Airdrop. Nope. Not The Apple AirDrop.

Airdrop??≠?AirDrop

A crypto airdrop is a "free giveaway" of tokens or coins as part of a broader marketing incentive. The main idea is to send newly minted tokens to hundreds or thousands of different wallet addresses. This, in turn, will create more incentives for users to engage with the corresponding project - even if it's only to learn how to obtain the free tokens and cash out. It is not mainly about making the recipient spend money but rather raising awareness for new projects.?

Usually, a crypto airdrop is issued to users in exchange for completing a certain task such as:

• Following a social media account
• Sharing or retweeting one of their posts
• Sending or receiving a transaction
• Creating an account and signing up to receive updates

Why Crypto Airdrops Exist

The primary reason for organizing a crypto airdrop is to promote a blockchain startup. By issuing tokens, the team can bootstrap its project and ensure a fair distribution of tokens among its community. Moreover, tokens recipients can have more incentive to increase awareness of the project and reach a broader audience. The more "hype" is built around the token, the more likely it will rise in price.

Airdrops usually gain traction by promoting the launch on a project's website, cryptocurrency forums, and social media such as Discord, Twitter, etc.?

How do Crypto Airdrops Work?

There are few ways to do crypto airdrop:

• Have users complete one or more small social tasks to qualify for receiving the airdrop
• Automatically distribute tokens to holders of a particular asset on the blockchain where the airdrop will occur
• Taking a blockchain snapshot at a previous date and letting users claim their airdrop tokens from the project's website through a smartcontract

WARNING!

There will always be airdrops that are nothing more than rug schemes. Meaning, the creator issues a token and hopes there will be enough hype surrounding it to have it listed on an exchange. However, once the tokens begin trading, the creator sells their large portion of tokens, crashing the price.

Another attack scheme is the so-called dusting attack. A scammer will send a small amount of cryptocurrency to a user to erode their privacy. Then, the scammer will trace down the transaction activity of the wallet tokens distributed to de-anonymize the person operating the wallet.?

Furthermore, since airdrops are considered income by the U.S. IRS, whenever you received a certain amount of "free tokens," you'll need to pay tax on them.

Examples of Crypto Airdrops

OpenDao's airdrop of SOS tokens?rewarded?all NFT creators, collections, and enthusiasts who had previously made transactions on the OpenSea NFT marketplace. Recipients did not have to complete any prior tasks other than manually claiming the token from the website. The airdrop successfully helped OpenDao grow its Twitter following to over 60,000 and more than 120,000 addresses claimed the token.

Similarly, the?LOOKS airdrop?orchestrated by the LooksRare team. Users with over 3 ether in transaction volume on OpenSea between June 16, 2021, and Dec. 16, 2021, were eligible for LOOKS tokens after listing an NFT for sale on the LooksRare marketplace. Token holders can receive a share of the trading fees generated by the LooksRare platform and stake LOOKS to earn more tokens.?

How You Can Be Eligible for a Crypto Airdrop?

The main requirement for receiving crypto airdrops is having a cryptocurrency wallet with a balance. However, each airdrop has different requirements to assess eligibility. You can find dedicated crypto airdrop websites and receive notifications for potential airdrop, check social media for the #airdrop hashtag and see if anything new is worth observing, be an active user of different cryptocurrency services and platforms, and explore cryptocurrency-related forums and news portals for mentions of upcoming airdrop.