What is a Crypto Airdrop and How to Get Some?

tl;drYou have probably walked past those ice cream booths, where they give you little pieces of their top ice cream flavour for free. You take them and try it, and you think to yourself, “I really want an ice cream now.” It is precisely how airdrops work!
What is a Crypto Airdrop and How to Get Some?
What is a Crypto Airdrop and How to Get Some?
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What is an Airdrop?

Traditionally, airdrops are a marketing strategy that crypto projects employ to incentivize the use of their platform. An airdrop is offered when the developers of a platform send free assets to wallet addresses. It can be for marketing purposes, rewards, or even incentivising users of a forked platform to move to the new one. New projects may airdrop crypto into your wallet as part of an initial offering, or as a reward for promoting the brand.

Crypto airdrops could be a way to bolster your crypto portfolio without having to buy digital assets. They could also help you get on the ground floor of a new platform. Keep reading to learn more about the airdrops and how YOU can receive free tokens in your wallet!

Why Would Businesses Give Away Airdrops?

There are many reasons behind giving airdrops, which are actually pretty common in the crypto space! There are plenty of reasons why a business decides to give away airdrops; however, the first and most significant reason is that it is a superb advertising strategy.

A Smart Marketing Strategy

By giving away free assets, marketers generate awareness and excitement. As more people talk about the project and bring in their other crypto-enthusiast friends into the project, they increase the chance of the asset getting a pump in value. A win-win situation.

Airdrops as Rewards

Airdrops are also used as rewards for early adopters of the protocol. It can be done in various ways, one of which is called a ‘retroactive airdrop’ that we will get to later in this article.

Hard Forks

A hard fork is a term in computer science. A fork is an old code that has been changed or updated. When the code of a blockchain gets so changed that it makes the previous blockchain too different from the new one, users simply can’t operate on the old blockchain anymore. So, they have to upgrade their system or switch to the new one to operate on. In this case, holders of the old chain are given the coins of the new chain, so they can keep participating and interact with the new chain. To achieve that, developers airdrop the equivalent amount of coins to the users who have transitioned to the new chain.

Lead Magnet 

A lead magnet is anything you’re offering for free, and in return, you get the users’ email addresses. These email addresses are highly valuable for marketers because they can use the addresses to notify users about upcoming upgrades, news, or other airdrops. These airdrops might require you to follow the project on social media platforms, like our Christmas Campaign

Four Types of Airdrop

Developers may give airdrops in several situations with different targets or goals, though, their main goal is to incentivize users to their platform.

  1. Standard Airdrop: A standard airdrop is for the promotion of the project and the mass adoption of the asset. With this airdrop, an amount of the asset is transferred to wallets as a marketing strategy.
  2. Holder Airdrop: These airdrops go to people who hold another specific asset in their wallet. For example, in 2016, Stellar announced XLM airdrop to existing holders of Bitcoin.
  3. Bounty Airdrop: They are similar to standard airdrops, with the difference of users having to engage in an activity in order to receive the airdrop. This can be following the project’s social media, signing up your email, etc.
  4. Exclusive Airdrop: With an exclusive airdrop, developers or marketers send crypto coins to a group of people who follow an airdrop aggregator.

Uniswap: An Example of Airdrop Utility

Uniswap is an exchange for Ethereum-based assets and is the biggest DEX by the total value locked in liquidity pools. It was centralised in the beginning, but they eventually changed direction and moved towards becoming more decentralised. The first step they took was creating the UNI token, which was designed for the sole purpose of voting on different changes to the platform, similar to how governance tokens work. By doing this, investors or holders of the UNI token could vote on protocol changes, which is way more decentralised than having a central authority make all the decisions. Uniswap gave every wallet address that had interacted with the platform around 400 UNI tokens, which was worth almost $1000 back then, and is worth around $8000 now.

How Did Uniswap Choose The Wallets?

Uniswap is a dApp run by smart contracts. Smart contracts are open-source, immutable codes meaning everyone can check out the codes. For the airdrop, the developers made a list of every wallet that had interacted with the smart contract and sent them UNI tokens, which is called a retroactive airdrop.

Retroactive Airdrop

Uniswap made the list of wallets by finding data from the past instead of using the current list of wallets. The purpose of this was to give the UNI tokens to only those who were early adopters or testers of the platform. The same happens with governance tokens; the developers want to provide the community with a way to vote on the changes fairly. They choose to reward early adopters and not random users or just everyone. 

How to Receive Airdrops

First of all, you need a crypto wallet to get started with airdrops. You also need to check if the wallet is compatible with a variety of assets since most of the assets involved in airdrops are Bitcoin or Ethereum-based. Then, all you need is to get notified about the airdrops! We’ll be having weekly posts to update you about the newest airdrops, which you can check here to stay tuned!

A Word to the Wise

You always need to be aware of what information you’re giving out when you sign up for an airdrop. Don’t forget to DYOR (Do Your Own Research) because nobody can be a better advisor for you than you!. Since even your email could be used to get access to your private keys, you should beware NEVER give out your private keys to anyone, and remember to proceed with caution. Here at Cryptologi.st, we have gathered everything you need to know before investing in a project, i.e., investment strategies, news, IDO/ICO updates, educational stuff and more!

To quickly compare available options and make the best investment decision, check out our website.

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