In the cryptocurrency and blockchain ecosystem, the term “Airdrop” refers to the distribution of digital assets to the public, either by virtue of holding a certain other token or simply by virtue of being an active wallet address on a particular blockchain.
This is separate and distinct from the allocation of tokens or coins that happen via an ICO event. During ICOs, the digital asset being offered is typically purchased using an alternate coin or token. In the case of airdrops, there is no purchase required from the recipient, meaning that the assets are distributed for free.
Airdrops are often used as a marketing tool in order to raise awareness of the coin or token that is being distributed, as well as a method of diversifying the number of holders of that asset.
The way in which airdrops typically work is that in order to be eligible, a user must hold a certain amount of the asset in a public wallet at the time of the snapshot that is taken as a view of the current state of the blockchain at that particular point in time.
For example, OmiseGo performed an airdrop to Ether holders on the Ethereum blockchain in July of 2017, distributing 5% of the total number of OmiseGo tokens at a ratio of 0.075 OMG per ETH to all wallets holding more than 0.1 ETH at the time of the snapshot.
Airdrops, along with forks, have been considered by some as a kind of dividend payment earned by holding a digital asset, insofar as it is an additional premium paid out to token holders on a pro-rata basis.