A decade ago, the big picture for cryptocurrencies would have seemed a little bit improbable. The new digital currencies, however, have demonstrated how they can revolutionize finance for the better. A small amount of Bitcoins, which must have sold for $1,000 ten years ago, can now make you a fortune. The rich rewards on investments in cryptocurrencies, notwithstanding the volatility risks, have increased interest in them.
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Interestingly, for those looking to jump on the cryptocurrency bandwagon right now, the issue of “What is a Crypto Airdrop” is important. Crypto airdrops, which have become a popular highlight in the world of cryptocurrencies, are essentially free token distributions.
When it comes down to it, cryptocurrency airdrops entail giving out free crypto tokens to those who expressed an early interest in decentralized applications, brand-new blockchain technologies, or cryptocurrency initiatives. The airdropped tokens can also be used for a variety of other purposes, but most importantly, they are essential for protocol governance. Numerous fresh DeFi and crypto projects have given their communities governance tokens. Being a founding member of cryptocurrency projects certainly seems to be a lucrative possibility, especially with the governance tokens’ value rising to thousands of dollars.
It would also underline the importance of crypto airdrops as a marketing tool for new protocols to attract more users when explaining the specifics of them to newcomers. Free airdrops are a simple way to entice more users to increase activity on innovative protocols that do not yet have native tokens. Many cryptocurrency fans have taken advantage of free airdrops to scale their earnings with only a modest initial commitment. It is obvious that cryptocurrency airdrops have grown infamously popular recently for good reasons.
How do crypto airdrops work?
A project will often put aside a portion of their total token supply to transfer to certain cryptocurrency wallet addresses if they want to conduct a crypto airdrop. The idea is that once people have the resources, they will use the product. The project’s founders might post on social media about a forthcoming crypto airdrop and explain how they intend to select the recipients of these tokens.
If a person has previously utilized a dApp (decentralized app), they may occasionally receive cryptocurrency airdrops. For holding a particular token at a specific time, others can receive a cryptocurrency airdrop. Web3 projects frequently offer cryptocurrency airdrops to early adopters and engaged community members.
Anyone who satisfies the eligibility requirements should see the tokens in their personal cryptocurrency wallet once the crypto airdrop goes live. Cryptocurrency projects may simply identify the public wallet addresses that satisfy their requirements because data on the blockchain is transparent.
Why do crypto projects perform airdrops?
Airdrops for cryptocurrencies are purely commercial. New ventures must find strategies to differentiate out in the crowded Web3 market. Free token giveaways are a tried-and-true marketing tactic that frequently attracts a lot of attention.
In order to draw attention away from more well-liked protocols in their target market, several Web3 developers use crypto airdrops. For instance, in 2021, the NFT exchange LooksRare sold 120 million of its LOOKS tokens to users of the rival website OpenSea. When LooksRare started in early 2022, the LOOKS airdrop assisted in bringing thousands of OpenSea traders to the platform.
There are, however, several possible justifications for why developers might offer crypto airdrops. For instance, some dApps could want to thank the founding members of the community. Others could want to encourage users to utilize their tokens for decentralized autonomous organizations (DAOs) or DeFi.
These elements had a significant impact on Uniswap’s well-known airdrop in 2020. The well-known Ethereum decentralized exchange (DEX) declared in September that it would distribute 150 million UNI governance tokens to users of its trading platform. Every Ethereum address that had previously traded tokens on Uniswap ought to have gotten 400 UNI tokens. More UNI might have been awarded to those who added tokens to Uniswap’s liquidity pools. This technology is particularly frictionless in the cryptocurrency world since users interact with cryptocurrencies through a wallet.
Additionally, a lot of NFT collections have offered crypto airdrops to entice community members to keep their tokens. Most notably, in the summer of 2021, Yuga Labs’ NFT studio handed anybody in possession of a Bored Ape Yacht Club (BAYC) NFT a “Mutant Serum” NFT. The Bored Ape of the holder could become a “Mutant Ape” thanks to these Mutant Serum NFTs. Millions of dollars have been paid for some of these mutant serum and mutant ape NFTs.
Are crypto airdrop and ICO the same thing?
When someone meets the requirements for an airdrop, they will receive free units of a new or even an existing cryptocurrency. This is known as a crypto airdrop. The requirement could be that they carry out specific actions to advance the project, own a specific cryptocurrency, or even just have used a service.
Initial coin offers (ICOs), like airdrops, are carried out to inform the cryptocurrency community about a project. Additionally, they provide a means for consumers to invest in the brand-new cryptocurrency. An airdrop and an ICO, however, differ slightly from one another.
The first obvious distinction between an ICO and an airdrop is that although investors must purchase shares in an ICO, cryptocurrency is given away for free in airdrops. In order to get an airdrop, you must first execute a task that benefits the project.
Participants in an ICO must purchase the cryptocurrency, either with fiat money or another cryptocurrency like Bitcoin, Ethereum, or a comparable one. While airdrops encourage users to utilize the project and frequently use their tasks as a free form of advertising, ICOs are a way of raising money for the launch of a new enterprise.
Types of airdrop
Participants in a conventional crypto airdrop merely announce their interest in receiving the airdrop in order to participate. There must be a valid wallet address provided by the user, while some airdrops only need this.
Standard airdrops frequently feature a predetermined number of tokens to distribute and a cap on the number of tokens any one person can receive. As a result, certain common airdrops have a deadline. These airdrops may be more challenging to obtain even though they are popular due to their simplicity. There is nothing stopping a single user from creating multiple wallets in order to quickly spend the airdrop amount.
Bounty airdrop
When users complete specific activities, they receive reward cryptocurrency airdrops. These duties frequently involve spreading the word about a project on social media by posting and tagging the business or by retweeting a recent tweet about the initiative. For those that bring in new users, sign up for the project’s newsletter, or join the company’s Discord channel, there may also be finder’s fees or referral bonuses.
Users frequently gain points for doing tasks that are correlated to the size of the reward airdrop they receive. Users can also need to accumulate a specific number of points before they are eligible for an airdrop. A user might, for instance, qualify for an airdrop after accumulating 300 points, with each of the aforementioned items costing 100 points apiece.
Exclusive airdrop
Exclusive crypto airdrops, a more specific kind of holder airdrop, take place when particular people are hand-picked for the airdrop. The distinction is that they may be chosen based on factors other than the number of tokens they possess, such as the length of time invested in a project, the amount of money spent on non-token activity, or the quantity of forum posts. An even more centralized method of rewarding people closest to the project, an exclusive airdrop might distribute tokens to wallets that may not even have any tokens in them.
Holder airdrop
According to who is holding existing tokens and how many tokens they own, holder crypto airdrops happen automatically. All blockchain users have complete transparency into wallets and token distribution because wallets and blockchain information are a part of a publicly distributed ledger.
Holder airdrops have the drawback that some token holders may not wish to participate. Instead, holder airdrops make sure that only the biggest, most invested people profit. Some holder airdrops will only give out airdrops to members who have a particular number of tokens in their possession; otherwise, they will prorate the payout.
How to claim an airdrop?
To claim crypto airdrops, you must first have a private crypto wallet. To participate in any crypto airdrop, you must make sure your crypto wallet is compatible with it.
For instance, claiming an Ethereum airdrop is not possible using a wallet powered by Solana, such as Phantom. On the other hand, it is not feasible to claim prizes on Solana using an Ethereum wallet like MetaMask.
After creating a private crypto wallet, you should look for news about impending airdrops on reliable crypto websites. Start your search on well-known cryptocurrency price aggregators like CoinMarketCap and CoinGecko for the best results.
Additionally, there will probably be a lot of news about crypto airdrops on social media platforms.
However, it can be challenging to identify which initiatives are frauds, particularly if they don’t have a sizable fan base. It’s best to stick with initiatives that have a sizable ecosystem and a sizable following if you’re looking for crypto airdrops on social media.
When you locate a crypto airdrop that you believe to be secure, you must adhere to the prerequisites outlined by team leaders. A dApp interaction, subscribing to a newsletter, or posting your public address on a project’s official website are a few examples of what this entails. If you own a specific cryptocurrency or have already used a specific dApp, you can automatically qualify for an airdrop.
When a crypto project’s official drop date comes around, you should notice the crypto airdrop there once you’ve finished the tasks outlined by the project.
Many people will act a certain way in response to “farm airdrops.” This implies that they will do the bare minimal steps necessary to be eligible for airdrops, frequently opening hundreds or thousands of wallets in an effort to appear to be many persons. Projects can be shielded against this by using Worldcoin’s Proof of Personhood system, which requires users to reveal their unique human address.
How to avoid airdrop scams?
A reputable cryptocurrency airdrop will never ask for money to invest in the currency. Its sole purpose is promotional. On the other side, a type of cryptocurrency scam known as a dusting scam involves delivering tiny amounts of bitcoin or other cryptocurrencies to unknowing receivers.
In order to claim their airdrop, several airdrop frauds instruct investors to link their wallets to phishing websites. A user will frequently be prompted by the web3 address to connect their wallet utilizing well-known and widely used wallet services like MetaMask, Trust Wallet, or Oasis. The scam is finished after a consumer connects their wallet by giving their secret password or keys.
Airdrop fraud can also take place by persuading market participants to buy a particular security in the expectation of receiving a different item via airdrop. For instance, a project might promise that storing particular NFTs in a wallet will qualify owners for a unique airdrop. The airdrop may have been real, but the project owners may have encouraged NFT market activity so they could sell theirs for more money.
Users need to be constantly on the lookout for unauthorized deposits into their cryptocurrency wallets. Users should also be conscious of the initiatives they are funding or trying to claim assets for. Do your own research is a tip that cryptocurrency explorers frequently offer.
Crypto aficionados are cautioned not to link to websites they are unfamiliar with. To do this, make sure that any external links they click on originate from the project. To be sure you’re always connected to the correct website, you might want to bookmark popular websites you intend to visit regularly.
Companies frequently announce airdrops and other promotions in public. To keep up with upcoming activities, think about following the project on social media, forums, or discord. However, be careful because sophisticated scammers may mimic or imitate project social media pages.
Consider making a second wallet just for airdrops if you don’t want airdrops to be linked to primary investments. Tokens can be transferred to several wallets after being received. Keeping cryptocurrency in various wallets spreads risk even though it is not a traditional type of diversification.
In conclusion
An enjoyable benefit for early Web3 users is a bitcoin airdrop. When learning about these incentives, however, rookie investors should moderate their expectations. Even while a small number of cryptocurrency airdrops have proved profitable, very few are worth thousands of dollars. Additionally, many initiatives that advertise lucrative crypto airdrops are fraud tasks.
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