What is Crypto Airdrop? (and How It Works)

Everyone likes getting an unexpected monetary gift. Whether you won a few bucks on a scratch-off ticket, got a rebate on a recent purchase, or even just found some money on the street, getting that money has been scientifically proven to increase happiness.

Crypto airdrops are similar to these small gifts. However, since they are directly connected to a world of digital finance and potential growth, crypto airdrops have much more utility. 

In this article, we’ll be exploring the world of crypto airdrops. We’ll look at what they are, how they work, and what types exist. By the end of the article, you’ll understand more about this unique segment of the crypto world. 

What Is a Crypto Airdrop?

A crypto airdrop is essentially when a specific blockchain project gives out tokens or coins for free. These could be part of a mass giveaway or something more specific. However, in all cases, tokens leave the company and go directly to individual crypto wallets. 

The amount given away is typically small. It may be just enough to form an initial investment in the project. However, there are cases where the amount given in an airdrop is larger or grows if you hold onto it. If the airdrop is significant, the money from it could even be used for everyday purchases. The possibilities are endless!

Why are Crypto Airdrops Done?

Crypto airdrops are typically done as a form of promotion. Giving something out for free increases interest in the product itself. Think of it like a free sample, a form of promotion that has a proven impact on sales. You would probably be more interested in a company offering you a free sample of their product; a crypto airdrop works in a similar way. 

This could be used to bring attention to a new blockchain project. If a project is struggling to get attention, there is no better way than to offer something for free. The hope here is that people flock to the product because of the airdrop and then stick around and invest in it once they learn more about it. 

This starting amount may even be used as a way to encourage users to invest in the infrastructure. Imagine getting a $5 off coupon to a restaurant. It is unlikely that you will be able to find a meal on the menu for under $5, so you will have to spend more to use the coupon. The amount given away in an airdrop may not be significant but could form a place for someone to start investing in the system. 

Crypto airdrops could also be used to bring attention to new developments. A blockchain project that has changed the way it operates may plan an airdrop to emphasize the change. Doing so has the potential to add new users. 

Type of Airdrops

All crypto airdrops share the same essential premise: providing people with an opportunity to earn crypto. However, how they do this varies, leading to the existence of many types of airdrops. 

Standard Airdrops

Person looking at prices on a laptop

Standard airdrops are the most basic form of airdrops. With these, tokens are given away to anyone participating in the airdrop. Typically, the number of tokens given out is limited and ends once all of the tokens have been claimed. 

In some cases, this limited quantity creates a desirable effect. Knowing the offer won’t last long encourages people to rush toward the project rather than wait until later. This increases the chance that people will actually engage with the offer. 

Bounty Airdrops

Bounty airdrops are similar to standard airdrops. However, bounty airdrops require users to complete some sort of task to receive their free tokens. 

Typically, these tasks relate to something that the company running the airdrop wants. A common task is to subscribe to the company’s newsletter or interact with them on social media. Tasks like these have long-term benefits for the company that they value more than the cost of the tokens. 

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Another common task is to spread the word about the project. For example, Blockcard offers $10 in TERN spending power when you refer a friend. People often refer projects to their friends anyway but rewarding them for it is a great way to ensure they do so. 

Holder Airdrops

Most blockchain projects generally want users to hold their tokens rather than sell them. This is especially true in the case of coins that are viewed as investments. If too many users are selling, the price of the coin will crash. 

This is where holder airdrops come into play. These are specific drops where free tokens are given to users who have already accumulated a certain number of tokens. Conducting the giveaway in this way encourages users to hold and accumulate tokens, as they know that doing so will give them free rewards. 

Exclusive Airdrops

Exclusive airdrops are one of the most targeted forms of airdrops. In these giveaways, users are given free tokens for their relationship and history with the blockchain project. It may reward users who have been around for the longest or have the most time spent on the project. In any case, this airdrop is designed to reward loyalty, which is an important element of success. Rewarding loyalty like this creates a cycle that ends up increasing loyalty all around. 

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Raffle Airdrops

In most cases, a raffle airdrop is similar to a standard airdrop. However, while standard airdrops usually take a first-come-first-serve approach to the giveaway, raffle airdrops use a raffle system. With this system, interested users are rewarded tokens after a randomized raffle. 

These provide many of the same benefits as standard airdrops. They bring attention to a project or highlight some change. However, they do so without giving quite as many tokens for free. Because of this, they are a good choice for promotion on a budget. 

Participating in Crypto Airdrops

Hands holding Bitcoin symbols

Crypto airdrops often create a win-win scenario. The users win because they get something for free, and the company wins because they increase the level of interest and participation of their users. In the end, participating in crypto airdrops is good for everyone!