What are crypto airdrops and how to spot them?

What are Crypto Airdrops and how to Spot Them?

Imagine you got a good amount of crypto tokens for just using a blockchain protocol. Well, this is not something out of the world, this is called a crypto airdrop.

Crypto Airdrop is a marketing strategy undertaken by a new cryptocurrency company, where they send tokens to the active blockchain users or active crypto wallets for free or in exchange for some minimal task such as retweeting a tweet, sharing some post, etc.

This is primarily done to promote the coin in the market by making acquaintance with the active users and by making their name in the headlines through airdrops.

From the surface, airdrop looks really cool and seems like an easy way to earn money instantly with just some luck, but it has many strings attached to it.

Let’s dive deeper and learn everything about it.

How do Crypto Airdrops work?

Talking about the process, the first node is traced back to the point in a startup where the company decide that they need an airdrop. This decision may be influenced by various factors such as a marketing strategy, a hard fork in the network, or to regenerate the interests of the existing investors.

The next node in this process tree is to launch the public campaign. This begins with the data collection of the interested/ deserving party. Sometimes this data is limited to wallet address and sometimes it includes the email address and other contact details.

After deciding the list of beneficiaries, the company make a smart contract to facilitate the airdrop. Companies often publicize the transaction block to ensure transparency.

Considering the second step of the process mentioned above, there can be many ways to choose whom to send:

  • Companies determine a small task or set of small tasks to use as the eligibility criteria. Users complete the task and got selected for an airdrop.
  • Companies distribute the tokens axiomatically, to the users holding a certain amount of tokens or simply assets.
  • Companies take a random snapshot of the blockchain at an earlier point in time and then invite those randomly selected users to claim their airdrop.

Types of Airdrops

  • Standard Airdrop

In this type of airdrop, the interested user shows their interest in receiving an airdrop. The individual has to provide a valid wallet address as a mandatory field and the rest is upon the company having airdrop. In this type of airdrop, the number of tokens to be given away as well as the limit of tokens to be sent to each interested user is fixed and hence makes this a time-sensitive airdrop. This is the much popular due to its simplicity.

  • Bounty Airdrop

To raise awareness and name of the projects companies often assign some tasks to interested users. These tasks are as simple as putting a post on your social media about the company, retweeting the tweet, bringing followers to the company’s social media handle, etc. As per the task performed by the user, the company assign some points to the user describing what amount of work is done by the user, and later, according to the points, they distribute tokens. 

  • Holder Airdrop

This type of airdrop is automatically depending on who is holding assets and how much? Being a part of a publicly distributed ledger, the wallet and other blockchain information are publicly available. It might have a drawback. There might be some users who don’t want any kind of airdrop but they had qualified the criteria for Holder Airdrop.

  • Exclusive Airdrop

This is a specialization of Holder Airdrop. This is rolled out to handpicked exclusive members. The criteria of selection here are not the amount they hold in their wallets, but some criteria like time spent on blockchain projects, money spent on non-token activities or simply interest.

  • Raffle Airdrop

Generally, the number/ amount of token a company want to airdrop is less than the number of interested users. So the company may give a raffle ticket, but one has to earn it. A user may earn a raffle ticket in various ways such as by holding tokens, storing points through various tasks, or just by showing interest.

Some Famous Airdrops

  • deCRED
      • Date: Jan 2016
      • Amount: 258000 DCR
      • Peak airdrop Value: 32,500 USD
  • Bitcoin Cash
      • Date: Aug 2017
      • Amount: 1 BCH to everyone who held 1 BTC
      • Peak airdrop Value: 2947 USD/BCH (peak)
  • Oyster
      • Date: Nov 2017
      • Amount: 2227 PRL
      • Peak airdrop Value: 11,000 USD
  • Minereum
      • Date: Jan 2016
      • Amount: 32000 MNE
      • Peak airdrop Value: 440,000 USD
  • Stellar
      • Date: Jan 2016
      • Amount: 1000 USD worth of XML/BTC
      • Peak airdrop Value: 125,000,000 USD
  • Uniswap
    • Date: September 17, 2020
    • Amount: 400 UNI
    • Peak airdrop Value: 17800USD @42USD per token

Are Crypto Airdrops safe?

Although it sounds like a dream deal to receive tokens for free, it has some hidden risks involved in these airdrops.

  • Pump-and-Dump

The market has seen several airdrops which were just pump-and-dump stunts. The company issuing the token expect sizzling hype for the same but doesn’t get the same response. Once the trade of tokens starts, the creator sells the sizeable portion of tokens they hold, which eventually crashes the prices.

  • Dusting Attacks

Unlike the above, the scammers out there possess the risk. The scammer will credit a minimal amount of tokens into someone’s wallet and invade their privacy. The scammer will then trace the transactions of the wallet and deanonymize the user or firm operating the wallet.

How to spot Crypto Scams?

  • The first and most important requirement to avail of an airdrop is owning a private crypto wallet which is compatible with the token the user is interested in.
  • To get updates regarding crypto airdrops, one needs to keep updated with crypto news from reputable crypto sites such as CoinMarketCap, CoinGecko, CryptoBullsClub etc. to get the information about the upcoming crypto airdrops.
  • When you find an airdrop about which you have researched enough to be sure and safe, you have to follow the instructions and eligibility criteria posted by the admin. You might need to do some tasks as mentioned in the above sections.
  • Once you have qualified for the airdrop, you have to wait for the official date and should check your crypto wallet on the date of drop.

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