In the ever-evolving Web3 world, cryptocurrency airdrops are the latest way to distribute tokens, cultivate community, and improve brand exposure. These marketing gimmicks present an opportunity for users to get free tokens, which are worth thousands of dollars, just for qualifying basic eligibility checks or by performing market acts.
As exciting as these airdrops can be, they are also filled with risks, especially scams that are designed to trick users into exposing their wallets. This blog explains everything you need to know about crypto airdrops. In this blog, you will learn how airdrops work, how to identify genuine airdrop schemes, and how to avoid airdrop scams altogether.
What Are Crypto Airdrops?
A crypto-airdrop is an event where a blockchain project distributes free tokens to the community to raise awareness and increase adoption. Here, the user does not have to do much; according to various airdrops, the users simply have to hold a wallet, register, or complete a few tasks online.
You must wonder, how is an airdrop any different from ICOs or token sales? ICOs and token sales require their users to pay money, whereas during airdrop events, users are rewarded for participating, for being an early investor, or just for being a fan of the brand. These airdrop events became famous during 2017’s ICO craze. Airdrops have emerged as a tremendous weapon in the arsenal for distribution of token ownership, rewarding the community, and providing viral feedback loops.
Why Do Projects Use Airdrops?
Here are some of the reasons why a crypto airdrop is used, depending on a project’s stage and approach:
New tokens are difficult to market: Airdrops are quick to get people’s attention, especially when they are given to influential communities.
User Onboarding: Projects conduct token giveaways or airdrops to incentivize users to sign up, test the product, and provide feedback.
Distribution of Tokens: Web3 applications should be decentralized. Airdrops are intended to prevent centralization of ownership by distributing tokens among a large number of wallets.
Loyalty Rewards: If you are an active community member for a long period of time, you are rewarded with tokens during the airdrop events.
Common Types of Crypto Airdrops
Not all airdrops are equal. Every airdrop event is organized to serve a different purpose; some are designed to reward users, others are designed to generate hype, build communities, or even test a new blockchain feature.
Let’s quickly have a look at all the categories of airdrop for your better understanding.
Regular Airdrops: Users are given tokens simply for signing up or registering. These are the simplest form of airdrops.
Holder Airdrops: Any user who holds specific tokens will receive airdrop tokens. The distribution is based on the number of tokens held in their wallet at the time of the snapshot.
Task-Based Airdrops: Users perform tasks such as following social profiles, posting on Twitter, or entering a Telegram group, and are rewarded for the same.
Valuable Airdrop: Projects thank some of their active community members or early supporters by distributing some tokens to the users without publicly disclosing that they have delivered them.
Bounty Airdrops: These are given in exchange for specific activities such as writing blog posts, graphic designs, translation activities, and more.
Fork Airdrops: These tokens are distributed amongst the people who held the original coin before the hard fork, as the network splits and creates a new version.
How to Get Started With Airdrops
Receiving an airdrop is easy, but one has to do it both safely and effectively. We have listed a guide on how to get started with airdrops safely and effectively:
Get a Web3-Compatible Wallet: The majority of airdrops are dropped on top of Ethereum or other EVM-compatible chains. It is a very user-friendly way to dip your toes into the crypto world, and MetaMask is a great place to begin.
Use a Specific Airdrop Wallet: To contain risks, individuals should create one wallet to claim airdrops. In this way, if at all the airdrop is a scam, the individual’s main money is not at any risk. One can also avoid junk tokens in their main wallet, and this makes it easier to track airdrops in one place.
Get Involved Early: Participate in project communities. One can enrol themselves for the testnet or beta phases and become an integral part of the testing phase. This participation acts as a bonus.
Keep Tabs on Reliable Airdrop Sources and Stay Updated: Make sure to follow the Twitter account, join Discord servers, or check out good airdrop aggregators that are updated in real time. As the crypto industry moves quickly, one should keep themselves updated by following social media, subscribing to their newsletters. Stay alert for deadlines, changes in eligibility, new snapshot date or time, or any changes in claiming procedure.
Minimize Gas Costs If You Can: Some airdrops need to be claimed by interacting with a smart contract, which costs gas. Assess weighing whether it is worth the fee. If the gas fee is too high, it might not be worth claiming. Wait it out, once the fees are lower, one can claim the airdrop, or else one can simply skip the airdrop.
Once you’re comfortable claiming airdrops safely, you can learn how to optimize them for maximum returns in our comprehensive crypto airdrop strategy guide.
The Growing Threat of Airdrop Scams
Increased interest in airdrops has led to malicious intent. While most of these airdrops are legit rewarding but scammers take advantage of the enthusiasm around token airdrops through a range of tricks. It is necessary to know how to spot a fraudulent airdrop scheme. A few of these tricks have been listed below:
Fake Airdrop Sites: Scammers clone websites to mimic genuine projects, aimed at deceiving users into sharing their wallet credentials.
Phishing Links: Malicious links are embedded in the “claim” buttons that drain your wallet when an individual clicks on them.
Dummy Accounts: Bots and fake influencers push for airdrop scams on Twitter, Telegram, or Discord, and other social media platforms.
Fake Wallet Connect Prompts: These prompts ask individuals to connect wallets and secretly get access to their funds.
Smart Contract Traps: One might click some links that cause gasless approvals and allow a scammer to transfer your tokens.
How to Identify and Avoid Airdrop Scams
As stated above, airdrops can be rewarding, but they attract bad actors as well. To stay safe, we have listed down a few simple practices that can protect your wallet and personal information as well:
Never Give Away Your Seed Phrase: No legitimate project will ever request access to your seed phrase.
Utilize a Hardware Wallet: Cold wallets are another line of defense against unauthorized access. Make sure that you utilize them.
Fact-Check Links: Never trust links. Instead of clicking on any promoted Twitter link or sponsored Facebook post, bookmark the official sites.
Verify the Project Genuineness: Main projects are usually announced on the project’s official website or official social platform. Refer to those announcements.
Don’t Over-Personalise DApps: Revoke DApp powers routinely, with known resources to avoid risks.
Exercise Social Caution: No matter how tempting the offer is, do not trust links from DMs or fake threats.
If something seems too good to be true, it likely is. Airdrop scams depend on urgency and FOMO to overcome one’s sensibilities.
Legal and Tax Considerations
Airdrops could be considered taxable events, depending on one’s jurisdiction. In some countries, if one receives tokens through an airdrop, they must report them as income based on their market value at the time of receipt.
Record Everything: Keep a record of the airdrop date, the tokens you received, and their value in your minimum wage.
Use Tax Tools: Consider using tax crypto software to keep tabs on income and gains.
Review Regulations: Tax rules can vary from country to country. It is recommended that local laws be studied before claiming or cashing out airdrops.
Advanced Airdrop Hunting Tips
The most experienced airdrop hunters have developed a more strategic approach, such as:
Target Ecosystems With Organic Growth: One should get involved early in the networks so one can get rewarded for their loyalty. For example, projects such as zkSync, StarkNet, or Base usually reward their loyal users.
Participate in Testnets: There are many projects that reward their users for simply interacting with their testnet. It is usually free and shows early commitment.
Engage with Protocols Often: Using dApps and protocols regularly can help an individual become eligible for multiple airdrops over time.
Participate on Social Platforms: A few projects take into consideration the user’s Twitter or Discord participation to see if they are eligible for the airdrop.
Employ Multi-Wallet Setups: This one is somewhat controversial, but airdrop farmers use multiple wallets to increase their odds. This approach walks on the ethical line, proceeds with caution, and ethics.
Are Crypto Airdrops Worth it?
Yes, with caveats. Airdrops provide a relatively low-barrier entry to earning crypto, but they are not the lottery ticket they once were. With the level of competitiveness and more convincing scams today, the requirement for security and selective interaction is increasingly important. The best airdrop hunters are not just active, but they are strategic, disciplined, and constantly learning.
Not every airdrop will be a big win, but over time, the value may add up big time.
Final Thoughts
Crypto airdrops remain as some of the most interesting opportunities in the decentralized economy, which offers value in exchange for attention, play, or loyalty. But there are strings attached to this opportunity – both visible and invisible.
Whether you are a newcomer just starting out or you are a veteran of DeFi, it is necessary to understand how airdrops work and how scams mimic them. If you have the tools, the mindset, and the willpower, airdrops can be a great way to get a little extra value on your crypto journey.
In the end, your greatest protection is not luck; it’s knowledge.
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