Crypto airdrop is a marketing strategy adopted by crypto startups to promote the project and their new token. It involves distributing their native cryptocurrency to current or potential users' for free. Sometimes, users have to complete simple promotional activities before they can claim, such as following the project's social media account and sharing their posts.
There are different types of airdrops, and each crypto project has its own requirements. But most airdrops share the same goal: increase awareness and overall interest in the project. Some are done directly into users' wallets, while others require a manual claim.
Anyone with a cryptocurrency wallet can receive or claim an airdrop, but you should always be careful with scammers. There are many fraudulent airdrops that can steal your wallet funds when you claim or transfer the free tokens. Make sure to confirm the legitimacy of the project before claiming an airdrop. You should be particularly careful when it requires you to connect your wallet to an airdrop website.
With the ever-growing number of new coins, it's difficult for crypto investors and traders to keep track of all the new projects. As such, some crypto projects offer airdrops as a way to stand out and increase awareness. While everyone loves free crypto, airdrops are not always legit. Let's see how they work and what you can do to protect yourself against airdrop scams.
What is a crypto airdrop?
How do crypto airdrops work?
There are different types of crypto airdrops, but they usually consist of a small amount of cryptocurrency being distributed to several wallets (usually on Ethereum or Binance Smart Chain). Although less common, there are also projects that giveaway NFTs instead of regular crypto.
Some projects will do the distribution without asking for anything, while others will ask you to perform certain tasks before claiming. These tasks often include following social media accounts, subscribing to a newsletter, or holding a minimum amount of coins in your wallet. However, you are not always guaranteed to get the airdropped tokens.
Why do crypto projects perform airdrops?
As mentioned, blockchain projects give out free tokens in an attempt to gain wider adoption and grow their network. A higher number of holders is often seen as a positive metric, which also makes the project more decentralized in terms of token ownership. Crypto airdrops also motivate recipients to use and promote the project. This can help cultivate an initial user base before the project lists on crypto exchanges.
On the other hand, airdrops might also give a false impression of growth. So, it's important to consider other factors when evaluating adoption. For example, if hundreds of thousands of addresses are holding a certain token, but no one is really using it, then the project is either a scam or simply failed to captivate the community.
Are crypto airdrop and ICO the same thing?
Crypto airdrops and ICOs are different concepts, even though they both involve new cryptocurrency projects. While airdrops don't require any investment from participants, an ICO is a method of crowdfunding.
Types of airdrop
As we've seen, there are different ways to conduct a cryptocurrency airdrop. Apart from the standard airdrop that simply transfers crypto to several wallets, we have a few other types. Common examples include bounty, exclusive, and holder airdrops.
A bounty airdrop requires users to complete certain tasks, such as sharing a post about the project on Twitter, joining the project's official Telegram, or creating a post and tagging a few friends on Instagram. To claim a bounty airdrop, you'll likely be asked to fill out a form with your wallet address and provide proof that you completed the tasks.
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 to claim an airdrop?
How to avoid airdrop scams?
In other cases, scammers will announce a fake airdrop that leads to a phishing website. They will trick you into connecting your wallet into a website that looks very similar to the original one. As soon as you connect your wallet and sign a transaction, you will have other tokens taken out of your wallet. This often happens with fake Twitter and Telegram accounts that look very similar to the official ones.
Some airdrop scams include asking you to send crypto to an unknown wallet address to unlock your free tokens in return. Legitimate airdrops will never ask for your funds or seed phrase. Be careful with airdrop emails or direct messages.
To avoid being scammed, make sure to look into the project's official website and social media channels. Bookmark the official links and double check if they are really doing an airdrop event. If you don't know anything about the project, you should do extra research to find out what the crypto community is saying. If you can't find enough information, it's probably better to just ignore the airdrop.
Crypto airdrops allow crypto projects to stand out and gain traction in the crypto space. It can also be a good way for crypto enthusiasts to grow their portfolio with up-and-coming tokens. However, there are likely more scam airdrops than legitimate ones around, so be careful and make sure to do your own research before participating.