What Is An Airdrop In Crypto? Tips For Free Coins

As the crypto market grows and evolves, new terms and concepts emerge frequently. One of the latest trends is airdrop. In this article, we will explore what an airdrop is in crypto, provide examples, show how you can get in on the action and discuss its benefits.

What is an Airdrop?

An airdrop is a marketing strategy used by cryptocurrency projects to promote their token or coin. It involves distributing free tokens or coins to a large number of people to create awareness, reward loyal supporters, or attract new investors.

Airdrops can be spontaneous, but they are often planned and announced in advance. They can be targeted to a specific audience, such as existing token holders, or open to the general public. The tokens or coins distributed in an airdrop can have real value and can be traded on exchanges or held for potential future gains.

Examples of Airdrops

Many cryptocurrency projects have used airdrops as a marketing strategy to gain exposure and create demand for their tokens. Here are a few examples:

  1. Stellar Lumens (XLM): In 2018, Stellar Lumens conducted a massive airdrop worth $125 million in XLM tokens. The airdrop was open to all users of the Blockchain wallet who signed up for the promotion, and each user received $25 worth of XLM.
  2. Uniswap (UNI): Uniswap, a decentralized exchange (DEX), conducted an airdrop of its UNI token in 2020. The airdrop was open to anyone who had used the Uniswap platform before September 2020, and each eligible user received 400 UNI tokens, which at the time were worth approximately $1,200.
  3. Binance Coin (BNB): Binance, one of the largest cryptocurrency exchanges, conducted an airdrop of its BNB token in 2017. The airdrop was open to anyone who held at least 0.1 ETH in their wallet, and each participant received 500 BNB tokens.
  4. Arbitrum (ARB) March, 2023 dropped 1,275,000,000 tokens to everyone who bridged to their network and used the dapps on it.

How to Receive Airdrops

Here are some of the top tips of finding and qualifying for Airdrops.

  1. Be active on Twitter and Discord. Find and follow some of the top people in the Defi community. These guys do hours of research looking for clues and are willing to share with others. Some of the best are Miles Deutscher and HDF humble defi farmer.
  2. Wallet Watch. Find some of the top airdrop farmers and watch their wallets to see what chains they are interacting with that haven’t released a token yet. Using a site like debank makes it easier to save and track.
  3. Start Using the Chain. Once you have a clue a chain might do an airdrop in the future starting using it. Bridge money over, use dapps, mint, buy, sell NFTs, and use their exchanges.

We’ll take the last example of $ARB and go through the process of how I received the airdrop from them. It’s important to know that must of the times Airdrops are rumor based so it’s more of a follow the clues type of event.

airdrops

So you can see here there were 6 factors they took into consideration to see to whom and how much they were going to airdrop.

  1. Bridged to Arbitrum: First step was to bridge money from ETH to ARB network.
  2. Transactions over time: They want to see that you actual are using the network over an extended period of time. It’s good to get started early and try and use the network a couple times a month.
  3. Transaction frequency: They also look at who was using it more regular. The more often the better. In this case I did some trading on GMX but not as often as that wanted to see.
  4. Transaction Value. The more money you bridge the more they like you.
  5. Providing Liquidity: Staking and providing Liquidity is very importante for new start ups.
  6. Activity on Arbitrum Nova: Being activate also on ARB Nova.

Keep in mind they don’t release this information before or tell you when and if there will be an airdrop. You kind of have to explore and be a customer of their products and hopefully you’ll be rewarded in the end. It also takes some time so be patience. This process happened 6-12 months so don’t give up.

Check out the top 5 Airdrop opportunities for 2023

Benefits of Airdrops

Airdrops can provide several benefits to cryptocurrency projects, investors, and users. Here are a few:

  1. Awareness: Airdrops can create awareness and exposure for a cryptocurrency project, especially if the airdrop is targeted to a specific audience or widely promoted.
  2. Reward: Airdrops can be a way for cryptocurrency projects to reward loyal supporters, such as existing token holders or active community members.
  3. Adoption: Airdrops can encourage adoption of a cryptocurrency project by attracting new investors and users who may not have heard of the project before.
  4. Liquidity: Airdrops can create liquidity for a cryptocurrency token or coin by introducing it to a larger audience and potentially increasing trading volume on exchanges.
  5. Engagement: Airdrops can encourage engagement and participation in a cryptocurrency project’s community, as users may need to complete certain tasks or follow certain social media accounts to receive the free tokens.

Risks of Airdrops

While airdrops can provide benefits, they also come with risks. Here are a few:

  1. Scams: Airdrops can be a breeding ground for scams, as bad actors may impersonate legitimate cryptocurrency projects and trick users into giving away their private keys or personal information.
  2. Dumping: Airdrops can lead to dumping of tokens or coins on the market, as users may sell their free tokens immediately after receiving them, potentially causing a drop in price.
  3. Regulatory issues: Airdrops may run afoul of securities laws and regulations, especially if the tokens or coins distributed are deemed to be securities.

Takeaway

Airdrops are a popular marketing strategy used by cryptocurrency projects to promote their tokens or Overall, airdrops are a unique and exciting aspect of the cryptocurrency world. While they may not always result in significant gains, they are an excellent way to experiment with new projects, support the development of promising new technologies, and expand your portfolio without making any significant investment. Just be sure to do your due diligence and research each airdrop opportunity before committing your time and resources.

Airdrops are an innovative way for cryptocurrency projects to build a community, incentivize participation, and distribute their tokens. For crypto enthusiasts, they offer a low-risk opportunity to explore new projects and potentially earn some free tokens in the process. While there is always a risk associated with any investment, airdrops can be a fun and potentially rewarding aspect of the cryptocurrency ecosystem. So keep an eye out for new airdrop opportunities and always remember to stay vigilant and do your research before getting involved.