There are many crypto airdrops taking place every month but a few stand out from the rest with impressive rewards for recipients.
One such example is the high-value airdrop organized by dYdX, a decentralized platform for margin and perpetual trading. dYdX rewarded early users with tokens with a monetary value of between $4,000 and $135,000. The amount received by airdrop participants was calculated based on trading volume on the platform.
Another popular airdrop that attracted the attention of the crypto community was the one conducted by ENS (Ethereum Naming Service). The airdrop rewarded ENS domain owners with tokens worth four digits.
At the same time, one of the largest crypto airdrops evaluated is one created by Tamadoge, a memecoin play-to-earn platform. The platform is offering $100,000 to a TAMA token holder who has more than $100 in the token. Those participating in the airdrop must complete nine tasks to qualify as eligible to receive the reward.
Cryptocurrency airdrops are one example of how blockchain technology is reshaping the way we think about traditional models. We can already see how crypto airdrops are influencing marketing strategies as an innovative way to promote awareness and encourage participation in different crypto startup projects. As the space evolves, the likelihood is that more creative solutions to popularizing new tokens and coins will arise.
