What is a Crypto Airdrop?

If you’ve been exploring web3, you’ve likely heard of airdrops. In short, it’s a method of sending out coins or tokens for free—directly via their blockchain addresses. As simple as it sounds, this mechanism opens up a world of possibilities. 

To explain, airdrops are employed for various purposes; from benefiting existing holders to creating a whole new community around a new platform. But what is an airdrop exactly? 

In this article, you’ll learn all about what crypto airdrops are, how they work, and how to claim them safely. So without further ado, let’s dive in.

What Is a Crypto Airdrop?

In the most basic sense, an airdrop is when a project issues coins or tokens directly to your crypto wallet free of charge. Since many blockchains are public and transparent, it’s easy to gather a list of addresses that own a certain token or conduct a specific activity. 

For example, a project might want to send tokens to addresses that trade a lot of valuable NFTs. In this case, they would collect the addresses that have bought and sold NFTs of a certain value and send the new tokens to those addresses. That way, they create a new community of people they know are interested in valuable NFTs. 

Of course, this doesn’t just work with NFTs, but any crypto token in general. In many cases, projects will airdrop tokens to their exclusive communities acting as an incentive for their members too. To understand why, let’s look at what airdrops can do.

What are crypto airdrops for?

Since the blockchain is transparent, it’s easy to find wallets that perform certain actions, interact with certain platforms, or behave in a certain way. 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. With that in mind, let’s look at how web3 projects use airdrops.

Rewarding Existing Community Members

Some airdrops are designed to reward members of existing web3 communities. These could include utility tokens, governance tokens, or even NFTs.

Utility tokens

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. In these cases, the utility token’s price relies on speculation. The more users on the platform that use that feature, the more desirable it will become. This rewards early adopters as they can sell the tokens they have accumulated for a profit. 

Governance Tokens

Another related use is as a governance token. To explain, several public blockchains support decentralized apps. These apps operate without a centralized body and thus rely on the users and developers to shape their future roadmaps. Of course, making a decentralized decision for an app can be a difficult task. This is where governance token airdrops come in. In short, governance tokens act like votes, giving each holder a say in the platform’s future development. By airdropping these tokens, an app can continue to grow with the help of its users.

NFTs

Airdrops can also offer value to holders via non-fungible tokens (NFTs). For example, a project may want to simply airdrop a piece of artwork created by a famous NFT artist to early adopters. Sometimes these NFT airdrops will go to every holder of a specific NFT. Alternatively, the airdrop may only be available to specific holders, such as those that hold a minimum of 5 NFTs from a specific project, or those that have never listed that specific asset. 

Using these mechanisms, NFT projects can incentivize their community to hold their tokens rather than sell, thereby maintaining the original asset’s floor price. In some cases, it may even increase the value of the token since these rewards increase the project’s desirability.

Building a New Community

Airdrops are also used to build new web3 communities. Typically these types of airdrops will be driven by actions. To explain, new projects will often set up airdrops to generate publicity. For example, they may ask you to post about the project on social media, subscribe to newsletters, create memes, or sign up for their platform. In return, they will reward you with points or levels, directly impacting the amount of tokens you receive. 

This method is used to catapult a project into the public eye, increasing visibility and fostering a sense of “FOMO”. After all, who wouldn’t want some free crypto tokens? 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.

Adverts and Guerilla Marketing

The next use is possibly the most controversial: airdrops as a guerilla marketing tactic. For example, you might receive an NFT airdrop displaying the details of an upcoming NFT mint or pre-sale. Much like a flyer you might receive in your mailbox, an NFT delivered to your blockchain address may aim to raise awareness about an up-and-coming project or token sale. However, today most wallets will relegate airdropped NFTs to a “hidden folder”. As such, this marketing tactic isn’t as fruitful as it once was.

Scams and Spam

Another reason you could receive an airdrop is much less positive. In short, scammers can send you airdrops too. Since the blockchain is transparent, bad actors can decide to send you spam NFTs or tokens too. Typically these tokens aim to catch you out in one of a few ways: either redirecting you to a phishing site that tricks you into revealing your seed phrase or private keys, downloading malware, or signing a malicious smart contract approval. As such, you should always exercise caution when interacting with any strange token airdropped into your address.

Examples of Famous Airdrops

So now you know about all the different types of airdrops, but what about some of the most successful airdrops so far? Let’s take a look at some examples of famous airdrops and why they were so popular.

Uniswap Airdrop

Uniswap airdropped UNI tokens to its users in 2020. 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. 

The airdrop was one of the most lucrative of all time, as the 400 free UNI tokens were valued at around $1000 at the time. That’s a lot to giveaway; especially when you take into account that Uniswap airdropped these tokens to 12,000 addresses! Since then, the value of the token has only increased, with its value standing at over four times that price (at the time of writing).

Mutant Ape Yacht Club NFT Airdrop

One of the most historically significant NFT collections is the Bored Ape Yacht Club. Created by Yuga Labs in 2021, BAYC was an immediate success and inspired many other 10k generative PFP collections just like it. The concept is simple: it’s essentially an exclusive crypto club for NFT lovers inspired by meme culture and gaming. With the collection gaining so much popularity, its floor price spiraled out of control, with a single Bored Ape costing around 20ETH in the same year it launched. 

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.

The solution was to create a new collection: The Mutant Ape Yacht Club (MAYC). In short, the new collection would include 20k NFTs, twice the size of the original collection. To reward their original holders, they airdropped 10k “mutant serum” NFTs to the holders of the original BAYC NFTs. With each serum, a BAYC holder could mint a MAYC NFT for free.

Essentially they killed two birds with one stone: keeping the original holders happy by protecting the scarcity of BAYC (and providing them with another NFT), and allowing new people into the ecosystem. As a result, the airdrop was a huge success, with both BAYC and MAYC performing incredibly well in that market cycle.

ENS Airdrop

The Ethereum Name Service (ENS) is a project that helps to improve the user experience of the Ethereum blockchain by replacing the long and chunky hexadecimal address with a human-readable .eth domain.

 The airdrop eligibility rules were simple: anyone who had registered an ENS address before October 2021 could claim their $ENS tokens. The idea was to reward early adopters for their contributions to the ecosystem and introduce a governance mechanism.

ApeCoin Airdrop

Contrary to popular belief, ApeCoin was created by ApeCoin DAO rather than Yuga Labs itself.

That said, Yuga Labs has a role as a contributor to the project, and ApeCoin plays a huge part in its wider ecosystem. For starters, to mint NFTs for Yuga Labs’ Otherside metaverse, you had to pay in ApeCoin. 

The ApeCoin airdrop was announced in March 2022, and holders of Bored Ape Yacht Club and Mutant Ape Yacht Club NFTs were eligible to claim the token. In addition, holders of the aforementioned collections who also had Bored Ape Kennel Club NFTs also received a bigger portion of the tokens. 

While the coin gives plenty of benefits within the ecosystem, such as voting power in the ApeCoin DAO, it has since been adopted by the wider crypto community too. For example, Gucci accepts $APE in selected stores in the US. 

dYdX Airdrop

dYdX is a decentralized exchange (DEX) that allows users to swap crypto including Ether, Bitcoin, ATOM, and many more. Founded in 2017, the DEX is currently one of the most popular platforms of its kind. Its airdrop, announced in August 2021, was open to anyone who had used the platform to trade, lend, borrow, or provide liquidity to its liquidity pools. In total, the platform airdropped tokens to around 65k wallets, with users receiving up to $1000 worth of tokens each. 

Arbitrum’s ARB Airdrop

Arbitrum is an Ethereum layer two blockchain that focuses on scalability, offering super-fast apps while keeping transaction costs low. Its growing ecosystem includes three main products, Arbitrum One, Arbitrum Nova, and Arbitrum Nitro. Together, they use optimistic rollups, a scalability solution, to support complex apps without burdening the user with exorbitant fees. 

In 2023, it launched an airdrop of its native token ARB. This ERC-20 token is now in use as a transfer of value, and investment and a governance token for the Arbitrum ecosystem.

To qualify for the airdrop, you had to fulfill at least 3 of these 6 conditions:

• Bridging assets to either Arbitrum One or Nova
• Performing transactions on Arbitrum regularly at least two months before the snapshot in February 2023
• Interacting with at least 4 Arbitrum smart contracts or performing 4 transactions on the network
• Your transaction value exceeding $10,000 
• Depositing a minimum of $10,000 on Arbitrum One
• Use the social chain, Arbitrum Nova for at least 3 transactions

How to claim Airdrops

Now you know all about how airdrops work, and you even know about some of the most famous airdrops to date. If you’re still reading, it’s probably because you want to start claiming some airdrops yourself. So, let’s dive into the steps you can take to get some free crypto.

Where to find upcoming airdrops

To claim an airdrop, you need to know where to find them. The best thing you can do is to stay up to date with the crypto ecosystem. Follow crypto newsletters, read crypto and NFT news sites, and of course, pay attention to social media including X (Twitter), Discord, and Telegram. 

Another option you have is using an airdrop eligibility checker. Tools like Earnify and Wenser allow you to browse upcoming airdrops and check your eligibility all in one place. This can be a great help if you’re unsure which ecosystems you may have interacted with in the past.

How to check your eligibility for an airdrop

Typically, you will have to check your eligibility for an airdrop using each project’s official website. However, as mentioned, there’s now a range of tools available to help you check your eligibility for multiple airdrops at once. 

How to receive your airdrop

Receiving your airdrop will depend on the project. Some projects require you to claim an airdrop via the official site by connecting your wallet. Other projects will drop the tokens to your wallet address automatically. In short, you will have to check out the process per airdrop. Of course, it’s important to make sure you are eligible too! If you want to receive an airdrop, you’ll have to meet the requirements first, typically within a specific timeframe.

How to navigate airdrops safely

Airdrops can be a great way to get your hands on free crypto, but like with all good things, there are some risks too. 

Avoid Interacting with malicious tokens

Firstly, you need to be aware that bad actors may send you malicious tokens or tokens designed to lead you to phishing sites. In these cases, the tokens will arrive directly in your wallet. You may be excited. You might think you’ve been airdropped something wonderful. However, it’s important to note that scammers feed off your enthusiasm and may simply try and trick you. If you receive an unknown airdrop, don’t interact with it! Don’t follow any of the links it displays either. Simply, leaving these airdropped tokens alone is the best course of action. 

Do Your Own Research

It’s not just automatic airdrops you need to worry about. If you are looking to claim an airdrop and it requires you to sign a transaction, make sure you do your research before signing. In short, airdrops can offer bad actors an easy opportunity. You think you’re about to receive free crypto, but in fact, the scammer will send you a malicious smart contract function. Signing this approval could mean losing the assets in your wallet. To avoid this risk, make sure you research each project’s legitimacy before you sign your assets away. Reading the whitepaper and getting involved with a project’s online community can help you determine whether you trust the airdrop, thus keeping your assets safe.

Claim with a separate wallet when possible

Sometimes, an airdrop will allow you to receive tokens in a separate wallet from the wallet that gives you eligibility. If you have to connect your wallet to claim the airdrop, using a separate wallet is a good option. A good practice in this instance is to segregate your assets into multiple wallets and only connect an account containing minimal assets to sign. That way, if you do sign a malicious transaction and the airdrop was a scam, your main holdings should stay safe. However, it’s important to note that a malicious airdrop is unlikely to offer this feature as your main holdings are what they are after in the first place! 

Final Thoughts on Airdrops

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.

If you do want to claim an airdrop, make sure you do your homework: check the legitimacy of the project, or as many say “do your own research”. Only you can decide if a crypto airdrop is for you. 

Of course, if you want to want to protect any kind of value, you’ll need a suitable wallet. Once you’ve accumulated your tokens, the best way to protect them is by keeping your private keys offline and away from online threats. For this reason, Ledger devices are the most secure option you have that don’t forfeit your custody. Plus, they also allow you to manage multiple accounts across multiple blockchains, meaning you can protect your airdropped tokens on Ethereum, Solana, IBC blockchains, and many more. 

So get into the airdrop spirit! With a Ledger device, you have the benefit of security and self-custody on your side.