What is a Crypto Airdrop? (Beginner's Guide on How to Get One)

The world of cryptocurrency is constantly evolving, and one of the most exciting developments in recent years has been the rise of crypto airdrops. If you're new to the crypto space, you might wonder: what exactly is a crypto airdrop, and why should you care?

In this comprehensive guide, we'll dive deep into these topics. We'll explore what airdrops are, how they work, and why they've become such a popular phenomenon in the crypto space.

We'll also look at some notable airdrops, discuss the potential risks and rewards, and provide you with strategies to make the most of these opportunities.

What Is a Cryptocurrency Airdrop?

Cryptocurrency airdrops are a method of distributing new coins or tokens to existing cryptocurrency holders or users who complete specific tasks. They serve as both a way to reward early adopters and as a marketing strategy. When a project conducts an airdrop, they're essentially giving away free tokens to build awareness and encourage the adoption of their cryptocurrency.

These airdrops often target active members of the blockchain community. You might receive small amounts of a new virtual currency in your wallet for free or in exchange for simple actions like retweeting a post. The primary goal is to create buzz around a new token or coin and get it circulating among potential users.

For crypto projects, airdrops can serve multiple purposes. They allow companies to reward their early participants while simultaneously creating an initial distribution among their most dedicated users. This dual function makes airdrops an effective tool for both distribution and marketing, as well as a mechanism for onboarding new users to a platform.

What is a token airdrop?

A token airdrop typically occurs when a crypto platform, such as a decentralized exchange (DEX), creates its own native token. To show appreciation for their existing user base, the project might distribute a significant portion of the total token supply to users' wallets. Often, this distribution is based on factors like trading volume or other engagement metrics on the platform.

This type of airdrop is a strategic move to retain users and discourage them from migrating to competitors. By giving users a stake in the platform's native token, the project creates an incentive for continued loyalty.

What is an NFT airdrop?

With non-fungible tokens (NFTs), airdrops take on a slightly different form. An NFT project might use the promise of a future airdrop to generate interest in their current NFT sale. For example, they might announce that holders of their current NFT collection will automatically receive a new, exclusive NFT in the future.

This strategy can be highly effective in driving sales of the current NFT collection. It also keeps the community engaged and excited as they anticipate the upcoming NFT drop. This approach leverages the power of exclusivity and rewards, two key drivers in the NFT space.

Understanding Cryptocurrency Airdrops

At their core, crypto airdrops are promotional activities typically carried out by blockchain-based startups to jumpstart their virtual currency projects. The main objective is to spread awareness about the cryptocurrency and encourage more people to trade it when it is eventually listed on an exchange as an initial coin offering (ICO).

You may find airdrops promoted on a company's website, social media channels, and various cryptocurrency forums. But a more common practice is when projects don’t tell you anything about a potential airdrop and then suddenly distribute tokens to their users. The distribution of coins or tokens is usually targeted and sent only to specific wallets based on criteria like the blockchain network or the coins held in existing wallets.

To qualify for an airdrop, you might need to meet certain conditions. This could involve holding a minimum quantity of specific crypto coins in your wallet. Alternatively, you might need to complete specific tasks, such as posting about the currency on social media, connecting with a particular member of the blockchain project, or writing a blog post about the project.

Types of Crypto Airdrops

Infrastructure projects

If you're interested in airdrops from companies setting up their blockchain, you'll likely need to contribute to the network or provide liquidity to qualify. This might involve bridging ETH or other currencies onto the chain and providing liquidity to DeFi platforms. Some blockchain ecosystems might require you to acquire or mint an NFT.

In some cases, participation can be measured through activity on a testnet. This is an early version of a blockchain where users and developers can test the network. The advantage here is that your efforts only require time, not real money.

DeFi projects

For decentralized finance (DeFi) projects planning an airdrop, your participation on the platform is key. On rare occasions, a few token swaps on a decentralized exchange might be enough, it's more likely that providing liquidity, staking tokens, and participating in lending and borrowing will play a role. The bottom line that if you want to qualify for a DeFi airdrop, you need to use the platform actively.

Gaming projects

In the gaming space, token distribution methods can vary widely. Here are some common approaches:

1. Holding or staking an NFT: Token airdrops for gaming projects often go to those who hold specific NFTs, particularly "Genesis" NFTs.

2. Participating in play tests: If you're asked to share your wallet address during a play test, this participation might lead to future rewards.

3. Community activity: While optional, some projects reward users who are active in Discord, create content, or share their passion for the game in other ways.

4. Play-to-earn: This recent trend requires you to actively participate in a game's ecosystem and play the game to earn points that will lead towards an airdrop.

Crypto Airdrop Process

The journey of a crypto airdrop begins when a project or company decides there's a need for one. This decision might be driven by market strategies, a hard fork in the network, or a desire to incentivize existing investors. The first step is determining how the airdrop will be facilitated and who will be eligible to receive it.

Many types of airdrops rely on what's known as a snapshot. This is a capture of a specific moment in time that identifies who meets certain criteria. Any transactions occurring after the snapshot won't impact the results of the airdrop.

It's worth noting that coin or token prices that are already publicly traded often experience volatility around the time of snapshots. Users might buy or sell tokens to meet the snapshot criteria, leading to price fluctuations.

Once the list of airdrop recipients is finalized, the distribution often happens through smart contracts. The company may use its Treasury wallet for this process. To demonstrate transparency and fairness, they usually publicize the transaction block. But in most cases, airdrops are now distributed via a claim page. This means that instead of receiving airdrops to your wallet, you’ll visit a website and claim it yourself. This process also involves spending gas fees on claiming the airdrop.

Here's a step-by-step breakdown of how you might participate in an airdrop:

1. Research: You'll need to stay informed about legitimate airdrops. This can involve subscribing to newsletters, following reputable social media accounts, and joining airdrop communities. Alternatively, you could simply use platforms like Linity that curate airdrop opportunities for you.

2. Engagement: Once you've decided to participate in an airdrop, you'll need to complete certain tasks to be eligible. These might include using the platform, creating transaction volume, following social media accounts, retweeting posts, or joining Telegram or Discord groups.

3. Snapshot: The project will take a "snapshot" of all eligible participants at a predetermined time. This records your crypto address or other key information.

4. Announcement: After the snapshot, the project typically announces the airdrop campaign through its website, social media channels, or other communication platforms.

5. Token claim: Once the project announces the rewards, you'll usually need to claim your share of the airdrop. This typically involves connecting your wallet to a smart contract and signing a transaction.

Advantages and Disadvantages of Cryptocurrency Airdrops

Pros:

1. Free tokens: The most obvious benefit is that you're getting free crypto just for holding a token or completing tasks. These tokens could potentially be worth much more in the future if the project succeeds.

2. Community building: Airdrops often attract new users and build strong communities around projects. By participating, you can connect with like-minded crypto enthusiasts.

3. Rewards for early supporters: If you're an early user of a project, airdrops can be a way for the project to show appreciation. This could lead to significant gains if the project becomes successful.

4. Learning opportunity: Participating in airdrops can provide valuable learning experiences, especially if you're new to crypto. You'll gain hands-on experience with setting up wallets, completing tasks, and interacting with different blockchain networks.

Cons:

1. Risk of scams: Be cautious of airdrop scams designed to steal your personal information or cryptocurrencies. Some malicious actors create fake airdrops to trick you into sharing sensitive data or sending funds to their wallets.

2. Overwhelming tasks: Some airdrops require completing numerous complex tasks. These can become time-consuming and overwhelming, especially if you're participating in multiple airdrops.

3. Worthless tokens: Not all airdropped tokens hold value or have a strong use case. You might end up with tokens with little to no market demand, making them worthless in your portfolio.

Notable Crypto Airdrops

Hyperliquid

Hyperliquid is a decentralized derivatives platform that made history with one of the largest crypto airdrops ever conducted in 2024.

This groundbreaking event distributed 274 million HYPE tokens, reaching a peak value of $2.685 billion. It established itself as one of the most valuable token distributions in crypto history.

Distribution Highlights:

• The project distributed tokens to 94,000 unique wallet addresses.
• Individual rewards ranged from less than ten tokens to 970,000 tokens ($9.56 million).
• The average user received 2,915 tokens worth approximately $28,500.

Market Performance:

• The HYPE token demonstrated exceptional growth:
  • Launched at $2 on November 29
  • Peaked at $9.8 by December 1
  • Achieved a market cap of $3.3 billion

Read more about the Hyperliquid airdrop here.

Starknet

StarkNet is a blockchain platform designed to enhance Ethereum by making it faster and more secure, particularly for complex applications. It's beneficial for developers looking to build advanced apps and for users seeking faster and cheaper transactions.

To be eligible for the StarkNet airdrop, you needed to meet certain criteria. These included being an Ethereum independent staker, an Ethereum Liquid Staking Derivative (LSD), a non-Web3 developer, or a member of various groups within the StarkNet ecosystem.

The minimum criteria for eligibility included:

• Using the network for at least three independent months
• Generating a minimum of six transactions
• Conducting transactions worth no less than $100
• Holding at least 0.005 ETH at the time of the snapshot (November 15, 2023)

Based on this data, the estimated cost of these activities was around $150, including volume, gas fees, and minimum holding at the snapshot time.

In terms of rewards, individual addresses received between 500 to 10,000 $STRK tokens during the Starknet Airdrop. With $STRK token's listing price at approximately $2.7, the airdrop value ranged from a minimum of $1,350 to a maximum of $27,000.

Read more about the Starknet airdrop results here.

Celestia

Celestia is a modular blockchain network that enhances scalability by distributing functions across multiple chains. It serves as a specialized Layer 1 (L1) blockchain that focuses on data availability, while Layer 2 (L2) chains handle execution tasks.

The Celestia airdrop required participation in certain activities from the Genesis Drop, which allocated 6% of the total supply (60 million TIA). Due to the variety of activities involved, determining the exact cost of this opportunity was challenging.

For instance, being active on other Layer 2 networks like Arbitrum or Optimism could have made you eligible for hundreds of dollars worth of tokens while running a node incurred higher costs.

Rewards varied widely. The smallest token amount was 160 $TIA, equivalent to $440 at listing. Node operators received between 6,000 and 8,000 $TIA tokens per node, amounting to $16,000 - $21,000 during the listing period.

The price surge a few weeks after listing made the $TIA airdrop particularly popular. When the token hit its all-time high of $20, even the smallest allocation was worth $3,200.

Learn about the Celestia airdrop opportunity here.

LOOKS

The LOOKS airdrop is a classic example of using an airdrop to jumpstart user adoption for a crypto project. LOOKS is the reward and utility token of LooksRare, an NFT trading platform on Ethereum. LooksRare entered a market dominated by OpenSea, which had captured the majority of NFT trading volume.

To incentivize users to switch to their platform, LooksRare airdropped 12% of the total LOOKS supply to anyone with a combined trading volume of 3 ETH or more on OpenSea for the six months before the snapshot (June – December 2021).

Read more on the LooksRare airdrop opportunity.

UNI

UNI is the governance token of Uniswap, the most popular decentralized exchange (DEX) on Ethereum. Uniswap released UNI in response to a competing DEX that had managed to attract more than 50% of Uniswap's liquidity.

Uniswap airdropped 400 UNI tokens to each wallet that had used its exchange to counter this trend. This defensive move proved successful, reversing the liquidity drain and significantly boosting Uniswap's total value locked (TVL), a key metric for DEX liquidity.

Learn more about the Uniswap airdrop results.

What to Look Out for With Crypto Airdrops

Crypto Airdrop Scams

While free crypto is enticing, you need to be aware of potential scams. Some airdrops are actually "dusting" schemes or "poisoning attacks." Here's what to watch out for:

Dusting: In this scenario, attackers send a very small amount of cryptocurrency to your wallet, essentially "dusting" it with their tokens. Their goal is to make you curious about the source of these tokens, leading you to interact with them. Doing so might inadvertently expose your personal information or compromise your wallet's security.

Poisoning attack: In this type of scam, a hacker creates a wallet address that looks very similar to your own, typically differing by just a few characters. They then spam you with tiny transactions to this fake address. If you accidentally use their address instead of yours when receiving funds, your money will go straight to the hacker's wallet.

To protect yourself:

• Stay informed about crypto news and potential scam warnings.
• Participate in airdrops only through credible platforms with a history of hosting legitimate projects.
• Use wallets with proven security track records.
• Be extremely cautious about providing sensitive information or access to your wallet.

Crypto Airdrops and Taxes

The tax implications of crypto airdrops vary by country. Some jurisdictions view airdrops as securities and subject them to strict tax regulations. Others take a more lenient approach, considering airdrops as marketing tactics rather than financial instruments.

It's crucial to check if your jurisdiction requires you to declare airdrops on your tax return. Failing to report airdrop income could lead to penalties from tax authorities.

Value Dilution

Another risk to consider is the potential for token value dilution. When a project distributes a large number of tokens through an airdrop, it can lead to oversupply and potentially decrease the token's value.

Before investing time and resources into an airdrop, evaluate the long-term prospects of the project and consider this risk. Responsible projects use airdrops sparingly and distribute a reasonable amount in relation to their total token supply.

Airdrop Farming

Airdrop farming refers to actively seeking out and participating in as many airdrops as possible to receive free tokens.

While it might seem tempting, it comes with certain risks:

1. Time and effort spent on airdrop farming may divert your attention from other potentially more rewarding activities in the crypto space.

2. In the rush to participate in multiple airdrops, you might not spend enough time carefully checking each project or considering risks like market volatility and regulatory uncertainty.

3. The tokens you receive might not have significant value, making your efforts less worthwhile than anticipated.

How Linity Simplifies the Airdrop Grind

Participating in airdrops can be a great way to earn free crypto, but it's challenging. It requires consistent effort over time and can be pretty complex, especially for newcomers to the crypto space. This is where Linity comes in - a platform designed to make navigating airdrops simpler and more efficient.

Here's how Linity can help you maximize your airdrop potential:

Opportunity Scouting & Project Analysis

One of the most time-consuming aspects of participating in airdrops is finding and analyzing opportunities. This process can be tedious and repetitive, often consuming all the time you've allocated for airdrop grinding.

Linity's team of analysts works hard to provide you with this information, allowing you to focus on the farming part. As of November 2024, Linity’s platform boasts over 224 project reviews and 116 opportunities, with these numbers growing daily. Every time a new project or opportunity page is published, you'll find it on Linity's platform feed and Discord channel.

New Tasks & Step-by-Step Guides

Staying updated on new information and identifying and completing new missions is crucial for maximizing your chances of qualifying for an airdrop. However, tracking multiple opportunities can be challenging, as not all projects update simultaneously.

Linity's analysts spend time on social media and project pages to find the latest activities for you, ensuring you don't miss anything. They create easy-to-understand guides for performing activities safely and easily. If there are issues with an activity, you'll know how to avoid them and proceed smoothly.

Community Farming

Linity is more than just a platform - it's a community. Recognizing that farming can be mentally exhausting, Linity has created a space to discuss the latest news, projects, and airdrops with like-minded individuals.

Their "Farm with Fam" initiative, a community farming call hosted every Tuesday, allows you to farm alongside others and ask questions in real time. This communal approach not only makes the process more enjoyable but also provides a support network when you encounter challenges.

Educational Content and Activities

At its core, Linity is an educational platform that gives you the tools to become a Web3 expert. Here are some of the educational initiatives they've undertaken:

• Community Campaigns: These events allow Linity community members to explore the web3 world with partners, answer questions about airdrops and crypto, and learn about crypto culture while winning rewards.

• X Spaces: Linity hosts regular X Spaces to keep you updated with the latest trends in the crypto world, covering topics like news in crypto, Memecoins, AI, Liquid Staking Tokens, and more.

• Guides: Linity has created numerous guides to help you start your crypto journey on the right foot, covering topics like managing gas fees during NFT mints, how to mint an NFT from the contract, and how to set up various types of crypto wallets.

By leveraging Linity's resources, you can streamline your airdrop participation process, stay informed about the latest opportunities, and continually expand your crypto knowledge. This comprehensive approach not only increases your chances of success with airdrops but also contributes to your overall growth in the crypto space.

In conclusion, while crypto airdrops offer exciting opportunities for free tokens, they require careful navigation. By staying informed, using reputable platforms like Linity, and approaching airdrops with caution, you can maximize your potential gains while minimizing risks. Remember, the crypto world is ever-evolving, so continuous learning and adaptation are key to success in this space.