You have heard people grow from $0 to $100k in crypto.
Thanks to Airdrop, the only business you can start with zero capital, a phone, data, and consistency.
As crypto gains popularity, the word airdrop is becoming more common daily. So, to avoid being out of the loop at your next dinner party, you should brush up on the term and how to tap from the unlimited free money that is being shared.
What Is Crypto Airdrop?
A crypto airdrop is a marketing strategy by crypto projects to give free tokens to their community members for their support during the project’s early development stage.
Typically, people who participate in the airdrops must complete different tasks to receive crypto tokens.
Arbitrum launched their token a while back to their early users. Their community got about 1250 to 10,250 ARB tokens per wallet.
The concept of airdrop is simple. It is a company giving a small part of its revenue to customers to thank them for their loyalty and patronage at their early stage despite their competitors.
Getting crypto airdrop tasks used to centre around filling Google forms, chatting with Telegram bots, following Twitter accounts, retweeting the projects tweets, referring people, etc.
Nowadays, it is targeted at users interacting with crypto projects and other projects in its ecosystem. Below are Arbitrum airdrop criteria.
The purpose of this is to enable community members to get familiar with the protocol.
It is certain that as the years go by and as more people onboard in Web3, the criteria will continue to evolve.
What Is an NFT Airdrop?
NFTs stand for non-fungible tokens, which are a type of cryptocurrency. What makes these coins special is that you can’t replicate them. Plus, they only exist on a blockchain.
An NFT airdrop is the distribution of free NFTs to community members. It is often not distributed to community members, rather community members have to go to a recommended NFT marketplace to mint the free NFT.
Cryptopunk started as an NFT airdrop. You just had to pay the gas fee of about 0.011 Ethereum to mint a Cryptopunk NFT. Today it is worth more Ethereum.
Types of Crypto Airdrops
We have two types of crypto airdrop
- Holders airdrop.
- Non-holders airdrop.
Crypto protocols will give you their token if you hold another token. This is often predominant between a base token and a supplement token.
This often happens when a new coin within an ecosystem is launched. To attract users to the new project, they airdrop their token to holders of the base or old token.
A different example of a holder’s airdrop is when new crypto projects fork from an existing blockchain. They airdrop new or supplement tokens to holders of the existing blockchain.
Bitcoin Cash (newly forked) gave their tokens to bitcoin holders when they forked the bitcoin blockchain.
Ethereum Classic (newly forked) gave their tokens to Ethereum holders when they forked the Ethereum blockchain.
Bitcoin Gold (newly forked) gave its tokens to bitcoin holders when they forked the bitcoin blockchain.
We can take this further toward NFTs.
Holders of Bored Ape Yacht Club(BAYC) and Mutant Ape Yacht Club(MAYC) NFT were airdropped Apecoin.
Non-holders airdrop method distributes cryptocurrency tokens to users who don’t necessarily have to hold a particular crypto or base crypto in their wallet or on the exchange.
This type of airdrop is usually distributed to users based on certain criteria such as;
- Bounty: you have to complete or participate in the protocol’s promotion.
- Participation in testnets activities. Testing the product of a protocol before they launch the mainnet.
- Retroactive airdrop: those who used the protocol during their early days. This includes the volume of dollars and the number of transactions carried out cumulatively on the protocol before the token launch.
Non-holders airdrop aims to promote the adoption and usage of a protocol. And by incentivizing users, more people get to learn about a new protocol. Not only that, they get to understand how to use the protocol.
Why Do Crypto Airdrops Exist?
They exist for the following reasons.
- Publicity or awareness
- Avoid SEC trouble.
- Reward initial investors
- Decentralization and governance.
Let’s get into the details.
Publicity or awareness.
Advertisement giants like Google and Facebook banned crypto advertisements on their platforms. This made it more difficult for crypto projects to advertise the sales of their tokens, popularly known as ICO(Initial Coin Offering).
As I mentioned earlier. The Web3 industry is the most innovative industry with smart people who have the freedom to execute things without impediment from regulations.
Web3 builders thought it wiser to share tokens with their users or incentivize the use of their protocol by airdropping their tokens to their early users.
This airdrop attracts new users and retains those who find the protocol has an amazing product.
Incentivizing protocol usage helps new users to get familiar with a crypto project technology. When they get the airdrop and move to the next one, they will still come back to use your protocol when they see the need to use it, despite the competition out there.
I only found out Uniswap existed when their airdrop started trending on Twitter. It got my attention to study them, and to date, I still use Uniswap.
And I wasn’t given an airdrop.
During the phase of ICOs, most investors need to understand the use cases of a project they want to invest in. Most investors are not interested to use the protocol to familiarize themselves with it.
They are just interested in making 2x+ of whatever they invested in the ICO whenever the token pumps and then move on to the next crypto project.
This is because top-tier exchanges have more liquidity to pump the token price very high. And when the token price pumps very high, guess who benefits the most?
Initial investors sell their ICO tokens and move on to the next ICO that would give them 10x in less than 30 days.
SEC (Security and Exchange Commission)
With the way SEC has mood swings classifying all cryptocurrencies apart from bitcoin security and fining them, each crypto project feels safer distributing their tokens freely to the public.
To escape the indecisiveness of the SEC, they simply airdrop their tokens to the public. This way, it is easy to say that the tokens were given out for charity.
Building a loyal community is one of the best gifts a crypto project would get in the Web3 space.
You can have an amazing product, but when you don’t have a strong community that believes in you and spread your word, it will be difficult for such projects to be known in the crypto space.
As a founder, what is the essence of building something you wouldn’t market to the world to improve people’s lives?
We can count several projects that are doing amazingly well but no one knows them because they are not being marketed appropriately
One of the advantages is that a huge and loyal community will help a protocol’s token to get to Tier-A exchanges without paying a listing fee.
Exchanges do this as a marketing strategy to attract a new user base to their exchange.
Another advantage of having a huge and loyal community is that they talk about your projects in groups and post on WhatsApp status and other social media channels because the community believes in the project.
Ethereum has people who believe in them and talk about their Ethereum technology shamelessly anywhere they can.
We even have Ethereum Maximalist.
The Ethereum developers don’t have to bother themselves to raise money to market their technology.
Their community is enough.
Binance coin has a similar kind of community.
Bitcoin has a similar community.
Ada has a similar community.
And so on.
By airdropping tokens to potential users, users are incentivized to engage with the protocol, join its community and become advocates for the project.
Airdropping your tokens serves as a way to reward existing community members for their support and loyalty during the early stages of development. Users also have a sense of being a part of a project that is bigger than them.
The Web3 industry is innovative and competitive. Crypto projects are competitive to attract both users and investors.
By airdropping tokens to the community, the community will continue to support the crypto project and create awareness.
Reward Initial Investors.
Crypto projects conduct an airdrop as a way to give Venture Capitalists(VCs) a return on their investments. Venture capitalists often fund the project’s to take them from the idea stage to the finished product stage.
At least the most logical thing to do to enable VCs to earn a return on their investment is to give them access to their token at the early stage and a cheap rate. This is one of the reasons why, projects like Arbitrum and Uniswap that we’re heavily funded had more chances of doing an airdrop.
The same is likely going to happen to LayerZero.
Although VCs tokens are often vested for some months or years, when they are unlocked, they sell when the price is appropriate for them.
If you connect the dots, since VCs’ tokens are going to be locked for years, they need to invest in crypto projects that are solving problems in Web3, not meme-coins.
The reason is that the utility of the crypto project will make the price stay at a reasonable price when their tokens will be unlocked.
Sometimes, the longer it takes to unlock their token, the more profitable their investment becomes.
Decentralization and governance.
Another reason for doing an airdrop is to decentralize the network. The whole idea of Web3 is to have a decentralized network and projects on the network.
This is one of the reasons crypto projects have to be decentralized.
When crypto projects conduct an airdrop, the token is shared with everyone according to their activity on the network. This helps the token to get to the hands of the network participants. These network participants decide on the development of the network. This appeals to both users and developers.
As a developer or project founder, you don’t want to share the majority of your tokens with a few individuals because they have money. These few individuals can influence decisions in the network by voting for proposals that favour them and against proposals that don’t favour them.
Because they have the majority of your token, they often have high voting power and most times their vote can count as a veto vote.
This is one of the reasons some crypto projects avoid ICO (Initial Coin Offering).
How to Avoid Airdrop Scams
Some Airdrop Scams to Keep in Mind and How to Avoid Them.
The moment a crowd begins to navigate towards an innovation or a new thing that has proven to make you money, scammers troop into these industries to exploit inexperienced users.
Recovering your stolen funds in crypto is nearly impossible, but you can set preventive measures to avoid them.
It is important to learn about these scams so that when you notice similar red flags with a new project, it will be easier for you to take precautions and move on.
Bait and switch
This scam tricks you into signing up for other things so that someone else can receive referral credit.
Sometimes, you may be asked to sign up for “partner” airdrops, but these are not partners. The airdrop form is simply a clever way for scammers to generate referrals.
Another version of this scam involves signing up for a specific crypto exchange so that the scammer can benefit from a referral.
Yet another version tries to get you to join pump-and-dump groups, often on Discord or Telegram. In all cases, the airdrop is fake, and the form is just a way of getting you to sign up for other things.
Bait and switch scams are a waste of time and can be challenging to detect because legitimate airdrops may ask you to join social media accounts or register on their website.
However, a bait-and-switch airdrop will ask you to sign up for unrelated projects, create accounts on exchanges, or join a Discord or Telegram group not explicitly dedicated to the project supposedly behind the airdrop.
The best way to avoid them is to avoid participating in any airdrop that asks you to sign up for unrelated projects or social media channels.
What is a dump airdrop?
Some airdrops are not focused on building value or community but rather on generating short-term buzz to encourage people to buy the token when it hits exchanges.
This is known as a dump airdrop, and the developers quickly sell (dump) all their tokens for a profit before disappearing and abandoning the project.
While this may not be a straight-up scam, as the token is real, the goal is to benefit financially from dumping tokens that will not be developed further.
You find out that when a token has a reasonable amount of hype, people that didn’t get the airdrop will be eager to buy the token when they hit the exchange.
So these developers will freeze the wallets of these airdrop earners, then send their allocation to the exchange when they’ve launched and sell them.
An example of a dump airdrop was the ATFS project in 2018. The ATFS team claimed to be creating a platform to revolutionize the agriculture industry by using blockchain technology to increase efficiency and reduce waste. They offered an airdrop of 500 ATFS tokens to anyone who registered on their website and followed them on social media.
However, after the airdrop, it became apparent that the project needed to progress toward its stated goals. The team provided no updates, and the website needed better maintenance.
Meanwhile, the price of ATFS tokens began to drop rapidly as the team dumped their holdings on various exchanges.
Eventually, the ATFS project was abandoned, and the website went offline. The airdrop recipients were left with worthless tokens, and the developers profited from dumping their holdings.
It can be challenging to spot a dump airdrop, but spending time on the project’s website and whitepaper can be helpful. Typically, those behind a dump airdrop will put little effort, and inconsistency will be apparent.
In contrast, legitimate airdrops are designed to benefit the community by building interest and engagement in a project.
They can also distribute tokens fairly and widely, create a broad user base, and encourage adoption.
Legitimate projects will have a clear roadmap and whitepaper, and the team will actively engage with the community, providing regular updates and addressing concerns.
To avoid falling victim to dump airdrops, it’s essential to do thorough research before participating. This includes checking the team’s credibility, reviewing the project’s roadmap, and analyzing the tokenomics.
Avoid airdrops that request private keys.
Scammers can use airdrops to trick people into giving up their private keys, which are essential for accessing and controlling cryptocurrency wallets.
Unlike legitimate airdrops that only require a wallet’s public address, these private key scams also request the private key.
Unsuspecting individuals who are unfamiliar with how cryptocurrency wallets work or who are too trusting of strangers on the internet are particularly vulnerable to these scams.
The best way to avoid this scam is simple: never share your private key with anyone for any reason. If you encounter a form, website, or direct message that asks for your private key, do not provide it because it is a scam.
Legitimate airdrops such as Uniswap, Optimism, DyDx, Arbitrum, etc., do not require a private key before you get their airdrop. You only have to connect your Metamask wallet to their website and claim their airdrop.
Scammers ask for a private key to access your wallet and steal your funds.
I encountered another type of airdrop scam that aims to collect personal information, which can be sold to third parties or used for future phishing attempts.
These scams often claim to offer free tokens, but in reality, the projects behind them are fake. The main objective is to obtain your email address, wallet address, social media information, and other personal details.
Although less dangerous than private key scams, these information trolling airdrops still pose significant risks.
When I participated in some of these scams early in my crypto journey, I noticed an influx of phishing emails in my inbox.
Another example is an airdrop task telling you to input your identity to get their airdrop. Be careful about how you give out your details on these websites, as some of them sell your identity to third parties or use it in the form of impersonation to scam innocent people.
Web3 is all about privacy and security. It is a red flag when a crypto project is doing an airdrop, and part of its task is to do KYC.
For what reason?
Tools Needed For Airdrop.
The list below is very important for anybody who wants to chase airdrops successfully.
- Download and set up a Metamask wallet
- Have a separate wallet solely for airdrops(they are popularly called burner wallets). Anytime you get an airdrop, send it to an exchange or another wallet you don’t use for airdrops.
- The following Twitter accounts often post upcoming airdrops and how to get them. Follow them. AbrahamChase, Rektfencer, and Olimpio.
- You need money. Yes, you need more to pay for gas fees, and you need money for transaction volume.
Strategies to become rich with crypto airdrop.
Keep in mind that what is being said here is for speculative purposes. It doesn’t guarantee that you will get the token whenever they distribute an airdrop.
Some of the requirements are 100% speculation, and the project team didn’t say anything about these requirements.
It is often during the token distribution that the requirements are published.
1. Study the requirements of similar projects or competitors that have done an airdrop previously. Use it as a guide to interacting with similar future protocols.
If you used DyDx the same way you used Uniswap, you would have gotten dydx airdrop.
2. Genuinely use the protocol frequently. I have used Uniswap to buy and sell tokens without considering getting an airdrop.
The reason for using Uniswap is that good crypto tokens have yet to launch in a reputable centralized exchange. You can only get them on Uniswap.
3. Use the protocol at least 2 times a month for 3 months.
4. If the protocol is a blockchain that houses various crypto projects, you should use every new project launched on their blockchain.
5. Lastly, you need capital. I know the aim was to use a small amount to make a lot of money, but the truth is that airdrops are gradually turning into a business for the rich.
Thanks to the Ethereum blockchain for charging up to $50 in gas fees to interact with these protocols.
The more volume you have made on a protocol, the more chances you have to get an airdrop.
Someone with a $1,000 transaction volume will usually get a different quantity of tokens than someone with a $10,000 or $100,000 transaction volume.
Remembering to identify crypto projects with the biggest backing is a very important prerequisite.
This is because the projects that have big backers means they have more capital to ignite incentives programs like airdrop incentives that, in the end, benefit the retail users.
Often, you see big projects with big backers, which means they usually get a token because the backers need to make their money back.
It also means that the project has the firepower to push incentives that would attract users to use their protocol and developers to build on their protocol.
When Optimism launched its token, it allocated 25% of its token to projects and communities that are building on its ecosystem.
Are Crypto Airdrop and ICO the Same Thing?
There’s a clear distinction between airdrops and ICO. The former are promotional events that boost the profile of a specific currency.
On the other hand, ICO stands for initial coin offering. This is a way to raise capital and is similar to initial public offerings (IPO).
How do I claim crypto airdrop?
This is not a straightforward answer because each project that does an airdrop often gives instructions on how to claim their airdrop. Some of it could be from their website. Some of it could be on a Marketplace.
They often provide a step-by-step guide to claim their token when they launch. Follow the Twitter handle of the projects to get notified about their airdrop and how to claim it.
What Was the First Crypto Airdrop?
Auroracoin (AUR) was the first crypto airdrop in the history of blockchain. It was conducted in March 2014.
Is airdrop real money
Airdrops are real money. When you get one, claim it, send it to an exchange and convert it to fiat.
Can you make money from crypto airdrops?
I am a living witness. I have gotten several airdrops since I joined crypto. There are testimonies of people who have made 6 figures through airdrop.
Can I sell my AirDrop token?
Yes, you can. You can either sell it on a reputable exchange like Binance (when it is listed on Binance) or an unregulated market also known as the black market(WhatsApp groups, Telegram groups, Facebook groups, etc., or decentralized exchanges like Uniswap, 1inch and Sushi.
What was the biggest crypto AirDrop in history?
Three things need to be considered to classify an airdrop as the biggest.
- The number of wallets the airdrop was given to.
- The number of tokens each wallet got.
- The price of the token is at its peak.
Currently, Uniswap remains the biggest airdrop in the history of crypto. Frontier protocol explained this in detail.
How do I get a crypto airdrop?
By following the strategies I’ve mentioned in this post.
Do you need a wallet for airdrop?
Yes, you need a wallet for airdrop.
Create a Metamask wallet here.
How much is an airdrop token?
There is no straightforward answer to this. Airdrops can be worth from $0 to a few thousand dollars.