What’s the deal with crypto airdrops?

While doing your usual crypto YouTube browsing, you may have seen everyone’s clickbait titles, saying, “OMG free crypto don’t miss this CRYPTO AIRDROP!! ,” and rolled your eyes as you scrolled past. With as many scams as there are in the cryptosphere, it’s easy to block out noise that sounds too good to be true.

But, is that the case with crypto airdrops? Can you really get free money in the form of tokens? Well, some people certainly have.

There are lucky investors who have collected thousands of dollars from airdrops. Uniswap airdropped everyone who’d ever tried to use the DEX more than $1,000 worth of governance tokens. In 2021, dYdX airdropped its users tokens worth an average of between $1,000-$10,000. So yeah, airdrops can totally be worth it.

What are crypto airdrops?

Airdrops are a marketing strategy that help build awareness and excitement about a crypto project.

Tokens are sent directly to eligible users’ wallets by the crypto project when they are claimed. This serves to give receivers value and a positive sense of the project brand. It also creates good press for successful campaigns.

There are a few different kinds of airdrops.

Standard

Sometimes marketing really is just about list building and awareness. Most standard airdrops are exactly that—anyone who wants to can get a small crypto reward for signing up with an email or subscribing to a newsletter. These kinds of airdrops are not usually very valuable, but if you actually like the project, they could be worth it for a small effort.

Bounty

There are other opportunities for reward tokens you can claim when you complete tasks. When you do, you’ll receive a crypto bounty that’s paid through an airdrop. Tasks are usually digital marketing tactics like retweeting something, posting on IG, following, commenting, joining a telegram group or Discord. They’re also relatively easy to claim but can be time consuming for the value of the reward.

Hard fork

Sometimes users receive crypto in the case of a hard fork. If a project has such a radical change that it requires a divergence onto a new protocol altogether, old coins or tokens can be incompatible with the new version. In this case, projects airdrop new coins to users equal to what they held of the old coin. An example of a hard fork airdrop was Stellar’s 2018 airdrop totalling $125 million.

Exclusive

A few of the most valuable airdrops have been retroactive rewards for early adopters of a platform. Exclusive airdrops are handed out to users as a reward for using and participating in a project in its infancy. They are common when an existing project creates a DAO with a governance token. When that’s the case, it’s also likely that recipients are asked to participate in voting on governance proposals.

What can you do with crypto airdrops?

Once you have these amazing and free tokens, what do you do with them? Well, a lot of people sell them, which can tank the price. They can hold their value, however, and even increase if the project is successful, in which case, it’s a good idea to hodl them. Sometimes your airdrop crypto is worth good money—sometimes not. If they’re governance tokens, you can also hang onto them to continue engaging in the governance of the project by voting or staking them. This is a good option if you believe in the project and want to stay active in its community.

Examples of airdrops

There are all kinds of little aidrops you can scrounge up on Reddit forums and Twitter. But some of the most notable ones happen infrequently and are widely publicized. Some examples:

ENS governance token

In November of 2021, Ethereum Name Service, which is a decentralized domain name provider, airdropped its new governance token to everyone with an ENS domain. The reward amount varied depending on the length of time a person had their domain and the number of domains they owned. Plenty of people received more than $10,000 worth of ENS tokens, and the value of the tokens increased in the days after they were released. ENS is a fairly well-established project with quite a bit of adoption, so likely people feel confident that it will be around in the future.

Bitcoin faucets

One of the oldest ways to get free crypto has been through Bitcoin faucets. Back in the stone ages of the early 2010s, they weren’t known as airdrops, and you could make an argument that faucet rewards aren’t the same as airdrop rewards, but to me they’re close enough. Similar to bounty airdrops, you can receive crypto for using apps or websites to do small tasks that reward you with crypto. In the early days of Bitcoin faucets, you could receive five bitcoins for completing tasks! That’s definitely not the kind of free money you’ll be getting these days, but you can still find small amounts of free Bitcoin dripping here and there.

NFTs

In 2017 CryptoPunks weren’t as popular as they are today. We know them now as the OG of NFTs and they can be worth millions of dollars. But there was a time when they were airdropped for free. Even CryptoPunks needed to be marketed at one point, and 5,000 punks were airdropped to anyone who wanted them for a small Eth gas fee.

Country airdrops

By now, hopefully, you’ve heard that El Salvador was the first country to adopt Bitcoin as legal tender. This news stirred the crypto community as one of a growing number of government and country sign-ons to crypto. In encouraging its citizens to begin using Bitcoin, El Salvador promised to airdrop $30 worth of BTC to everyone who downloaded the country’s wallet app.

How do you get that sweet, free crypto?

Look, we can’t promise you free crypto, no one can.

I know the City of Miami is talking about airdrops and you probably want to know how to get your hands on that incredible free money. There are several ways to look for and acquire airdrops, though –  some more predictable than others.

Here are a few.

Airdrop hunting

There are websites you can visit that track various airdrop opportunities. If you have the time and inclination, it’s relatively easy to search the web for different bounties that you can collect. Websites like airdrop.io and airdropalert.com are a good place to start. You can also poke around on Reddit and Twitter for community buzz.

Participating in lots of new projects

You can’t always predict which projects will do retroactive reward airdrops. There may be hints and rumors floating around that you use to guess at where the rewards will be falling from the sky. However, one of the best ways to be positioned for an exclusive airdrop is to just use lots of new projects. Participate in DeFi, use apps, swap, trade, stake. You’ll learn a lot, get to know the space, and hopefully also set yourself up to get those sweet free tokens.

Are they worth it?

There are a few cautions and things to remember when it comes to free money—nothing is really free.

Don’t forget…

Airdrops are taxed

You probably don’t have to worry too much if you get five useless tokens as a bounty from a project no one’s heard of. But some significant rewards can be worth thousands of dollars. Remember that airdrops are taxable, just like any other kind of crypto earnings.

They can lose value

It’s not always easy to know if you should sell or hold. If you have a token that would be worth some money if you sold it right away, hooray! A promising token may be worth more in the future, however. Just hope you don’t hodl it and the price bottoms out over time.

They can cost more than they’re worth

Even though they’re free, to claim crypto rewards there will likely be gas fees. If the token happens to be on Ethereum, the gas fees could be quite high! Unless the airdrop is pretty valuable, it may not be worth claiming if the gas fees are higher than the value of the tokens.

There are lots of scams

The more transactions are going in and out of your crypto wallet, the higher the chance security can be compromised. Watch out for airdrop scams making promises that actually just clean you out. Especially if you’re airdrop hunting, it’s smart to use separate burner wallets and accounts that won’t get your portfolio if they’re hacked or phished.

Summary

Aidrops can be really fun, rewarding events in the crypto community. Especially if you’re an early adopter of a project that you really believe in and support, receiving tokens can build community and confidence while benefiting both users and developers.

Bounty hunting can be fun too, if you like that sort of thing.

The more you get involved in crypto, the more likely you are to run into some worthwhile airdrops. Just remember to be careful and always keep safety and security in the front of your mind.