The basic idea behind crypto airdrops is to distribute some form of crypto-asset, entirely for free, to holders of another crypto-asset in order to encourage the adoption of the offered token. However, the concept often leaves investors confused. Why would a company give away something valuable for free? Are there rules to participate in airdrops? What’s the catch?
In this guide, our goal is to teach you the concept behind crypto airdrops, the goals of companies performing airdrops, the different types of airdrops, how airdrops work, the usual participation requirements and, finally, how to best track airdrops.
There are plenty of reasons why organisations would choose to employ airdrops. They are an effective method to gain quick network usage and create hype and buzz around a new blockchain-based enterprise, and act as a way of rewarding investors and customers. Many companies will use airdrops for customer and marketing benefits, but some may use them because of technological reasons, such as when performing a hard fork.
Let’s look at some of the most common reasons why companies use airdrops:
- To generate leads: Marketing is all about increasing the size of your database. Organisations normally tend to pay a lot of attention to generating appropriate leads which will drive marketing campaigns to increase patronage. Airdrops can be used to accomplish this goal. In exchange for free cryptocurrency tokens, users are asked to complete online forms that contain valuable user information, such as your name, email address, interests, and so on.
- To create awareness: With the sheer size of the cryptocurrency market, a new cryptocurrency can go completely unnoticed if it isn’t given the right boost in terms of substantial marketing campaigns. Just like every other aspect of the digital world, hype and buzz play a key role in the cryptocurrency ecosystem. With many cryptocurrency enthusiasts looking for new cryptocurrency options, an airdrop is a great way to pique people’s interest. Marketing campaigns on social media and word-of-mouth advertising around airdrops can generate increased attention being paid to a new cryptocurrency, leading to higher user engagement and participation.
- To reward investors and customers: From time to time, blockchain-based services like cryptocurrency exchanges, trading platforms, or wallet service providers may wish to give back to their customers and subscribers. Airdrops can be used as a means of rewarding loyal customers with free cryptocurrency tokens, serving as an incentive to ensure continued usage of such platforms. This type of airdrop mirrors discounts and voucher giveaways by non-blockchain companies in the mainstream commercial world. Airdrops can also serve as a type of dividend payment without the legal implications of promising payments to investors, as there was no actual purchase by agents.
- To perform hard forks: A simple use case for airdrops, recently used by Bitcoin Cash, Bitcoin Gold, and Bitcoin Diamond, is to upgrade the network. When a project wishes to make non-compatible updates to the network and perform a hard fork, an airdrop of the new token to previous token holders is usually the go-to option.
In conclusion, airdrops are a great way to help bootstrap new cryptocurrencies and update hard-forking old ones.
The usual requirements for participation in an airdrop vary from project to project, although there is common ground in most cases. Generally, crypto airdrops can be divided into two categories. They can either be completely randomised or dependent on whether the investor is already a supporter of the project carrying out the airdrop or not. When an airdrop is carried out as a way of hard-forking a network, the requirement is the receiving agent has to hold the parent token until a certain block snapshot.
If this concept sounds confusing, just imagine dividends and how they usually have an ex-date, record date, pay date, and so on.
The typical requirements to participate in an airdrop are as follows:
- Follow or like the company on social media
- Register interest with an email address
- Register interest with personal details (name, address, ID, and so on)
- Be an owner of the parent token (for hard forks)
There are many examples of blockchain-based enterprises carrying out crypto airdrops to increase adoption.
In 2017, after a hard fork from Bitcoin, the developers of Bitcoin Cash carried out an airdrop rewarding all Bitcoin holders with BCH on a 1:1 ratio. The end result was that in less than a month, Bitcoin Cash was among the top 10 cryptocurrencies on CoinMarketCap. Pretty impressive.
Also in 2017, Binance carried out an airdrop of 500 TRX to all account holders on their platform. In order to qualify for the airdrop, users had to have at least 0.003 BTC in addition to having completed at least one transaction.
Examples of the most famous and lucrative airdrops are:
- Bitcoin Cash
- Stellar (blockchain.info airdrop)
Where to catch ’em all
Airdrops don’t wait, so don’t forget to keep updated with current and future events. The following sites post updates detailing when and where airdrops are taking place, and what you need to do to get involved:
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.