What does Airdrop mean in Crypto? Airdrop has become a central feature of the cryptocurrency space. It refers to the practice of crypto projects giving away free tokens to the public.
Example: “Those who held their UNI tokens received through an airdrop back in 2020 are now sitting on roughly $12,000!”
By doing so, they plan to increase the project publicity and the token circulation. Getting more people trading in it when it lists on an exchange. From the crypto project perspective, airdrops are often used as a method to diversify the number of holders of that crypto token.
In the ICOs boom in 2017, crypto projects will simply give away some of their tokens. Done as a marketing strategy to raise awareness for their offering among the crypto community. They can be useful in generating initial buzz around a crypto project.
In some cases, people have to complete simple social media tasks. Such as joining the Telegram group of the respective crypto project, retweeting a post on Twitter, or referring friends, before they claim their airdrop token rewards.
This offering creates a win-win scenario because the crypto project gets low-cost (or free) marketing about their project or upcoming token sale, and you get free crypto tokens.
The claiming procedure differs from project to project. Some “holder drops” will drop tokens automatically into the wallets of users who own a minimum quantity of a specific token. Other projects are snapshot based, and can only be claimed by users who held the required token during the “snapshot”. Which is a record of token holders taken at a particular time.
For example, in July 2017, OmiseGo (later named OMG Network) performed an airdrop to Ether (ETH) holders on the Ethereum blockchain. Distributing 5% of the total number of OMG tokens. Eligible ETH holders (holding more than 0.1 ETH) will receive 0.075 OMG tokens for each ETH tokens that they held at the time of the snapshot.
Some consider airdrops as a kind of dividend for holding a crypto asset.
Beware of Airdrop SCAMS! A legitimate crypto airdrop NEVER seeks capital investment in the cryptocurrency. Some crypto scams involve sending a small amount of Bitcoin or other cryptocurrencies to unsuspecting recipients (known as a “dusting scam”).
Also, the design of some airdrop scams to trick you into giving out the private key to your wallet. A legitimate airdrop asks participants for their wallet’s public address, instead of the private key.
Users should always be vigilant about unsolicited deposits into their crypto wallets. Do not give out your private key for any reason.