Adoption is the largest barometer of a technology’s success. With over 22,000 cryptocurrencies vying for dominance in the space, the competition is fierce. Therefore, marketing becomes a critical aspect of any new crypto project because it helps to create awareness and interest in the project. A strong marketing strategy can draw in investors, establish a community of supporters, and build the project’s brand and reputation. Crypto airdrops represent an effective marketing tool to this end.
Airdrops are marketing strategies where crypto projects distribute their native tokens for free to current and potential users. These campaigns strive to increase project awareness and reward early adopters. From completing brand awareness tasks to simply signing up, opportunities to claim airdrops are endless.
Understanding Crypto Airdrops
The free transfer of a project’s native cryptocurrencies, tokens, or NFTs to users’ web3 or crypto wallets is known as an airdrop. Airdrops fundamentally focus on achieving adoption. Crypto projects offer airdrops to current and potential users to drive awareness of the project while growing larger communities. In addition, as recipients may begin to trade their airdropped assets, airdrops also assist in establishing an early value for a token.
Airdrops are beneficial for both crypto projects and participants. Apart from generating interest and engagement, it is a cost-effective marketing strategy for new crypto projects. This is because they don’t require significant investments in advertising or promotional campaigns. While it’s common practice to use crypto airdrops to promote new projects, some existing projects also use airdrops to recognize and reward loyal community members.
Airdrops are used in this situation to entice early adopters to keep using their platforms and to draw new users through social media promotions. Furthermore, since airdrops frequently require users to follow the project’s social media, projects can gain valuable insights into the demographics of their potential user base and tailor their future marketing campaigns to those users.
For participants, airdrops offer a chance to acquire tokens for free and potentially benefit from the future value appreciation of the project. Therefore, participants frequently consider airdrops one of crypto’s most profitable passive income streams. This guide provides an overview of other effective passive income strategies in the crypto space.
Crypto airdrops = free crypto in your wallet. pic.twitter.com/MDpqEOw6ni— Binance (@binance) March 5, 2022
Types of Crypto Airdrops
The crypto space has evolved since the first documented example of an airdrop in 2014 with AuroraCoin (AUR). As a result of the entry of fresh narratives like NFTs and DeFi, airdrops now apply to a wide range of contexts. Therefore, just as the cryptocurrency industry has developed over time, so has the practice of using airdrops as a marketing tool. Furthermore, depending on the type of airdrop a project promotes, there are different requirements for participating. The following are the five most common crypto airdrops.
To be eligible for a standard airdrop, participants must only express a desire to receive the tokens. This is accomplished by subscribing to the project’s newsletter. Since no tasks are necessary, this is the easiest type of airdrop. However, given its popularity and ease of access, the key is to act quickly. This is because there may only be a limited number of tokens associated with the launch of a new project. These airdrops are distributed on a first-come, first-served basis.
Bounty airdrops, in contrast to standard airdrops, require participants to complete particular promotional tasks to receive the airdropped tokens. These tasks include spreading information about the project via social media platforms or producing content for the project. Bounty airdrops are a way for projects to create a community, raise public awareness of their project, and incentivize people to help the project grow and succeed.
Instead of distributing tokens to a large audience, an exclusive airdrop distributes them to a select group of recipients and wallets. These airdrop recipients frequently have a long history with a particular project or community. These airdrops are therefore designed to reward investors, community members, or early adopters.
Holder airdrops refer to the free transfer of tokens to users with specific amounts of a particular cryptocurrency in their wallets. The project determines this by taking a snapshot of users’ crypto holdings at a particular time and date.
One example of a holder airdrop that turned out to be lucrative for participants is the Stellar Lumens (XLM) airdrop in 2017. In November of that year, Stellar distributed 16 billion XLM to Bitcoin (BTC) and Ripple (XRP) holders who held a minimum balance on participating exchanges and wallets. This airdrop benefited Stellar because it helped increase awareness and adoption of the project. For participants, the airdrop was extremely profitable, as the value of XLM appreciated significantly after the airdrop. This meant that participants who held onto their XLM received a significant return on their initial investment of holding BTC or XRP.
Hardfork airdrops are similar to holder airdrops in that users who already hold certain tokens will receive new ones. The creation of a new blockchain alongside its original one is known as a hard fork. The free distribution of the new blockchains’ tokens occurs when a blockchain splits from its original blockchain. The native tokens of the new chain are thus distributed to users of the original blockchain. These users are typically credited with an equivalent amount of the newly forked cryptocurrency. One well-known instance of this kind of airdrop was the 2017 Bitcoin Cash (BCH) hard fork. Here, those who held Bitcoin (BTC) automatically received an equal amount of BCH.
Requirements to Participate in Airdrops
As previously mentioned, the requirements and guidelines for participating in an airdrop vary depending on the type of crypto airdrop. However, certain prerequisites must be met by participants looking to claim crypto airdrops. Having a cryptocurrency wallet is the primary requirement for receiving airdrops. An airdrop cannot be claimed or received without a wallet address. This article offers a helpful guide for configuring a cryptocurrency wallet like MetaMask.
Participants also require social media accounts and access to the most widely used platforms, including Telegram, Discord, Telegram, and Twitter. This is because most cryptocurrency projects make announcements about airdrops and detailed instructions for participation on their social media platforms ahead of the airdrop date.
Users can use several specific websites dedicated to crypto airdrops in addition to keeping up with upcoming airdrops through social media. These include airdrop aggregator websites like AirDropAlert and Airdrops.io.
Crypto airdrops mutually benefit both projects and participants. This unique marketing strategy allows projects to gain visibility and attract users to their platform while providing an opportunity for participants to grow their portfolios passively. However, it is important to know the pros and cons before participating in an airdrop.
Scams are prevalent in the crypto space. From January to November 2022, scams led to the theft of cryptocurrencies worth $4.3 billion, according to a report from Privacy Affairs. The allure of “free crypto” has allowed scammers to use airdrops as a popular ruse for nefarious activities. For instance, phishing scams where scammers create fake airdrop websites or social media accounts that mimic legitimate airdrops are often used to gain access to participants’ private keys and funds.
Furthermore, while airdrops do provide an opportunity to reap extraordinary returns due to the potential for the token’s future price appreciation, it is also important to remember that participating in airdrops does not guarantee profits. Therefore, it is crucial to approach airdrops cautiously and clearly understand the associated risks and benefits. As with any investment decision in the space, conducting research about the project and the team behind it and the requirement for proper storage and security of the received tokens becomes imperative.