What is a crypto airdrop? Your ultimate guide

Airdrops give away free tokens to crypto enthusiasts. But are they too good to be true?

Crypto airdrops                                 
A crypto airdrop can be an effective way to gain exposure for a new coin – Photo: Shutterstock
                                

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With more than 8,000 cryptocurrencies littering the market, it is always challenging for a new coin to gain trading momentum. Airdrops offer a way for cryptocurrencies to stand out from the crowd by giving away coins.

Receiving free money may seem too good to be true. To qualify for a crypto airdrop, crypto enthusiasts can earn cryptocurrency by, for example, something as simple as completing a promotional activity, such as posting on a social media forum.  So how do crypto airdrops work and are there really no strings attached?

What are crypto airdrops?

The concept of airdrops is simple: cryptocurrencies are sent to users’ digital wallets without the owner paying for them. It may seem like bad business to give away free digital money, but there are definite advantages for the founding team to airdrop some of its coins.

When it’s hard to spread awareness for a new coin, airdrops allow a crypto project to promote its cryptocurrency and to get more people trading it.

Michael J Casey, chair of CoinDesk's advisory board, said in an opinion piece that marketing is essential if a cryptocurrency is to succeed. He wrote: "A currency is nothing if it is not widely used. And that can't be achieved unless people make some cost-incurring effort to encourage widespread usage.”

There are many ways for crypto enthusiasts to qualify for an airdrop. A common one is for the recipient to already be holding some of the coins. From a business perspective, this acts as a motive for people to start buying the coin. This could be worthwhile for some investors as well, especially if the user is already interested in the coin or its price has bullish potential.

Not everyone wants to invest in a new coin, however, and alternative methods to earn airdrops have popped up. Users could be rewarded for engaging with a cryptocurrency’s brand, such as signing up for a newsletter, following its social media platforms or posting about it on a forum.

Some do not even require any social interaction. Auroracoin created the concept of a cryptocurrency airdrop in 2014 when it allowed residents of Iceland to claim 31.8 auroracoins after signing up with their ID.

The price of auroracoin skyrocketed in the first few weeks. However, recipients of the crypto airdrop cashed out, causing the price to slump. It is rumoured that it was all part of a pump and dump scheme.

Scams and fraud are a real concern. When signing up to a crypto airdrop, there is the risk of giving money or sensitive information to a fraudulent platform. The Coinbase Threat Intelligence team have been tracking airdrop phishing campaigns. These campaigns work by airdropping fictitious coins into wallets and enticing users to visit malicious websites.

A Coinbase blog post said: “Be wary of airdrop tokens received from an unknown source. It is highly likely these unsolicited tokens are part of a phishing campaign.”

How to find crypto airdrops

Despite the scams, there is a whole community dedicated to receiving cryptocurrency airdrops, as there are some legitimate rewards. Finding out about upcoming crypto airdrops and how to become eligible for them can seem challenging, but there are resources for airdrop followers.

A number of aggregator sites document recent airdrops and how to take part. Airdrop.io is one example of a website that lists cryptocurrency airdrops that users can take part in. These websites are not usually involved in the cryptocurrency, instead they act as a project helping the airdrop community.

Earnifi is another example of an “airdrop aggregator”. It sends email alerts about new crypto airdrops, though it charges users to gain access to a premium version of the platform.

The best way to think of these services is as a platform that does the research so users do not have to. However, Airdrop.io does warn that while it tries to list only legitimate projects, scams could still evade its security and be promoted on the site. It is always recommended to research a project before investing in it.

Another way to find the next big airdrop is through following rumours. Whether a story about an upcoming aordrop is posted on Reddit or on a blog post, rumours could give users a pointer on what to look out for.

For example, a rumour making the rounds at the moment is about a MetaMask token that will launch with an airdrop. It started when Joseph Lubin, the founder of the development hub that built MetaMask, tweeted: “Wen $MASK? Stay tuned.”  

There are also rumours of a token launch and airdrop for the NFT marketplace Opensea. Marketplaces such as Rarible already have a token, and a Medium post from Stakingbits said: "An airdrop makes the most sense for Web 3.0 dApps”, like Opensea. The staking publication said the most likely way to be eligible for an Opensea airdrop is through trading NFTs.

A cryptocurrency airdrop can be found through verified exchanges as well, which may be a more trusted method to sign up for them. Currently, Binance has an event where you can get an airdrop of the cryptocurrency COTI in return for depositing the coin. The quantity of airdrops is reduced after tokens are deposited, acting as a motive to get involved quickly.

Airdrops are becoming increasingly popular and increasingly valuable. In September, the dYdX token distributed $100,000 worth of airdrops. Even last week, the Ethereum name service gave out ENS tokens worth $17,000 to $30,000.

As more coins join the party, airdrop hunting is becoming a new trend.

FAQs

It depends. Although there are a lot of legitimate airdrops, like the recent ENS giveaway, scams are a real threat. Recent phishing campaigns operate by airdropping fictitious coins into wallets and enticing users to visit malicious websites.

So yes, some crypto airdrops are safe – but be sure to avoid scams. Airdrop participants should never give away personal information and always do their own research before investing.

There are a number of ways to get crypto airdrops. Users can scroll through aggregator sites, research the latest rumours or look on trusted cryptocurrency exchanges. But always do your own research before signing up to a crypto airdrop – it could be a scam.

It could be. Recently the dYdX token distributed $100,000 worth of airdrops and the Ethereum name service gave out $17,000 to $30,000 worth of ENS tokens.

However, there have been cases of cryptocurrencies pumping up their value with airdrops and then cashing out, causing the price to drop. Users should always research new projects before deciding whether to sign up to an airdrop.

Further reading

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