Coming across social media promo over a blockchain protocol giving away free tokens is nothing short of familiar. As new projects come to the market, they make their brand known by disseminating a portion of their native cryptocurrency to users in exchange for promoting the launch on social media, or in crypto forums. Investors can earn an extra crypto asset without depositing any investment of their own.
An airdrop’s impact is determined by the hype surrounding the launch. In most cases, becoming eligible to participate in an airdrop requires promoting the launch or interacting with the platform. As the community for the project grows, the token becomes more valuable. As the community grows, market activity becomes more frequent, increasing the token’s monetary value.
Conducting an Airdrop
Going about hosting a token giveaway can be done in multiple ways. One thing to consider would be the reason behind the airdrop. Most airdrops are a marketing method to build a community, but projects can also distribute tokens to existing community members as a “token” of appreciation. Once you have your reason, you can establish eligibility criteria for participating in the airdrop.
Types of Airdrops
Standard Airdrops are normally conducted by blockchain startups looking to build awareness. Users are normally required to sign up for updates via email or text message for information on when the launch takes place. Those that sign up are instantly listed as token recipients and are incentivized to promote the launch on their socials for a greater percentage of coins.
Exclusive Airdrops are normally for already established blockchains looking to reward loyal community members. From active participants to protocol developers, a contributor’s loyalty is not taken for granted and is therefore rewarded. Long-term holders of the protocol's native token can also qualify depending on the number of tokens held and for how long.
Hard Fork Airdrops take place after a blockchain has forked into a separate network. The new blockchain comes with a new native cryptocurrency token in which holders of the original chain are given a portion of new tokens equivalent to their original holdings. After Ethereum’s fork which created Ethereum Classic (ETC), Ether holders were granted ETC tokens.
Bounty Airdrops are promotional events that require users to promote the launch on social platforms like Twitter using specific hashtags for airdrop eligibility. This makes the event easier to find on social media and trending hashtags can generate more online traffic.
Holder Airdrops are more like partnerships between blockchain protocols. These launches are targeted at an existing community for another project, and token holders can receive tokens from the startup blockchain. Projects building on distributed ledgers like Ethereum, or Cosmos (ATOM) generally promote airdrops for native token holders to build awareness within the ecosystem.
Airdrop Eligibility
All airdrops come with a guideline users must follow before being compensated. These guidelines are normally tasks that a user must complete, ranging from following a social media account to opting in for network updates. Based on the underlying reason behind the launch, users can participate in a launch with little effort on their part.
Promotional airdrops normally just require promotion from external sources, whereas exclusive airdrops are rewards for existing community members. Users can also receive distinct percentages of coins based on all the tasks completed. We’ve done something similar ourselves; the recent NewsCrypto airdrop included eligibility criteria and specific missions for users to claim their rewards. Each completed mission grants users a greater percentage of the airdrop reward, you can check out the criteria at http://app.newscrypto.io/airdrop (but keep in mind that the snapshot has already happened a month ago, so it’s no longer possible for new users to become eligible).
Potential Risks
While free money does sound enticing, it is crucial you do your research before participating in any token giveaway. Airdrops, when they’re done by projects with no prior recognition, are grounds for a potential pump and dump scheme. Startup projects are the most susceptible as the native blockchain token has little to no value in the beginning. As the token becomes available for trading and market activity increases, the creators of the project can sell their massive portion of the tokens and send the price spiraling.
Airdrop recipients are also under threat of dusting attacks, which occur when unsuspecting users receive a small amount of traceable cryptocurrency which can ultimately de-anonymize the individual or entity behind the recipient wallet. Once de-anonymized, scammers target these individuals trying to scam them out of their funds.
Bottom Line
Airdrops are a great marketing tactic for startup blockchains and are an effective way to establish a fair token distribution. You can stay up to date on upcoming airdrops at https://airdrops.io.
