What Is a Cryptocurrency Airdrop?

This means a project can quickly identify a group of people who may be interested in what it’s doing, and give them access to a platform or service immediately via an airdrop. To receive an exclusive airdrop, one must league of kingdoms how to earn meet specific, often more stringent, requirements compared to other airdrop types. While this may limit the number of recipients, it ensures a more targeted and potentially more engaged user base for the project. During the event, most recipients quickly dumped their airdropped token, and UNI changed hands at $2-$4. Instead of issuing tokens to various marketplaces, they enable the distribution of the tokens to the user’s crypto wallet, leaving out intermediaries.

Crypto Airdrop Pros

Simply, leaving these airdropped tokens alone is the best course of action. To be eligible, all you had to do was use the platform before September of the same year. As for using the platform, you had a choice from executing at least one swap, redeeming or holding SOCKS, or providing liquidity for the platform’s liquidity pools. This method is used to catapult a project into the public eye, increasing visibility and fostering a sense of “FOMO”. Well, this exact method leads to airdrop farming, wherein a crypto user will devote the majority of their time to completing these tasks, ensuring they receive as many tokens as possible. For example, a trading platform might airdrop a utility token to its users that gives them an incentive to perform a particular action, such as interacting with one of the platform’s features.

• Not only do they introduce individuals to new tokens, but they also incentivize network participation, foster community growth, and pave the way for newer innovations.
• Then again, if you are going to invest your hard-earned money into crypto, these tools can greatly help to improve or even double the value of your initial investment, risk-free .
• The total value of all the airdropped coins clocked in at over $40 million.
• The term “cryptocurrency airdrop” refers to the act of delivering or “airdropping” free tokens or coins into the digital wallets of eligible recipients.

A cryptocurrency airdrop refers to the distribution of new tokens or coins by a project to a wide range of individuals in the crypto community. Since they’re built to appear in users’ wallets automatically, crypto airdrops make for a quick and instantaneous solution to inform users of a new project. Crypto airdrops require no prior action from recipients and are self-executed, thanks to smart contracts. When a protocol branches off or hard forks from its original code, splitting into two separate platforms, developers airdrop the new coins as a crumb trail to convert native users. An example of a hard fork airdrop would be ETHPoW, a proof-of-work chain going separate ways with Ethereum since it transitioned to a proof-of-stake system in an event known as The Merge.

Fake Crypto Airdrops and Phishing Scams

Typically you need to meet certain requirements set by a crypto project to receive a crypto airdrop from them. So it is best to follow various projects and startups, taking note of any instructions they provide. At first glance, a hard fork may appear advantageous as it rewards token holders with an additional asset they can hold, trade, or sell. However, it’s important to note that a hard fork can often lead to a decline in the value of the native units on the two separate blockchains. This decline arises five bitcoin predictions in 2021 from concerns about an ongoing division within the community. Since that first nationwide airdrop, distributing tokens freely has become a popular tactic for new blockchain protocols.

Uniswap (UNI) Airdrop

Users of a news on bitcoin hard fork bitcoin network fee policy cryptocurrency can wake up one day and see a new cryptocurrency in their wallet. This is what happened to investors who purchased the famous Bored Ape Yacht Club NFTs. Those that held a Bored Ape at any time, regardless if they sold it, were rewarded with a new deposit of APE coin.

Best 5 Blockchain Networks of All Times

Imagine being in the early days of the internet and suddenly, you receive free shares of a promising new company, just because you’re an early user. Cryptocurrency airdrops are aptly named in reference to physical airdrops using aircraft. Airdrops using aircraft entail the delivery of resources (such as weapons, food, or medicine) that physically drop out of the sky. Following its success, Yuga Labs wanted to allow new entrants to the ecosystem without increasing the supply of the original collection. This was to protect the Bored Ape Yacht Club’s NFTs scarcity and price.

And they became a powerful tool to achieve this, rewarding loyal users and attracting new ones. Airdrops have been used to gain access to crypto wallets and steal other cryptocurrency assets stored by those wallets. However, there are several issues to consider in regard to crypto airdrops. The obvious concern is network safety, especially the nature of «redeeming» airdrops. For example, some airdrops may claim users must connect their wallet to suspicious websites; once the connection to web3 is made, the thief may now have access to the user’s keys or password.

How to Get Crypto Airdrops?

Some of the most profitable crypto airdrops in history include Uniswap’s UNI token airdrop and Polkadot’s DOT airdrop. Early adopters who held onto their free tokens saw substantial increases in value. Like any other investment or opportunity, crypto airdrops come with their own set of pros and cons. It’s important to fully understand these factors to make informed decisions about whether to participate in an airdrop. Finally, Loyalty Airdrops are a type of airdrop that rewards users for their loyalty to a particular platform or application. By consistently using a platform or engaging with an application, users can earn tokens as a form of appreciation for their commitment.

Two days following the airdrop, the value of UNI increased by 160 percent, gaining the token attention during its airdrop window. If a majority of airdrop recipients decide to sell their tokens in a certain timeframe, this can cause a project’s tokens to significantly drop in value. This instance will not only hurt current investors, but also the project and its brand as a business. Upon receiving airdrops, some users may immediately decide to sell their tokens for profit and not engage further with the project.

While airdrops can offer a great way of getting your hands on free crypto, from fungible tokens to NFTs, it’s important to exercise caution before claiming them. Beware, some airdrops are designed purely to lead you astray and others may directly put your assets at risk. Some airdrops are designed to reward members of existing web3 communities. In an ICO, investors purchase tokens with the hope that their value will increase over time. ICOs are a way for projects to raise capital and for investors to potentially reap substantial rewards.