The ever-increasing number of coins makes it hard for cryptocurrency traders and investors to keep track of them. Due to this, some crypto projects offer airdrops to attract attention and build awareness.
What is a Crypto Airdrop?
Crypto airdrops are the act of transferring digital assets from a cryptocurrency project to multiple wallets simultaneously. In the crypto industry, airdrops are a marketing strategy used by startups to promote their projects and new tokens. The company distributes its native cryptocurrency for free to current and potential users. The users are sometimes required to follow the project’s social media account and share their posts before they can claim their reward.
Similarly, NFT Airdrop is a marketing strategy used specifically by blockchain based NFT projects in order to appeal; establish recognition and generate curiosity for the project. So that the interested NFT buyers or potential owners could buy those in near future.
A person may decide to initiate an airdrop in several situations, but it always has the same effect. Crypto investors typically receive some cryptocurrency tokens or coins for free or for completing a simple task. Participating in an airdrop program may also require identifying yourself through the know your customer (KYC) process. For example, a cryptocurrency airdrop might reward users for signing up for the project’s newsletter, increasing engagement on its social media pages, or bringing attention to the platform.
Crypto Airdrops: How Do They Work & What Types Are There?
Airdrops help crypto startups stand out in the crowded crypto market. For a virtual coin to function, it needs to have many users trading and holding it. Thus, airdrops help build an initial user base by distributing currency or tokens to a small number of users without forcing them to spend money on something they are unfamiliar with.
A standard airdrop aims to distribute native coins or tokens into existing wallets to market the product. Typically, this is done during their initial coin offering to market the brand and encourage more people to adopt the asset. Signing up for the new project and providing your wallet address is typically all you have to do.
Similarly, bounty airdrops are a marketing strategy, but recipient engagement in promotional activities is required to receive the digital asset. For example, you could share a post about the blockchain project on Twitter or sign up for the project’s email newsletter. Also, it might be for discussing and participating in a project forum. As opposed to a standard airdrop, a bounty airdrop requires more effort, but the activities are not strenuous.
Users who are loyal to a cryptocurrency platform can receive exclusive airdrops. Exclusive airdrops send crypto coins to a group of followers of an airdrop aggregator. Websites like these share news of upcoming airdrops for promising crypto projects.
Airdrops for Holders
A holder airdrop is a reward provided to wallet holders for holding specific cryptocurrencies. People who own a certain amount of another cryptocurrency will receive holder airdrops. Crypto projects typically take a snapshot of crypto holdings on a specified day, then let people claim airdrops according to their ownership.
What role do crypto airdrops play in boosting the price of tokens?
Marketers use crypto airdrops to promote their products. But why are cryptocurrencies in need of marketing? Think about it; all currencies gain value from people who use them. In general, a currency’s value increases as more people trade it. But what about newly issued currencies? New currencies need to stand out with hundreds of options available to traders. The airdrop is one of the ways to do this.
Using the chocolate dip analogy again, the marketing of the product does not end when you purchase a bottle. You might later tell your friends and relatives, who might, in turn, buy it and spread the news even further. Thus, startups can use airdrops to build awareness of their products and build an audience. The circulation of the currency and its value increase when the platform has a proper network of users.
Each cryptocurrency project has its own requirements when it comes to airdrops. But most airdrops serve the same purpose: to raise awareness of the project and increase interest. As in most communities, there are always a few people who try to take advantage of others. Keep in mind that airdrops will never require you to send funds. Stay away from people who request payment for the airdrops. Before claiming an airdrop, make sure the project is legitimate. You should be especially wary when you are encouraged to connect your crypto wallet to an airdrop website.