'

EXPLAINER: What Are Token Airdrops?

The term “Airdrop” refers to the distribution of digital assets to the public. This distribution typically happens on 3 basis:

  • By virtue of holding a certain other token
  • By virtue of being an active wallet address on a particular blockchain
  • Or participating in a promotional activity like tweeting about the crypto

Airdrops vs. ICO

Airdrops have in the past occurred concurrently with initial coin offerings (ICOs) since their 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 ICO.

However, the airdrop 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.

Purpose of Airdrops

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.

Just like supermarkets distribute free samples of an item to promote sales, blockchain-based startups give away free coins to incentivize the use of their platforms.

______________________________________________________________________

SEE ALSOBitDAO, One of the World’s Largest Decentralized Autonomous Organizations (DAOs), Announces 8 Million $BIT Token Giveaway Courtesy of ByBit Exchange

______________________________________________________________________

In cases where the airdrop is only available to those who hold another token, tokens are distributed based on the balance of each blockchain address. In this case, snapshots are taken to record the balance of each token holder, at a specific point in time (i.e., block height).

In most cases, users can move their funds after the snapshot is taken without compromising their eligibility to participate in that round of distribution.

In a recent much publicized airdrop, anyone who had bought or sold NFTs on OpenSea, the biggest NFT marketplace, was entitled to claim $SOS tokens by OpenDAO launched on Christmas Day, December 25, 2021. The more money people had spent on OpenSea, the bigger the airdrop they were eligible to receive.

As of January 12, 2022, some 300,000 wallets had claimed the airdrop.

Its not all the time that users have to hold a token or have to complete a NFT sale to participate in an airdrop. All the various platforms have different eligibility requirements and conditions for participants.

Participating in an Airdrop

Airdrops are frequently advertised on the website of a new cryptocurrency project, on social media or crypto forums.

Third-party companies that send out information about new cryptocurrencies also promote them.

Sites like airdrops.io and Coinmarketcap provide a list of some of the latest airdrops, and those that are upcoming or live. Users can also discover such by being curious about new projects and follow activity on channels like Telegram and Discord where typically they post pertinent information to their communities.

When a participant registers for an airdrop, most platforms will ask for their wallet address. One thing to keep in mind is that different platforms may demand participants to have a wallet that is based on the blockchain they use. To be part of a platform’s airdrop, a participant must first understand the blockchain on which the platform is constructed and set up a wallet that supports that particular blockchain.

Be Wary of Scams

One thing to note is that airdrops are often exploited by scammers.

Untrusted sources will announce an airdrop requiring users to send a certain amount of their own cryptocurrency like ether and bitcoin in exchange for their tokens. Such nefarious activities can be avoided with research and due diligence on the company that is having an airdrop.

For beginners, anyone who asks a person to pay for an airdrop should be avoided. Legitimate crypto airdrops never seek capital investment in the currency since their aim is always purely promotional.

The Outlook

Other than the risks which can be avoided so long as one is careful, airdrops represent one interesting way that enthusiasts can start to hold tokens. Not only is it interesting, but potentially lucrative, if the crypto enthusiast does proper research to identify projects that are ambitious and look to have a positive future.

However, since they are free, one can just hold on to the tokens and hopefully they gain value over time.

As revealed in a recent report by crypto price tracking site, CoinGecko, the coins that made the most returns in 2021 were altcoins, some of which were new and completely unknown.

Airdrops thus offer a great opportunity to earn in the crypto space with little, to almost no investment, in the crypto space.

______________________________________________________________________

RECOMMENDED READING: ConstitutionDAO Becomes the Largest Crowdfunding Project in Crypto – Makes $PEOPLE Token Redeemable

______________________________________________________________________

Thank you for your support by helping us create content:

BTC address: 3CW75kjLYu7WpELdaqTv722vbobUswVtxT

ERC20 Address: 0xBc11cFa590C6CC465248D77d399C3106B881cC0E

SOL address: 9cC65AWFHj848kntcoyiT8av3jiRQEqyTTmBR1GvVUb

____________________________________________________________________

Follow us on Twitter for latest posts and updates

Join and interact with our Telegram community

_____________________

Subscribe to our YouTube channel below for more updates:

_____________________________________________________________