A cryptocurrency airdrop is a marketing strategy that involves sending coins or tokens to wallet addresses. Little amounts of new crypto are sent to the wallets of active blockchain community members for free or in return for a small service, such as retweeting a post sent by the company issuing the currency. ^[1]

Overview

Blockchain projects give out free tokens to gain wider adoption, spread awareness about a cryptocurrency project, and get people trading in it when it is listed on an exchange as an initial coin offering (ICO). A higher number of holders is often seen as a positive metric, which also makes the project more decentralized in terms of token ownership. Crypto airdrops also motivate recipients to use and promote the project. This can help build an initial user base before the project lists on crypto exchanges. ^[2]

A crypto airdrop can be beneficial for both the blockchain project and the holder. For the project, it is a cost-effective way to promote the project and generate hype around it. For the holder, it is an opportunity to receive free tokens that may have a significant value in the future. Airdrops can also help create brand loyalty among holders who receive tokens and become more invested in the project. ^[3]

History

The concept of airdrops can be traced back to the early days of cryptocurrency, with some of the earliest instances occurring in the Bitcoin community. However, the term "airdrop" gained popularity with the advent of alternative cryptocurrencies (altcoins) and the rise of initial coin offerings (ICOs) around 2017. ^[3]

The first crypto airdrop was attributed to AuroraCoin (AUR) on March 25, 2014. Intended to be the cryptocurrency for the nation of Iceland, every citizen or permanent resident who submitted their national ID received 31.8 AUR. ^[6]

ICO Era Airdrops

During the ICO boom of 2017, many blockchain projects started using airdrops as a marketing strategy. Instead of relying solely on traditional fundraising methods like ICOs, some projects chose to distribute a portion of their tokens for free to holders of a specific cryptocurrency (usually Ethereum). This approach aimed to create a wider user base and incentivize early adoption. ^[3]

Types of Airdrop

Bounty airdrop

A bounty airdrop requires users to complete certain tasks, such as retweeting the post about the project on Twitter, joining the project's official Discord, or creating a post and tagging friends on Instagram. In exchange for performing the tasks, users often receive points that correspond to how large of bounty airdrop they receive. Users may also be required to earn a certain amount of points before they qualify for their airdrop. ^[1][2]

Fork Airdrops

Fork airdrops involve the creation of a new cryptocurrency through a blockchain fork, where existing holders of a particular cryptocurrency receive a proportionate amount of the new tokens. An example of this is the Bitcoin Cash (BCH) fork from the Bitcoin (BTC) blockchain in 2017. ^[3]

Standard Airdrop

In this airdrop, participants interested in receiving an airdrop simply express their interest in receiving the airdrop. The user will provide a valid wallet address, and some airdrops require no additional information beyond this. Standard airdrops often have a set amount of tokens to distribute with a limit on how many tokens each user may receive. Therefore, some standard airdrops are time-sensitive. ^[1]

Exclusive airdrop

An exclusive airdrop only sends crypto to designated wallets. Typically, the recipients have an established history with the project, such as being active members of the community or early supporters of the project. ^[2]

Holder airdrop

This type of airdrop occurs automatically based on who is holding existing tokens and how many tokens they hold. Because wallets and blockchain information are part of a publicly distributed ledger, all users of blockchain have full transparency into the wallets and distribution of tokens, and if the wallet balance meets the minimum requirement, recipients can claim free tokens according to their holdings at the time of the snapshot. ^[1][2]

Raffle Airdrop

A raffle airdrop may be combined with some of the types of airdrops above. Sometimes, a project will state the number of airdrops they intend to give and encourage users to earn a raffle ticket. This ticket may be earned by earning points, holding tokens, or simply expressing interest. The number of users interested in the airdrop often exceeds the number of airdrops the company wishes to deliver. Therefore, a raffle occurs and a limited number of wallets are randomly selected to receive the airdrop. ^[1]

DeFi Airdrops

DeFi (Decentralized Finance) airdrops are a type of airdrop specific to the DeFi ecosystem. They are often used to reward users who have provided liquidity to a DeFi protocol or participated in a governance vote. DeFi airdrops are a way for projects to incentivize users to participate in their ecosystem. ^[3]

NFT Airdrops

NFT (Non-Fungible Token) airdrops are a type of airdrop that is specific to the NFT ecosystem. They are often used to reward users who have purchased or held a certain NFT. NFT airdrops are a way for projects to reward their most loyal users and increase engagement with their NFTs. ^[3]

Crypto Airdrop Process

To participate in an airdrop, users are typically required to fill out a form containing their personal information, such as their name and email address. The form may also ask for additional details, like their social media handles, to increase their chances of receiving the airdropped tokens. Once the form has been completed, users may be required to conduct a certain task, such as following the project on social media or joining a Telegram group. This task is usually designed to increase the project’s visibility and engagement. Users who complete the task successfully are then eligible to receive the airdropped tokens. ^[1][4]

Other types of airdrops may rely on a snapshot, a capture of an instance that identifies who possesses certain criteria. Any transactions occurring after the snapshot will not impact the results of the airdrop; therefore, coin or token prices often experience volatility in response to when snapshots are taken. ^[4]

Once the list of airdrop recipients is selected, the airdrop is facilitated often through the use of smart contracts. The company may choose to use its Treasury wallet to facilitate the airdrop, and the company often publicizes the transaction block to demonstrate the equitability of the airdrop. The transaction will show the airdrop leaving the company's wallet and distributing it to the recipients. ^[1][3]

Airdrop Examples

Gas DAO Airdrop

Gas DAO, a project that operates on the Binance Smart Chain, carried out an airdrop of its GAS token in May 2021. The airdrop was given to users who had interacted with the project before May 1, 2021. Each user was granted 1,000 GAS tokens, which were valued at approximately $50 during the distribution. The airdrop was viewed as a means of rewarding early adopters and raising awareness of the project. ^[3][1]

Bitcoin Cash

As a result of its branch from Bitcoin, Bitcoin Cash distributed a hard fork airdrop in August 2017. Bitcoin Cash was one of the first major forks in the bitcoin network, guaranteeing users 1 Bitcoin Cash (BCH) for each bitcoin (BTC) owned. At the airdrop’s peak, BCH was valued at over $4,300 in December 2017. ^[1][4]

Stellar

Noted as one of the largest crypto airdrops of all time, Stellar partnered with Blockchain.com to airdrop $125 million worth of Stellar lumens (XLM) to Blockchain Wallet users beginning in November 2018. Stellar became Blockchain.com’s first airdrop partner following the rollout of the Blockchain Airdrops program in October 2018. Blockchain.com distributed the airdrop in an effort for users to try out crypto attached to the new program and increase wallet usage. ^[4]

Uniswap

Uniswap rewarded over 250,000 early users of its exchange platform with an airdrop of Uniswap tokens (UNI) in September 2020. Those who had made at least one transaction on the platform before that September were eligible for the airdrop, with recipients gaining at least 400 UNI. Two days following the airdrop, the value of UNI increased by 160 percent, gaining the token attention during its airdrop window. ^[5]