Crypto Airdrops: A beginners guide

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Coinmonks

7 min readMay 28, 2022

What is an Airdrop?

The airdrop is perhaps the most striking promotional format to launch a token or cryptocurrency. And it is that in an ecosystem as populated as that of cryptocurrency, free asset sharing is one of the best ways to put yourself on the map.

One of the most prominent activities in the cryptocurrency world are Airdrops. The idea behind them is to give cryptocurrencies or tokens to a community interested in them; a a situation that undoubtedly captures the attention of many people, as it is a good opportunity to get money effortlessly. Although it is a promotional campaign format based on fairly traditional schemes, the truth is that in practice it is somewhat different. During an airdrop, the tokens are sent to the addresses that the managers of these events decide. For example, if your address has been chosen, even if you don't ask for them, you will still receive tokens. This small nuance makes the distribution format similar to mailing.

Reasons why Airdrops are done

Behind this distribution of public cryptocurrencies and tokens ,community growth and economic objectives are quite clear.

Among these are:

1. To capture media and people's attention. Airdrops, especially those from serious projects, often get a lot of media attention. This is good because it makes the project known and more people can become interested in it.
2. To make sure the cryptocurrencies or tokens reach as many people as possible and they start using them. With the use of received cryptocurrencies or tokens, the economic activity of the project is boosted. This has a positive impact on the growth of the project, favoring its development. It also ensures a better distribution of tokens, thus decentralizing the control of it.

As you can see, airdrops are used as a publicity tool, and they are therefore considered a promotional element that aims to broaden the target audience and boost the economic activity of the project with which they are associated.

Types of Airdrops

There are different types of airdrops, each with its own peculiarities. Among them we can cite:

1. Task/Bounty Airdrops: This is the most common of them and objectives, asking users to complete certain tasks to be eligible for the event . Normally, the tasks to be performed are focused on social media or similar activities. For this reason, many have the condition of following the project's social media accounts or others related to its promotion. In this way, an attempt is made to reach a certain critical mass of users for the initial phase of the project. Or in other words, the more people know about and talk about the project, the better.

2. Airdrops with exchanges: This is another very common type of airdrop. In this case, those who manage the airdrop system are the projects and exchanges associated with it. The project selects a few exchanges that allow you to manage the cryptocurrency or token on your platform. It is therefore the exchange that is responsible for receiving users, as well as informing and managing the requirements necessary to make them eligible for airdrop.

An example of this type of airdrop can be seen among exchanges like Coinbase, and the Stellar Project. The two run an airdrop that allows the delivery of $50 in Lumens (XLM) to who passes the entire KYC identification process of their platforms. Only after completing the whole process, the user is eligible to receive the Airdrop reward.

3. Airdrops with wallets: This is another fairly common form of airdrop and widely used by crypto wallet platforms to promote their projects. Normally, these airdrops provide cryptocurrencies or tokens to those who install or use their wallets under certain circumstances. The intent of this is clear: bring your wallet to as many users as possible. All with the goal of increasing the size of your community and your profits. This is so because these wallets usually offer other payment services associated with them. Eg The Trust Wallet Airdrop

4. Holder airdrops: This is a rare form of airdrops. This happens when the requirement to receive the airdrop is to have a certain amount of a cryptocurrency in a personal wallet. Normally, the amount to be received by the airdrop is related to the amount of cryptocurrencies or tokens in your possession. This way, the more tokens and cryptocurrencies you have in your possession, the greater the reward to be received.

5. Exclusive airdrop: An exclusive airdrop only sends crypto to designated wallets. Typically, the recipients have an established history with the project, such as being an active community member or an early supporter of the project.

How do you participate in an Airdrop?

Usually, participating in an airdrop is not particularly difficult. Firstly, you need to be aware of the projects that will launch one soon. There are a lot of websites dedicated to this like airdrops.io and Airdrop Alert, showing different airdrops launching all over the world.

On these sites, all the necessary steps are indicated to be able to participate in the various registered parachute drops. In general, these allow you to perform very simple tasks such as:

Joining cryptocurrency projects' social networks
Making some kind of message to highlight the project
Some specific tasks to make the user eligible for airdrop.

Another way to be aware of airdrops is to see news of new projects and follow their official sites. Admittedly, it takes a bit of work but in general it's usually a safer and middleman-free way for such a task.

You also need to know the airdrop requirements to claim your prize. Typically, projects launch their portfolio or explain how to create one to receive the prize. At this point, you must carefully follow the steps to receive the airdrop prize if chosen.

Dangers of airdrops

Airdrops can be a powerful and interesting activity for projects. Nevertheless, you should be careful, as they are not free from certain risks. In this situation, it is better to be alert and not get carried away by emotions. Some airdrops may be a form of scam. Especially those that require performing an action at an economic cost to the user.

For this reason, it is important to check the validity of such actions and examine official or community media to find out if there are any complaints or reports. Of course, you should never accept an airdrop that asks you to transfer money to an account or asks for control of your private keys. Both situations are very dangerous for your privacy and are a good starting point for losing your funds.

Also, remember that hackers and scammers are also looking for these opportunities. The reason for this is that many people who participate in these events are beginners and this makes it easier for scammers to perpetrate their dishonest activity.

When faced with these dangers, always keep the following safety considerations in mind:

1. Never send money to an address for the purpose of participating in an airdrop. It doesn’t matter if that person claims to be Vitalik Buterin or Satoshi Nakamoto , don’t. The beauty of airdrops is to receive for free, not to pay money before you can participate.

2. Always keep control of your private keys, never share them with anyone. Remember that these keys are for your eyes only.

3. Have alternative social media profiles and if possible different wallets from your real ones for participating in airdrops. Maintaining this separation will help you ensure your privacy and security.

4. Do not install third-party apps lightly. Always check that the software is safe and not a malicious application. At the very least, use anti-virus software to keep you safe.

Are airdrops a form of investment in a cryptocurrency project?

This is a question I get a lot and the answer is no! Not at all.

Airdrops are free gifts of cryptocurrencies or tokens, which are made to users in the hope that they will be used and boost the economy of the project. In no case should they be considered as a kind of investment in the project, for which you may be asked for money in exchange for profit or participation in it. For fundraising and investment purposes, the project will utilize an ICO (Initial Coin Offering), something with a totally different set of rules.

How much can you earn with an Airdrop?

The earning potential for airdrops can vary widely but usually they are usually a minimum of $10 . There are also some instances where the payouts can be much much higher. For example, in January 2016, Decred airdropped 258,000 DCR to select early members and enthusiasts, who signed up for it. The peak airdrop value was $32,500. This is one of the clearest examples of what you can gain from airdrops. Also, many airdrops have additional reward campaigns. With them, you can maximize the profit by multiplying, between two and five times, what was obtained during the first stage of the airdrop. This system is therefore a means of rewarding user loyalty to the project.

If you have any questions, you can let me know in the comments, I’d love to help.

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Crypto Airdrops: A beginners guide

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Written by Tolani Olawore