What Is a Crypto Airdrop? Read Here

What Is a Crypto Airdrop? Read Here

What Is a Crypto Airdrop? – In this article I will be giving you the guidelines What Airdrop Is about in Crypto currencies.

However, we are going to discuss what Airdrop is all about and how you can run Airdrops. Dopescholar.com is here to guide you through this process so let’s proceed with the tutorials

Let’s put it this way Airdrops involve crypto projects distributing or giving free tokens en masse to their communities in a bid to encourage adoption.

Users who interact with new and existing platforms on a regular basis are likely to receive an airdrop at some point. As part of a larger marketing campaign, blockchain-based organizations and developers distribute free tokens to members of their communities.

The fundamental concept is to deliver newly created tokens to hundreds or thousands of different wallet addresses in the hopes that receivers will become more interested in the corresponding project – even if it’s just to learn how to cash out the free tokens into anything else.

This idea is comparable to receiving a free discount card in the mail to entice you to visit a new store in your neighborhood. However, the goal of a crypto airdrop is to raise awareness for new projects and services rather than to make the recipient spend money.

In most cases, users receive a crypto airdrop in exchange for completing a certain assignment.

These tasks often involve things such as:

  • Following an account on social media.
  • Sharing or retweeting one of their posts, including hashtags.
  • Sending or receiving a transaction (using a particular crypto platform or wallet).
  • Creating an account and signing up to receive updates.

There are also scenarios when a crypto airdrop may be distributed to users without needing to do anything, as we will highlight below.

Why do crypto airdrops exist?

The main reason for preparing a crypto airdrop is to promote a blockchain startup, project or service. By distributing tokens to users, the team can strengthen its project and guarantee a fair distribution of tokens among its community from day one. Moreover, recipients of these tokens are motivated to increase perception or awareness and help the project reach a broader community once the token begins trading on an exchange. The more interest enveloping the token, the more probable it will rise in price.

Airdrops generally gain traction by promoting or advertising the launch on a project’s website, cryptocurrency communities and social media. This is no dissimilar from acquiring a HelloFresh voucher in your email with a discount code, as those initiatives are designed to bring more people to the system through a financial incentive.

Legitimate crypto airdrops can never ask users to make any commitment or investment. Instead, it is a way to stand out among competitors that have aimed external funding before distributing their tokens.

How do crypto airdrops work and are they safe?

There are various ways to organize a crypto airdrop:

  • Have users perform one or various small social tasks to qualify for obtaining the airdrop at a later date.
  • Automatically allocate or distribute tokens to holders of a specific asset or balance on the blockchain where the airdrop will happen. (For example, every address with a balance of 0.01 ether or higher receives the airdrop.)
  • Taking a blockchain snapshot or let’s use the word record at a previous date and allowing users claim their airdrop tokens from the project’s website through a smart contract.

Despite their popularity or widespreadness, however, crypto airdrops aren’t always as risk-free as they seem.

Because recipients obtain “free money” in their wallets, there will be airdrops that are nothing other than pump-and-dump schemes. More specifically, the developer distributes a token and hopes there will be enough or sufficient hype surrounding or encircling it to have it listed on an exchange. Once tokens start trading, the creator sells their sizeable share of tokens, crashing the price of the token or coin.

Another possible attack method is the so-called dusting attack. A scammer  or fraudster will send a small amount of cryptocurrency to an unaware user to compromise their privacy. Then, the attacker will trace down the transaction activity  or operation of the wallet tokens allocated to de-anonymize the person or company handling the wallet.

Finally, since airdrops are deemed income by the U.S. Internal Revenue Service, it means whenever you receive an amount of “free tokens” you’ll actually need to pay tax on them – whether you needed the airdrop in the first place or not.

Examples of crypto airdrops

The cryptocurrency industry has recently seen a few crypto airdrops that took users by surprise.

OpenDao’s airdrop of SOS tokens rewarded all non-fungible token (NFT) designers or creators, collections and followers who had previously made trades on the OpenSea NFT marketplace. Recipients did not have to perform any task other than manually obtaining claiming the token from the website. The airdrop supported OpenDao grow its Twitter following to over 60,000, and more than 120,000 addresses claimed the token.

A similar campaign came from the Gas DAO, which released by the GAS token on the Ethereum blockchain. Anyone who formerly paid $1,559 or more in gas fees on Ethereum was qualified for the airdrop, with tokens claimable  or obtainable via the website. More than 57,000 addresses requested and claimed the airdrop. The GAS token grants voting rights in the Gas DAO, which aims to be the voice of the Ethereum network’s active users.

The third example and illustration is the LOOKS airdrop coordinated by the LooksRare team. Members or users with over 3 ether in transaction amount or volume on OpenSea between June 16, 2021, and Dec. 16, 2021, were eligible and qualified for LOOKS tokens after listing an NFT for sale on the LooksRare marketplace. Users owning and holding the LOOKS token get a share of the trading fees produced and generated by the LooksRare platform. Additionally, customers and users can stake LOOKS to earn more tokens.

How can you become eligible for a crypto airdrop?

As a crypto airdrop is mainly designed for advertising, promotional and marketing efforts, it can be complicated or tricky to ensure and verify you are eligible and qualified for future events. Every airdrop has special requirements to assess eligibility, although most of them are simple and easy to find. An airdrop involving a blockchain snapshot is often announced after the fact, making qualification challenging. However, there are other options to explore:

  • Find committed crypto airdrop websites (you will usually get a notification via email) – comparable to signing up for promotions and offers from a store you frequently buy from.
  • Check social media for the #airdrop hashtag and see if anything new has occurred.
  • Be an active and engaged user of various cryptocurrency services, products, systems and platforms and blockchains.
  • Explore cryptocurrency-related forums, communities, groups and news portals for mentions of a recent or upcoming airdrop.

The main requirement and condition for receiving crypto airdrops is having a cryptocurrency wallet with a fund. One can’t obtain or claim an airdrop without owning a wallet address. Using an exchange address is acceptable but not suitable for airdrops. Instead, users should look into the various cryptocurrency wallet techniques they can use to store their funds. MetaMask is one of the most popular wallets to use.

Thanks for reading please if you have any further questions about Crypto Airdrop feel free to ask on the comment box below.

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