One major barrier for thousands of Nigerians looking to jump on the crypto bandwagon is a lack of funds to begin with.
Cryptocurrency is rife amongst young Nigerians with very little or no disposable income to invest in crypto asset trading.
This challenge has led many Nigerians to look for ways to benefit from crypto without any initial investment. They have seen them massively engage in various play-to-earn projects in the crypto space due to a lack of funds to get involved in the more lucrative side of the crypto space.
In this article and blog post, we’ll explore the concept of crypto airdrops, explaining what they are, how they work, and their significance in the crypto community.
What Is a Cryptocurrency Airdrop?
A Cryptocurrency airdrop is a marketing strategy that involves sending coins or tokens to wallet addresses. Small amounts of the new virtual currency are sent to the wallets of active members of the blockchain community for free or in return for a small service, such as retweeting a post sent by the company issuing the currency. The ultimate goal of a crypto airdrop is to promote awareness and circulation of a new token or coin.
There are many ways to earn free crypto tokens but the most trusted way with a high tendency of earning your life changing money is getting involved in an Airdrop Campaign. We are now going to look at what an airdrop is and how potential crypto enthusiasts can earn life changing money from it.
In this article, we are going to look at one major way to earn thousands of dollars’ worth of tokens for free in the crypto industry without any initial investment.
There are many ways to earn free crypto tokens but the most trusted way with a high tendency of earning your life changing money is getting involved in an Airdrop Campaign.
We are now going to look at what an airdrop is and how potential crypto enthusiasts can earn life changing money from it.
How Does Cryptocurrency Airdrops Work?
The process varies depending on the company and the type of airdrop. But generally, it follows these steps:
Announcement: Companies usually announce airdrops on their social media channels or via email newsletters.
User Action: Depending on the type of airdrop, users might need to perform specific actions.
For example, for holder airdrops, you’ll need to have the required cryptocurrency in your wallet. For standard airdrops, you might need to complete a form or sign up for a newsletter.
Distribution: After the airdrop, the tokens are automatically deposited into the eligible wallets.
How to Participate in Airdrops?
Most airdrops require little effort to participate. Here are some general steps:
Stay Updated: Follow your favorite crypto companies on social media, subscribe to their newsletters, and join their communities to stay updated about potential airdrops.
Hold Cryptocurrencies: Holding a diverse range of cryptocurrencies can make you eligible for more airdrops.
Complete Tasks: Some airdrops require users to complete specific tasks like sharing posts on social media or referring friends.
According to Charlie Defi, these tokens can range from a few cents to thousands of dollars. They are often used as a marketing strategy to either
Promote a new project: By giving away tokens, the project can generate interest and attract new users.
Reward existing users: This can build a stronger community and incentivize users to continue using the project.
An example of a successful airdrop was the just concluded Notcoin Airdrop which saw many Nigerians earning money from their participation in the Notcoin ecosystem.
A crypto user can earn thousands of dollars’ worth of crypto for free by participating in a crypto project and meeting the eligibility criteria.
The act of seeking potential Airdrop campaigns to join or joining multiple projects that are likely to carry out an Airdrop campaign is called Airdrop Farming. We are now going to look at that too.
Why Do Companies Do Airdrops?
Crypto airdrops might seem too good to be true. After all, why would a company give away potentially valuable tokens for free? Well, there are several reasons:
Marketing: Airdrops are a potent tool to spread the word about a new cryptocurrency. People naturally get excited about free stuff, which helps generate buzz around the new token.
Decentralization: In a decentralized network, power is dispersed among various nodes or users. By distributing tokens widely, companies can avoid a concentration of power and ensure that their cryptocurrency remains decentralized.
Rewarding Loyalty: Existing users who hold a particular cryptocurrency in their wallet may receive airdrops as a reward for their loyalty. This incentivizes users to hold onto their tokens, reducing market volatility.
What to Do After Receiving an Airdrop?
After you’ve received an airdrop, you have several options:
Hold: You can hold onto the tokens and hope their value increases over time.
Trade: You can Trade the tokens on a cryptocurrency exchange.
Research: Conduct in-depth research about the token. You might decide it’s worth investing more into the token, or you may choose to sell.
Types of Cryptocurrency Airdrops You should know
Understanding the different types of crypto airdrops can help users identify the ones most relevant to them. Generally, we can categorize airdrops into four distinct types:
Standard Airdrop
In a standard crypto airdrop, participants interested in receiving an airdrop simply express their interest in order to receive the airdrop. The individual must provide a valid wallet address, and some airdrops require no additional information beyond this.
Standard airdrops often have a set amount of tokens to distribute with a limit on how many tokens each individual may receive. Therefore, some standard airdrops are time-sensitive. Though these types of airdrops are popular due to their simplicity, there is nothing stopping a single user from creating multiple wallets to quickly drain the airdrop amount, so these may be more difficult to obtain.
Bounty Airdrop
Bounty crypto airdrops occur when users perform certain tasks. These tasks often entail raising awareness of a project by posting on social media and tagging the company or retweeting a recent tweet about the project. There may also be referral bonuses or finder’s fees for individuals who recruit other users, sign up for the project’s newsletter, or join the company’s Discord channel.
In exchange for performing tasks, users often receive points that correspond to how large of bounty airdrop they receive. Users may also be required to earn a certain amount of points before they qualify for their airdrop. For example, a user may be eligible for an airdrop after earning 300 points with each item mentioned above is worth 100 points each.
Holder Airdrop
Holder crypto airdrops occur automatically based on who is holding existing tokens and how many tokens they hold. Because wallets and blockchain information are part of a publicly distributed ledger, all users of blockchain have full transparency into the wallets and distribution of tokens.
The downside to holder airdrops is individuals who may be holding tokens may not want an airdrop. Alternatively, holder airdrops ensure that only the largest, most invested individuals receive the benefit. Some holder airdrops may only award an airdrop if members are holding a certain amount of tokens; otherwise, they may pro-rate the award amount.
Exclusive Airdrop
A more specific type of holder airdrop, an exclusive crypto airdrop occurs when specific people are individually selected for the airdrop. The difference is they may be selected not based on the amount of tokens they have but based on other elements such as time spent on a project, most money spent on non-token activity, or number of posts in a forum. An exclusive airdrop is an even more centralized way of rewarding those closest to the project and may give airdrops to wallets that may not hold any tokens at all.
Raffle Airdrop
Some of the types of airdrops above may be combined with a raffle airdrop. Often, a project will state the number of airdrops they intend to give and encourage individuals to earn a raffle ticket. This ticket may be earned by holding tokens, earning points, or simply expressing interest.
Ultimately, the number of individuals interested in the airdrop often exceeds the number of airdrops the company wishes to deliver. Therefore, a raffle occurs and a limited number of wallets are randomly selected to receive the airdrop.
Crypto Airdrop Scams
A legitimate crypto airdrop never seeks capital investment in the currency. Its aim is purely promotional. On other hand, some crypto scams involve sending micro amounts of bitcoin or other cryptocurrencies to unsuspecting recipients in what is known as a dusting scam.
Many airdrop scams rely on directing an investor to attach their wallet to a phishing website in order to claim their airdrop. Often, the web3 address will prompt a user to connect their wallet using common and popular wallet services such as MetaMask, Trust Wallet, or Oasis. After a user connects their wallet by providing their secret phrase or keys, the scam is complete.
Airdrop scams may also occur by enticing market participants to invest in a specific security in hopes of being airdropped a different item. For example, a project may boast that holding certain NFTs in a wallet will cause owners to receive a rare airdrop. Though the airdrop may be legitimate, the project owners may have enticed market activity of the NFT so they could sell theirs at a higher price.
How to Avoid Airdrop Scams
Users should always be vigilant about unsolicited deposits into their crypto wallets. In addition, users should be aware of the projects they are investing in or attempting to claim assets for. The common phrase among Cryptocurrency explorers is to “do your own research”.
It’s advised that crypto-enthusiasts not connect to websites they are not familiar with. This includes ensuring external links they click on come directly from the project. Consider bookmarking common sites you plan on visiting frequently to ensure you’re always connecting to the right site.
Companies often publicly communicate airdrops and other promotions. Consider following the project on social media, forums, or Discord to follow upcoming events, and be mindful that complex scams may replicate or imitate project social media profiles.
If you don’t want airdrops associated with primary investments, consider creating a new wallet specific to airdrops. After receiving the tokens, you can then transfer the tokens to different wallets. Though not a form of traditional diversification, keeping crypto in different wallets does spread and reduce overall risk.
Crypto Airdrops vs. Initial Coin Offerings (ICO)
Crypto airdrops and initial coin offerings may appear to be very similar. Both are likely to occur at the start of a project, and both are intended to distribute coins or tokens.
Crypto airdrops may not require an investment, while initial coin offerings often require a transaction. Though the transaction may reward investors by offering coins or tokens at a discount, it is expected that investors buy the coins or tokens as opposed to airdrops which are free. ICOs are often initially offered first to venture capitalists.
In addition, the demographic for these two events are largely different. ICOs attempt to attract larger investors who are willing to infuse capital into a project. These users are more likely to pursue the project as an investment. Alternatively, airdrops are often intended to raise awareness among smaller users. Though users may not have much use for a small airdrop, the goal is to entice smaller users to transact with the digital currency.
Steps to carry out an effective Airdrop farming
In order to increase your chances of earning thousands of dollars from Airdrop campaigns, you have to join as many airdrops as possible and that entails an effective airdrop farming campaign.
Here is a list of things to do to carry out an effective airdrop farming campaign.
- Actively engaging the project always
- Diversify your efforts by getting involved in various projects
- Select a few projects and focus on them don’t spread yourself too thin.
- Finding New Projects and joining early
- Staying up to date in the industry.
An airdrop campaign can earn you thousands of dollars for free as a reward for actively engaging in a crypto project. Many have earned life changing money from Airdrop campaigns and you can become one of them.
Successful Airdrops in Crypto History
Over the years, several crypto airdrops have made headlines for their unprecedented success. Here are a few noteworthy ones:
Uniswap (UNI): In 2020, Uniswap launched its native token, UNI, and decided to airdrop 400 UNI to every wallet that had used its decentralized exchange service.
At the time, the airdrop was worth around $1200, but the value of UNI has since skyrocketed, making this airdrop one of the most lucrative in crypto history.
Stellar Lumens (XLM): In 2019, the Stellar Development Foundation in partnership with Blockchain.com conducted the largest airdrop in history, worth $125 million. Users of the Blockchain.com wallet received free XLM tokens.
These airdrops not only rewarded the recipients but also effectively raised awareness about the projects, contributing to their long-term success.
At the end of 2021, Gas DAO was formed to distribute tokens to individuals who had paid a certain threshold of Ethereum gas fees. The concept was ownership of the DAO would be tied to the largest users of Ethereum. 55% of Gas DAO tokens were airdropped to 634,429 eligible wallets.
Also at the end of 2021, the OpenDao distributed tokens to NFT holders based on OpenSea trading activity. Ownership of OpenDao tokens would be airdropped based on NFT-ownership, forming an entity structure driven by the most ambitious collectors.
At its peak, OpenDao had a market cap of greater than $250 million. As of September 2022, its market cap had dropped to less than $11 million.
Frequently Asked Questions
What Was the First Crypto Airdrop?
The first cryptocurrency airdrop is attributed to AuroraCoin (AUR) on March 25, 2014. Intended to be the cryptocurrency for the nation of Iceland, every citizen or permanent resident who submitted their national ID received 31.8 AUR.
What Is an NFT Airdrop?
Similar to other types of crypto airdrops, an NFT airdrop credits NFT holders with additional tokens. This is done to build a stronger community around certain NFTs, create buzz, and reward NFT holders.
Did the Country of El Salvador Do a Bitcoin Airdrop?
Yes. To encourage Bitcoin adoption as the country expanded its legal tender to Bitcoins, El Salvador credited everyone who installed the government-built wallet with $30 worth of BTC.
How Do I Find Crypto Airdrops?
Crypto airdrops are often communicated and marketed to the general public to raise excitement and awareness regarding a token. Many of these airdrops can be found by subscribing to airdrop newsletters or following blockchains on social media.
Can You Make Money From Crypto Airdrops?
Individuals can make money from crypto airdrops, though crypto airdrops are intended to increase use of a cryptocurrency across a broad range of users. For that reason, airdrops are often not substantial amounts (less than $10), and the tokens may not be liquid. Also, there is higher risk that users will try to liquidate their holdings when they are able to (thus quickly dropping the value of the coins or tokens).
Related Article
Top 10 Emerging Cryptocurrencies to Watch in 2024
5 Crypto Airdrops Poised For July 2024
The Bottom Line
Crypto airdrops are a way for companies and projects to raise awareness of their token or coin. It is also a way to increase the liquidity of their security by giving it away to thousands of different wallets. Though airdrops have value and may be considered free money, there are also significant risks if users are not aware of potential scams related to crypto airdrops.
Disclaimer
The information provided on this website does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website’s content as such.
Token Metrics does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.
Sources: Tokenmetrics Nairametrics Investopedia
