Learn more about crypto airdrops in 2022 for developers and investors
Cryptocurrencies and decentralized apps are all the rage lately. You’ve probably heard of Web3 projects offering Airdrops and people desperately looking for new ones to claim. Well, Airdrops are a great way to learn about cryptocurrencies and potentially earn some free tokens in the process. But before jumping in line to get yourself some, what are crypto airdrops in the first place? This blog post will explain all about Airdrops and how you can get involved. Stay tuned!
What are Crypto Airdrops?
Crypto airdrops are basically a means by which a company distributes its tokens to the wallets of certain users, usually completely free of charge.
For anyone who has ever watched an old-time war movie, you will remember seeing huge Hercules airplanes dropping packages onto the land below. These boxes were full of supplies and were dropped with no costs attached to help those caught up in conflict.
In the crypto-verse, the same basic offer is true, but crypto airdrops are instead used as a form of marketing and distributed to build communities around projects in the early stages of development.
Alternatively, and more recently, governance tokens have been airdropped to users of a platform, allowing them to take a bigger role in the governance of a project as well as be rewarded for their loyalty or early adoption.
Do Crypto Airdrops Have Anything to do With Apple AirDrops?
No. It is important to differentiate between the Apple Mac and iOS file-sharing product ‘Airdrop’ and the airdrops we are discussing here. They are not connected in any way.
What are Crypto Airdrops Used For?
Airdrops in the crypto-verse from a developer perspective are employed for marketing reasons, and benefits include generating awareness, understanding users more deeply, raising funds, rewarding loyalty, and achieving a wider distribution of tokens.
From a user perspective, it is quite simple. Airdrops provide users the opportunity to participate in a chance to earn money online and become invested in potentially lucrative projects from the beginning.
We will look more deeply into the benefits to each party later in this article, but first, it is vital to understand the varieties of airdrops.
Different Types of Crypto Airdrops
The question ‘what are crypto airdrops’ is too simple to be answered in one way. There are different types of airdrops in the crypto-verse. So, each requires a different set of actions to avail the reward. Take a look at them below:
- Standard airdrop
- Bounty airdrop
- Holder airdrop
- Hardfork airdrop
- Exclusive airdrop
Standard Airdrop
These crypto airdrops require you to sign up for a newsletter or similar. Interested people can simply register with a name and email ID and instantly qualify for the airdrop. This will be the initial style of DappRadar airdrops and you can sign up here to be alerted when the first one drops in mid-November.
Bounty Airdrop
In this case, you need to perform an activity to qualify for the crypto airdrop. The most common activity includes tweeting about the project.
Holder Airdrop
This kind of airdrop happens when you hold certain tokens in your wallet. For example; EOS-based crypto airdrops offer some free tokens to you, provided you are holding EOS tokens in your wallet.
Hardfork Airdrop
When a coin hardforks from its original protocol, the holders of the original coin are also qualified for the new coin’s airdrop. The Bitcoin Cash airdrop on Bitcoin holders is a perfect example.
Exclusive Airdrops
Suppose you are a loyal member of a particular project, website, club, etc. You may qualify for exclusive airdrops which everyone else may not. As the name suggests, this airdrop is reserved exclusively for a specific community. Uniswap for example rewarded loyal users In September 2020 with 2500 UNI tokens. Which on the day of delivery equated to around $1250 with no strings attached.
How to get Crypto Airdrops?
Anybody can fundamentally take part in airdrops, but there are a few essentials before getting started. To take part you will first need three things:
- A crypto wallet;
- Some cryptocurrencies, such as Bitcoin, EOS, or Ethereum;
- An information resource about new airdrops.
How can I get a crypto wallet?
A cryptocurrency wallet is a digital wallet that you can use to store, send, and receive various cryptocurrencies. Check out our video below to get some visual insights on web3 wallets:
In regards to choosing a safe crypto wallet, you can refer to our article Best Cryptocurrency Wallets for 2022.
What Tokens Should I Own to Take Part in Crypto Airdrops?
Ethereum and Bitcoin are good examples of root tokens and if you want to take part in airdrops, then you need to have these tokens. You can go to any exchange right now and trade FIAT for those two. They are pretty much available everywhere. Coinbase, Crypto.Com, and Zerion are good places to start.
Keep in mind that in some instances you will get your airdrop tokens in proportion to your stake (the number of root tokens that you have). While we are not advocating you to put your life savings there, it is useful to have a good amount if only to receive increased rewards and not pay exchange fees repeatedly.
Where Can I Find Crypto Airdrops?
Regarding resources, there is a host available. To really have your finger on the pulse of the crypto-verse participating on Twitter is almost essential. It is one of the only social media sites allowing such free promotion and discussion around blockchain and cryptocurrency.
There are also dedicated sites such as Airdrops.io that focus entirely on this information. It is important to understand that these sites are usually brokering deals with developers and taking a fee to list and market airdrops.
Whilst this is not a problem overall, in order to find the best and most profitable options available you can’t beat some good old-fashioned hard work and internet trawling.
Why should crypto projects develop airdrops?
As discussed, airdrops can form a significant part of any project’s marketing efforts. Let’s look at the 5 main ways in which they can help developers build a strong community around their product.
1. Increase awareness
Due to the ever-increasing number of projects vying for space in the crypto-verse, increasing awareness of a project has become paramount to marketing teams. Airdrops can add a very active layer to any multi-faceted marketing campaign.
Investors are constantly being pulled in every direction to read and look at every new, potentially world-changing project. To assess them all would be impossible. But what if a project airdropped you some free tokens?
Instantly becoming invested in a project would no doubt drive increased interest. Experienced investors will want to learn more about a project they are now staked in, and that in itself is creating a lot of awareness of the project.
2. Understanding users
Most airdrop systems require those wishing to receive the tokens to submit some basic information about themselves. Twitter, email address, telegram name, wallet address, and perhaps more personalized data about how they discovered the airdrop in the first place.
By filling out this form and providing meaningful data, the company will gain more information about a potential user. Helping them create more focused marketing solutions for their ideal audience.
3. Raising money
Airdrops have proved to be an effective way of raising money from the outset of a project. Let’s look at how that process might work in the real world to help gain a more detailed perspective.
Let’s say that you’re building a dapp that runs on the Ethereum blockchain and that dapp will use a native token such as an ABC token. From the start, the project issues 100 million ABC tokens which upon launch will be worth $0.20.
The total market capitalization of the token would therefore be 100 million x 0.20 = $20 million.
Upon launch, the project can allocate 10 million tokens or $2 million dollars to Ethereum airdrops. At this point, you may be thinking ‘why would I want to give away $2 million in tokens immediately upon launch?’ By doing the above the total capital would be reduced from $20 million to $18 million.
But, as the airdrop campaign continues and social media becomes saturated with news about the token, more eyes ultimately see the project.
Provided you have a good foundation and business model, there will be more people posting about the project and researching what is on offer. Therefore, increasing the perceived value of the tokens.
Even if the value of each ABC token rises from $0.02 to $0.04, the overall value of your tokens will go up (0.04 x 90) = $36 million. So by subtracting the original amount from this new value, you are left with $18 million.
By giving away 10% of the tokens, you have raised $36m – $18m = $18m without even selling a single token! That’s how fundraising with airdrops can work.
4. Rewarding loyalty
An interesting instance of this method sent a ripple through the crypto-verse as unsuspecting users of the popular decentralized exchange Uniswap were suddenly gifted 2500 UNI tokens or, at that point in time around $1250 – for free!
Uniswap issued the UNI governance token which allowed all previous users to participate in future decision-making for the protocol. Alternatively, those that received the bounty could sell it for Fiat or stake the token. Incentivising the staking mechanism allowed Uniswap to retain tokens within the ecosystem and create liquidity, but unfortunately, it would appear most people just sold out and took the money elsewhere.
This model has been repeated since in other areas of the blockchain tech space and appears to be catching on. The $RARI governance token, for example, was distributed to users of the Rarible platform as a way to reward buyers and sellers of crypto art.
Loyalty among crypto users is very hard to come by. The average user wants to make as much money as possible by constantly looking for the “next big token”. Some airdrops are constructed in such a way that the more tokens you hold, the more you receive in subsequent airdrops.
So, if a user is actually loyal to a token and keeps a substantial amount of it in their wallet, they can be rewarded with more tokens by the company. MakerDAO through the popular Coinbase wallet operates a system in this way rewarding users for holding DAI in their wallet with daily rewards.
At the same time, airdrops can inspire loyalty among users since they are now actually incentivized to buy and keep tokens. This area is ripe for evolution and development.
5. Wider token distribution
One major issue facing any project selling up part of its company in the form of tokens is the issue of whale buyers taking large positions and fundamentally insulting decentralization. One famous example of this was the BAT ICO.
The BAT ICO had a lot of hype because it was Brendan Eich’s project. Brendan Eich is the same man that created JavaScript and Mozilla Firefox. When the BAT ICO did appear, one whale buyer took control of 20.7% of the BAT tokens in existence.
Just 5 accounts own more than 50% of the BAT tokens in existence! A big problem for a decentralized project. Airdrops can help here by dropping tokens proportionate to existing holdings.
Airdrops are effective at achieving wide, and even distribution as all these companies and dapps are built upon a parent blockchain, like TRON, EOS, Ethereum, etc. Those blockchains are relatively well distributed. Companies can take advantage of that distribution by airdropping their tokens to the holders of the parent blockchain token for example. Using a real-world example here will assist in understanding.
Think about a popular breakfast cereal such as Fruit Loops. Fruit Loops has a wide, diverse, and global audience who enjoy the product. Very often within or on the outside of the product, there will be a marketing tie-in with another company. For example, a voucher for 10% off at Disney Land.
Disney Land is simply ensuring the 10% vouchers are distributed fairly and equally amongst a wide and varied audience. In the same way, a dapp project can tap into the users of the specific blockchain or blockchains they are operating upon.
This method means the project can try to ensure that their token is distributed as widely as possible and they are making sure that a pretty well-distributed and diversified group of people are testing out their product.
Beware of Crypto Airdrop Phishing Scams
There are a lot of scammers out there who will pose as a legitimate project and request personal information from you in order to “send” you free tokens. They may even go as far as to create a fake Twitter account or a fake website that looks identical to the real project’s site.
Unfortunately, this tactic is turning popular in 2022, and you must always be very careful out there. Just in July 2022, $8 million were taken in a Uniswap phishing attack.
There are a few key things you can do to stay safe, such as:
- Never share your crypto wallet passwords and seed phrases;
- Consider a cold crypto wallet service;
- Diversify your portfolio;
- Check the integrity of the dapps you’re going to use.
Be careful about which permissions you grant. You should always do your own research to make sure the airdrop is legitimate.
What are Crypto Airdrops? Summing-up
Crypto Airdrops are a tool employed by companies to drive increased awareness and distribution. For users, they are a way to become invested from the start and to make an income online.
Mostly the arrangement seems like a win-win situation for both parties, but as with anything in the crypto-world, there are fraudsters and scams out there trying to take advantage of naive investors.
Take a look at this awesome video that can give you a visual explanation of what crypto airdrops are, posted on our official YouTube channel:
Remember always to educate yourself and do your own research. If you do your homework correctly, then as an investor, you can make money from airdrops. If you are a dapp developer, then airdrops will help you reach a user base and distribution far beyond traditional advertising if executed correctly.
If you’re interested in learning more about the exciting world of decentralized applications, follow DappRadar’s blog and YouTube channel. We will keep you updated about the best Airdrops news.
Also, visit the DappRadar Airdrop Hub to get free and verified crypto airdrops. Have the chance to get the latest tokens with a focus on DeFi airdrops and NFT.
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