What Is a Crypto Airdrop?

 

Airdrops became all the trend in the early 2010s as would-be trolls explored the possibilities of sending unsolicited pictures to unwitting passersby. Now, in the world of fintech, a similar strategy is used to stir up excitement around freshly launched cryptocurrency projects and build platform consciousness — a advertising tactic commonly referred to as crypto airdrops.

“In an airdrop, you'll open your crypto wallet and the airdropped item would magically be there,” stated Gregory Keogh, SVP of customer success at Curios, a white-label NFT marketplace. “It is vitally much like having a surprise birthday present mailed to your house.”

What Is a Crypto Airdrop?

A crypto airdrop is a marketing technique utilized by blockchain-based projects that includes divvying out free tokens en masse as a part of a broader promotional initiative. That is finished as a direct deposit into a user’s crypto wallet.

At the intersection of blockchain and guerilla marketing, these public campaigns are designed to increase awareness about a startup company’s platform or product and encourage widespread adoption of its native token.

“That is usually an exciting strategy to launch a community,” said Winston Robson, co-founder and CEO of metaverse market WeMeta, including that airdrops can be used strategically to focus on likely early adopters.

“It is very similar to having a shock birthday present mailed to your house.”

For example, NFT marketplace LooksRare airdropped its token to customers who had completed transactions via OpenSea, the main platform in this sector. 

This stunt generated a lot of chatter locally, Robson said, but didn't pose LooksRare as a long-term sustainable competitor to OpenSea. While many were excited by the big prize amount, and a few — Robson included — used the opportunity to cash out, there was a change of tune when the founding builders had the same concept. Though the builders denied accusations of a rug pull, this spooked traders, tanking the native token’s worth by 15 % in the aftermath.

Though crypto airdrops are generally employed to advertise new initiatives, some existing initiatives use airdrops to reward longtime neighborhood members, Robson stated. The 2021 Ethereum Identify Service airdrop, for example, awarded tokens to existing ENS area holders based on a formula decided partly by how long their domains had existed.

How Do Crypto Airdrops Work? 

As soon as a startup decides that an airdrop is the way to go, step one towards making it occur is to launch a public marketing campaign. Mostly, widespread outreach is achieved across forums and social media platforms comparable to Discord and Twitter. Ideally, the information energizes commotion around a platform’s debut or a newly launched function — as well as the size of the prize.

Because the campaign picks up traction, corporations compile a list of potential token recipients. This may be finished in numerous methods, comparable to amassing the wallet addresses of events or snapping a screenshot at a set time limit to qualify a users’ eligibility by specified, metric-based standards. If an airdrop is specified to customers of a platform previous to September, for example, then the screenshot would include the wallet addresses of active users from that designated timeframe. 

Sometimes companies gather further data, like an e-mail tackle, at this stage — particularly if the company hosting the airdrop is seeking to broaden its contact list. 

After figuring out a batch of recipients, companies usually facilitate the airdrop by way of a smart contract, or a self-executing program that automates transactions. This program transfers tokens from the corporate’s treasury pockets and distributes it to pick individuals, with no motion required on the recipient’s end. At this stage, companies usually publish their transaction block outcomes to additional promote the project and show that the airdrop truly occurred.

What Is the Point of a Crypto Airdrop?

As a crypto marketing agency founder, Tim Haldorson helps companies launch airdrops from scratch. In the end, the goal is to develop a platform’s user base in a way that doesn’t encourage a giant sell-off by token recipients.

“Crypto airdrops are a great way we help new initiatives stand out and enhance awareness rapidly,” Haldorson, who's CEO of Lunar Technique said, noting that there’s a trick to curbing users from flipping coins.

Since airdrops can goal early supporters, present members or extremely engaged customers of a challenge, builders want to determine which route will appeal to the viewers that may contribute most to the challenge at its unique stage and how to best incentivize the public to wish to study more.

“The goal with an airdrop is to offer long-term worth to the people who obtain the airdrop,” Haldorson stated, noting that a widespread technique inside the DeFi house is to airdrop tokens to customers holding crypto from competing platforms doing comparable issues. They're usually the best viewers and are more likely to contribute to the project after studying about it via the airdrop, he explained. 

“However, [a substantial growth in users] only follows initiatives with a robust staff behind it and a transparent vision ahead.”

Types of Crypto Airdrops

Crypto initiatives range of their preferred selection of airdrop, relying on their end game. Some could also be implementing this promotional tool to deliver collectively a community following a hard fork in a community, whereas others would moderately focus on making first-time customers really feel taken care of. It might additionally simply be a response to extremely aggressive market circumstances. Fortunately, there’s a wide range of strategies to parachute assured items right into a person’s virtual estate.

STANDARD AIRDROP

In a standard airdrop, no duties are required other than signing up for an account. The key here is to get in fast, as there could only be a sure provide of tokens tied to the discharge of a new project, doled out on a first-come-first-serve foundation. The decentralized alternate RabbitX has used commonplace airdrops to reward new customers who join its platform. 

BOUNTY AIRDROP

These service-oriented airdrops are sustained by small favors and voluntary legwork done by recipients. Usually, corporations require some low-lift promotional work, with rewards handed out to these prepared to join a publication, observe specified social media channels across platforms, work together with a project’s latest post or simply go surfing to a reside discussion board. Foodie NFT platform One Uncommon listed a nine-step to-do checklist for eligibility in a $75,000 giveaway, which included following the company’s accounts across social media, tagging buddies and adding accounts on a watchlist.

HOLDER AIRDROP

This type of airdrop rewards users who're ‘holding,’ or have accrued, a certain quantity of tokens at the time of the promotion. That is decided by a community-wide snapshot taken at a sure point in time of person wallets, which might happen on a particular date or throughout a set time span. Regardless of the reward, it’s gifted to those that have met or exceeded a threshold amount. NFT-to-token swap platform Sudoswap has but to launch its personal governance token, to be named SUDO. When it does, those holding NFTs of its sister application, Oxmon, or OXMON tokens will likely be on the receiving end of the first batch.

HARD FORK AIRDROP

When a protocol branches off or hard forks from its unique code, splitting into two separate platforms, developers airdrop the new cash as a crumb path to transform native customers. An instance of a tough fork airdrop can be ETHPoW, a proof-of-work chain going separate ways with Ethereum because it transitioned to a proof-of-stake system in an occasion known as The Merge. Like holder airdrops, these merely require customers to carry the original token. 

EXCLUSIVE AIRDROP

Wallet size isn’t everything. Exclusive airdrops usually reward a person’s time logged on a challenge, cash spent on non-token activity or stage of engagement inside a discussion board. Exclusive airdrops attain these with empty wallets and deeper extra-curricular funding in a challenge. A famous instance includes Uniswap’s beneficiant airdrop of 400 UNI tokens to every of its long-standing customers, no matter holding status.

RAFFLE AIRDROP

If a startup announces a set variety of rewards but receives an awesome response, it could choose to implement a lottery mechanism to deliberate the winners chosen at random, dubbed a raffle airdrop. This option can also be utilized as an add-on to any of the earlier airdrop methods. Gaming platforms Revv, Wolf Game and Phantom Galaxies all recently gave out $500 value of their native coins to 100 lucky winners