Airdrops are fast gaining popularity in blockchain technology for several reasons. In this blog post, we will answer the pressing question: “how does crypto airdrop work?” We’ll take you through what airdrops are and how to understand how they work.
What Are Airdrops?
An airdrop is the distribution of a cryptocurrency token or coin used by startups as a marketing strategy. These tokens are usually free; think of it as free “money” or a giveaway.
Startups often use airdrops when launching a new cryptocurrency, primarily to gain attention, attract investors, or build a community base. The use of airdrops is a win-win for both the startups and the receiver. This is because it’s a cost-effective way to spread awareness about their brand, and the token owners get free coins.
How Does Crypto Airdrop Work?
Airdrops are mainly used when projects are announced. When crypto startups announce projects, there is an upcoming airdrop with requirements to increase participation. This requirement could include holding a certain amount of a specific cryptocurrency in your wallet and completing tasks such as joining social media channels or signing up for newsletters. Once you meet the requirements, you’ll receive the airdropped tokens directly into your cryptocurrency wallet.
Types Of Airdrops
- Standard Airdrops:
These are the most common type of airdrops, where tokens are distributed “almost” for free. To get these airdrops, you have to do the least work to be eligible. In standard airdrops, users typically receive tokens simply for holding a specific cryptocurrency in their wallets or signing up.
- Holder Airdrops:
This system is used to reward loyal members. In holder airdrops, they receive tokens based on the amount of a specific cryptocurrency they hold in their wallet at the time without any further action needed like signing up. The more tokens a participant holds, the more tokens they are likely to receive in the airdrop. Holder airdrops encourage users to maintain or increase their holdings of a particular cryptocurrency to receive a larger share of the airdropped tokens potentially.
- Referral Airdrops:
Referral airdrops involve participants receiving additional tokens by referring others to participate in the airdrop. Participants can earn extra tokens by sharing the airdrop information with their network, encouraging others to join the airdrop, and expanding the reach of the project. Most start-ups make use of referral airdrops to help increase awareness of the project and attract new customers through word-of-mouth marketing.
- Bounty Airdrops:
Bounty airdrops require participants to earn tokens by completing specific tasks or actions set by the project team. These tasks can include promoting the project on social media, creating content such as articles or videos, participating in community discussions, or engaging in other promotional activities.
What To Do After Receiving Airdrops Token?
After receiving airdropped tokens, it’s important to secure them properly. You can do this by transferring them to another wallet; after securing them, take your time to understand the project behind the airdropped tokens. Learn about its team, technology, use case, and roadmap to evaluate its long-term potential. This will help you manage the token properly and decide whether to invest or trade it.
Wrapping Up
Airdrops are a way for crypto start-ups to engage with their communities and attract new users. As a user, you need to understand the different types of airdrops, including standard, holder, referral, and bounty airdrops because it will help make the right decisions in your crypto journey.