Understand Airdrops in just 3 minutes

In traditional marketing, it is common to receive free samples when launching a new product (perfume, creams, new desserts, etc.). In this case, it is cryptocurrencies. The startup, the development team, or the community behind a project will offer free cryptocurrencies to certain users.

What is it concretely?

This term “Airdrop” for “dropping” in English refers to a promotional operation. This is materialized by a distribution of digital assets to investors. In most cases, the simple holding of an altcoin token or the existence of an active portfolio address on a particular blockchain is sufficient to benefit from this offer.. It is also possible that this airdrop is done in exchange for a small service (retweet of a message sent by the issuing company, post of a comment on a forum, etc.).

Best examples in the matter, referral platforms like Binance, Kraken or FTX reward their users from time to time for their loyalty and the use of their service. These exchanges therefore regularly organize distributions of cryptocurrencies.

How to take advantage of Airdrops?

Knowing how to find the right projects to qualify for them is a practice that takes time, but some specialized sites dedicated to crypto airdrops offer user alerts and referral services for startups and new projects.

  • Coinmarketcap offers a list of current or upcoming airdrops.
  • On social media like Medium (by searching #testnet), on Twitter (by searching for #airdrop).
  • Referral sites like airdrops.io, airdropalert, coinairdrops or airdropaddict.

Airdrops.io website homepage with different airdrops operations offered

What is it used for ?

These cryptocurrency promotion operations provide liquidity to the project. This adds attractiveness to the protocol and initiates further development and results.

Likewise, it’s an incentive to come and test a protocol on the blockchain in testnet. That is, when it is still in the testing phase and not available to the public. It is a way for developers to implement patches to the code so that it is fully functional when opened to the public (mainnet).

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The airdrop also finds its usefulness to solidify NFT collection projects. In this case, the creators of these projects want the value of their NFTs to last over time, they will offer an NFT holder to receive an airdrop of other NFTs. A good way to increase the size of the community and bring more value to the ecosystem.

What are the advantages and disadvantages of airdrops?

The airdrop is generally a “win/win” operation for both investors and initiators of a crypto project.

  • This is a good way to ensure that the supply is well distributed and not focused on the wallets of developers and a few investors.
  • Unlike ICOs, it is the project team that keeps control of decentralization by estimating the total number of eligible wallets and the flow of tokens to be distributed. Conversely, during ICOs, large investors can concentrate a large number of cryptocurrencies, which poses governance problems.

Like any cryptocurrency mechanism, there are also dangers

  • Victims of their success, airdrops can attract quite a few scams. Including false projects aimed at emptying the investor’s wallets.
  • It is generally necessary to register beforehand to benefit from an airdrop. Must therefore be vigilant about the personal information communicated and the documents signed.

Conclusion: Should we be tempted?

This is a alternative to trading to grow your portfolio without spending a penny. But, beyond the free accumulation of cryptocurrencies, airdrops have several virtues. That above all allows you to discover new projects, protocols and learn to use them.

Nevertheless, as always in the crypto ecosystem, security is the overriding element. A preliminary analysis of the file is mandatory. You must refer to specialized websites that list and select projects using the airdrop lever.

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