How to earn crypto passive income with forks and airdrops?

When cryptocurrencies like Bitcoin (BTC) go through bear phases like the one we currently find ourselves in, the idea of earning passive income from one’s holdings becomes all the more attractive for long-term investors.

Different methods such as staking, lending, cloud mining, and yield farming have become popular in the past few years and involve rewarding investors with money or tokens for the crypto tokens invested in the mechanism.

However, with hard forks or airdrops, users who are active in the crypto ecosystem can forage for tokens or projects that offer additional tokens in proportion to their vested holdings as a reward for a variety of reasons.

Since both are intended at increasing the popularity of the project or as part of a promotional campaign, hard forks and airdrops work differently and come into existence through completely unique mechanisms.

Let us look at what differentiates crypto airdrops from hard forks and how one can benefit from them when invested in the crypto market for the long term.

What is a crypto airdrop and how does it work?

Considered to be like manna from heaven for crypto fans willing to experiment with different projects, crypto airdrops require minimum technical knowledge and potentially lower risks.

A crypto airdrop is a gratuitous distribution of a cryptocurrency coin or token to existing token holders, also known as token giveaways colloquially. Usually associated with the launch of a new project or cryptocurrency, the intent of an airdrop is to gain more user traction in a market that is flooded with thousands of crypto tokens and coins.

Purely promotional in nature, users do not have control over when an airdrop might occur, and it is usually done by developers or crypto entrepreneurs to reward existing token holders with additional tokens or coins for free.

The quantum of tokens awarded is based on the invested amount or contributions made toward a project and is similar to how traditional brands offer freebies to popularize a new product offering.

There are two types of crypto airdrops: retroactive airdrops and takeover airdrops, with key differences between the two being at which stage they are being offered and their specific purpose.

A retroactive airdrop is generally announced when an existing blockchain protocol is planning to unveil its native crypto token and rewards early users or those who have contributed to the project prior to a particular date.

It is a very popular tool for creating hype around the soon-to-be-launched token. Meanwhile, it also serves as a liquidity creation mechanism and helps with audience engagement by awarding tokens in exchange for retweets, feedback or even increasing followers on social media.

Takeover airdrops are employed when decentralized finance (DeFi) protocols want to snatch users away from the competition or increase their chances of retaining them by offering greater rewards.

While it is a comparatively more aggressive form of an airdrop, takeover airdrops are targeted at liquidity providers and users who have displayed higher engagement in activities such as staking so as to attract them away from a competing DeFi protocol.

DeFi aggregator 1INCH conducted a number of airdrops with the specific intention of enticing rival Uniswap users to shift to its platform, rewarding specific user sets in a series of airdrops and acting as a classic example of how free crypto airdrops are utilized.

Advantages and disadvantages of crypto airdrops

They have long been considered an unorthodox form of radical marketing in the crypto space, but crypto airdrops have become increasingly popular. Innumerable projects use this method to spur the adoption of their new crypto tokens.

Airdrops offer superlative benefits for crypto entrepreneurs and investors alike, making them the most preferred marketing tool to create initial hype and catalyze user traction — two elements…