What Is a Cryptocurrency Airdrop?

A cryptocurrency airdrop is a marketing strategy that involves sending coins or tokens to wallet addresses. Small amounts of the new virtual currency are sent to the wallets of active members of the blockchain community for free or in return for a small service, such as retweeting a post sent by the company issuing the currency. The ultimate goal of a crypto airdrop is to promote awareness and circulation of a new token or coin.

KEY TAKEAWAYS

• A crypto airdrop is a marketing method employed by startups in the cryptocurrency space.
• It involves delivering tokens to the wallets of current cryptocurrency traders, either for free or in exchange for a small promotional service.
• The airdrop is meant to spread awareness and increase ownership of the currency startup.
• While some are legitimate, other airdrops have been seen as fraudulent when attempting to steal wallet or personal information.
• Airdrops may be based on those who express interest, hold existing tokens, are intentionally selected, or win raffles.

Understanding Cryptocurrency Airdrops

A crypto airdrop is a promotional activity typically performed by blockchain-based startups to help bootstrap a virtual currency project. Its aim is to spread awareness about the cryptocurrency project and to get more people trading in it when it lists on an exchange as an initial coin offering (ICO).
Airdrops are generally promoted on the company's website, social media, and cryptocurrency forums. Coins or tokens are sent only to specific wallets based on the blockchain network or coins held in existing wallets.
To qualify for the free gift, a recipient may need to hold a minimum quantity of the crypto coins in their wallet. Alternatively, they may need to perform a certain task, such as posting about the currency on a social media forum, connecting with a particular member of the blockchain project, or writing a blog post.
Cryptocurrency airdrops are aptly named in reference to physical airdrops using aircraft. Airdrops using aircraft entail the delivery of resources (such as weapons, food, or medicine) that physically drop out of the sky.

Types of Crypto Airdrops

Standard Airdrop

In a standard crypto airdrop, participants interested in receiving an airdrop simply express their interest in order to receive the airdrop. The individual must provide a valid wallet address, and some airdrops require no additional information beyond this.

Standard airdrops often have a set amount of tokens to distribute with a limit on how many tokens each individual may receive. Therefore, some standard airdrops are time-sensitive. Though these types of airdrops are popular due to their simplicity, there is nothing stopping a single user from creating multiple wallets to quickly drain the airdrop amount, so these may be more difficult to obtain.

Bounty Airdrop

Bounty crypto airdrops occur when users perform certain tasks. These tasks often entail raising awareness of a project by posting on social media and tagging the company or retweeting a recent tweet about the project. There may also be referral bonuses or finder's fees for individuals who recruit other users, sign up for the project's newsletter, or join the company's Discord channel.
In exchange for performing tasks, users often receive points that correspond to how large of bounty airdrop they receive. Users may also be required to earn a certain amount of points before they qualify for their airdrop. For example, a user may be eligible for an airdrop after earning 300 points with each item mentioned above is worth 100 points each.

Holder Airdrop

Holder crypto airdrops occur automatically based on who is holding existing tokens and how many tokens they hold. Because wallets and blockchain information are part of a publicly distributed ledger, all users of blockchain have full transparency into the wallets and distribution of tokens.
The downside to holder airdrops is individuals who may be holding tokens may not want an airdrop. Alternatively, holder airdrops ensure that only the largest, most invested individuals receive the benefit. Some holder airdrops may only award an airdrop if members are holding a certain amount of tokens; otherwise, they may pro-rate the award amount.

Exclusive Airdrop

A more specific type of holder airdrop, an exclusive crypto airdrop occurs when specific people are individually selected for the airdrop. The difference is they may be selected not based on the amount of tokens they have but based on other elements such as time spent on a project, most money spent on non-token activity, or number of posts in a forum. An exclusive airdrop is an even more centralized way of rewarding those closest to the project and may give airdrops to wallets that may not hold any tokens at all.

Raffle Airdrop

Some of the types of airdrops above may be combined with a raffle airdrop. Often, a project will state the number of airdrops they intend to give and encourage individuals to earn a raffle ticket. This ticket may be earned by holding tokens, earning points, or simply expressing interest.
Ultimately, the number of individuals interested in the airdrop often exceeds the number of airdrops the company wishes to deliver. Therefore, a raffle occurs and a limited number of wallets are randomly selected to receive the airdrop.
 Never share your private keys with individuals you do not know or trust.

Crypto Airdrop Process

The crypto airdrop process begins by the project or company deciding the need for an airdrop. This may be in response to market strategies, a hard fork in the network, or to incentivize existing investors. The initial step is to select how the airdrop will be facilitated and who is eligible.
The next step for broad, general airdrops is to launch the public campaign. This includes collecting information for interested parties; this is often limited to just wallet addresses, though companies may also gather e-mail addresses to grow their contact list.
Other types of airdrops may rely on a snapshot, a capture of an instance that identifies who possesses certain criteria. For example, the project may perform a snapshot to identify all addresses that held at least 1,000 tokens as of midnight on December 31st. Any transactions occurring after the snapshot will not impact the results of the airdrop; therefore, coin or token prices often experience volatility in response to when snapshots are taken.
Once the list of airdrop recipients is selected, the airdrop is facilitated often through the use of smart contracts. The company may choose to use their Treasury wallet to facilitate the airdrop, and the company often publicizes the transaction block to demonstrate the equitability of the airdrop. The transaction will show the airdrop leaving the company's wallet and distributing to the recipients.
Airdrop recipients often directly receive the coins or tokens without having to accept the tokens. Some may need to add the token or coin along with its address to their wallet to appropriately view their wallet balance of the token.