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Ask CryptoVantage: What Are Airdrops?
If you have been in the crypto space for some time, you are familiar with projects and platforms that will post about airdrops hence creating a wave of excitement as adoption for their project skyrockets. The followers of the said project will then wait to receive free and newly minted tokens from the project’s platform in their wallets.
Simply put, airdrops are a way of distributing cryptocurrency tokens and coins to people’s wallets. They are usually done as a way of marketing or promotion for a new cryptocurrency and can be a great way to get people interested in a new project. You can think of an airdrop as a free discount card or free samples of a specific brand designed as a marketing move to encourage you to visit a store or experience their services.
In most cases, crypto platforms will require users to follow, join and subscribe to their social media pages or channels in exchange for eligibility for the airdrop. Sometimes staking is another prerequisite. Adhering to these requirements will allow platform users to receive the free tokens through what is called “airdrop distribution” which is carried out by specialized apps directly on your device.
This means that if you’re interested in grabbing some free coins, all you have to do is provide your wallet address, follow the platform’s instructions and wait for the tokens to appear.
What’s the Motivation Behind Airdrops?
As mentioned, airdrops are mostly used as a marketing tool among many blockchain and crypto-based companies. However, apart from its utility as a marketing strategy, airdrops are also useful in ensuring fair distribution of the platform’s tokens. Airdrops are also a decent way of ensuring more interest from the public on a particular project, thereby increasing the change of that project’s token rising. Once a critical mass of users starts to interact with a platform thanks to the airdrop, awareness about the platform increases and the team members of the project also get to expand their network while increasing platform development.
To add on, holders of the platform’s token and early adopters will also benefit from the airdrops. Airdropping additional tokens means that a greater number of people will become aware of your presence which in turn translates into added demand for your token, and this increase may have a positive effect on the overall value of your platform’s token.
Finally the individual cryptocurrency ecosystems will benefit from more people having, trading and swapping the crypto. Essentially airdrops increase liquidity and distribution.
What are the Requirements for Airdrops?
In most cases, to be eligible for joining an airdrop, you will have to meet specific requirements from the hosting platform. This is because some airdrops only allow a fixed number of participants which means that not everyone who signs up can receive tokens. Apart from that, in some cases, there may also be a minimum requirement for how much you should hold of the token in question. Therefore, the airdrop might only apply to token holders who participated in the project’s pre-sale.
While the requirements and conditions for each airdrop will vary depending on the project’s rules and regulations, it’s important to note that most projects won’t require you to provide personal information as long as your wallet address and the token you hold are listed among the eligibility requirements. Also, legitimate airdrops will never ask users to invest in the airdrop. Once you qualify for a project’s airdrop, joining and receiving tokens shouldn’t be a problem.
Examples of Airdrops
Popular examples of airdrops include OpenDao’s distribution of SOS tokens that were rewarded to users who had previously interacted with OpenSea’s NFT marketplace. For this airdrop, there was no requirement for recipients to complete tasks. All they had to do was receive the tokens from the OpenDao website. With the airdrop, OpenDao managed to double its Twitter following from under 60,000 to more than 150,000 as of writing.
Uniswap, one of the best-decentralized exchanges on the Ethereum ecosystem, also launched an airdrop with the launch of their governance token UNI. By the end of the operation, 150 million UNI governance tokens were distributed to Ethereum denizens who had previously interacted with the DEX in one way or the other. this meant that every wallet that had ever interacted with Uniswap before the airdrop could claim 400 UNI tokens worth over $1000 at the time. Currently, the same amount of UNI is worth about $4000.
The Downside of Airdrops
As great as they sound, airdrops may not be for everyone. This is because the tokens you receive from the platform’s airdrop will usually come with no guarantee and can never be exchanged on cryptocurrency exchanges.
In some instances, the tokens cannot be used to do anything except to be stored in your wallet and will only become valuable if the platform becomes successful and popular.
Beware Airdrop Scammers
Airdrops offer a great way to get people interested in new projects and cryptocurrency tokens. They also offer crypto enthusiasts an easy way to get invested in a project that has potential.
However, that doesn’t mean that all airdrops are made equal. Some may require participants to complete tasks for the tokens, while others may not be worth anything without an initial growth of users on the platform in question. The bottom line is this – if you’ve got the time and effort, it’s possible to make some easy money; however, like many other things in the crypto-world, it’s important to exercise caution when dealing with seemingly enticing offers. This is because some scammers use airdrops as bait to steal your personal information and money.
As long as you do your research before diving into an airdrop, there’s nothing to worry about. You can always end up with a free little bonus that will boost the number of tokens in your portfolio without any effort on your part.
