What is a crypto airdrop and how does it work?

For most crypto investors, there is nothing more important than making a return on their investment. Thanks to the volatility, this can be done quickly or it can be a hugely difficult task. That’s why crypto airdrops are an inexpensive way to make additional returns on your portfolio. After all, airdrop tokens are free and never hurt, right?

Almost daily there are new crypto airdrops, with some easier to obtain than others. Not every airdrop is equally reliable. Crypto airdrops always seem very lucrative at first, but they can also cause problems. To make sure you can profit from crypto airdrops, but also see through any pitfalls, you can read all about crypto airdrops and how they work in this article!

What is a crypto airdrop?

A crypto airdrop is a method by which you can earn free crypto from a crypto project. There are several ways to receive these tokens. Many times an airdrop is associated with free cryptocurrencies, but this is not necessarily true. You have to put in time and effort or you may have to deal with transaction fees. However, it is also possible to participate in an airdrop for free!

Related: What is cryptocurrency? A beginner’s guide to digital currency

You’re probably wondering; how do crypto airdrops work? Crypto projects have a certain amount of available tokens that they give to people who meet eligibility requirements. By completing tasks, you can become eligible for these tokens. There are several ways to participate in crypto airdrops. Often you have to sign up for an airdrop or perform other actions. After completing tasks or winning the tokens, you can claim them or they will be deposited into your wallet.

Examples of crypto airdrops

There have been hundreds of airdrops in the past, including the airdrops of leading crypto projects. There are therefore a huge number of examples of crypto airdrops. Airdrops have been occurring for years in the crypto world. The first airdrop ever took place back in 2014. Back then, a crypto project even handed out 50% of all tokens during an airdrop.

The crypto project, called Auroracoin, has its cryptocurrency token, known as AUR. The project had plans to make AUR the national cryptocurrency of Iceland. Therefore, the entire AUR airdrop went to Icelandic citizens, who could receive a total of 31.8 AUR per individual.

Many airdrops also followed in the years after the Auroracoin airdrop, including those of slightly more well-known cryptocurrencies. For example, in 2016 and 2017, respectively, Stellar Lumens (XLM) and Bitcoin Cash (BCH) organized cryptocurrency airdrops, distributing their airdrop coins to Bitcoin owners. Bitcoin Cash gave away one Bitcoin Cash token per Bitcoin, which was worth thousands of dollars at its peak.

Another well-known crypto airdrop is UniSwap’s airdrop, in which the governance token UNI was given out to users of the decentralized exchange (DEX) in 2020. In total, over 250,000 accounts received 400 UNI per account, which totals thousands of dollars per person! A very lucrative airdrop if you can sell your UNI tokens at the right time.

Different types of crypto airdrops

There are several different types of airdrops, all of which have unique characteristics. Crypto projects often see airdrops as a marketing tool where they try to grow as a project through the airdrop. For example, projects may be looking for more brand awareness and new users or they may want to reward their first users.

The motive of a crypto project is of course related to the type of airdrop. There are a few types of crypto airdrops that are common, namely:

Standard airdrop

In a standard airdrop, tokens are distributed for free and you do not have to perform any particular actions. All you have to do is create an account somewhere and then give your wallet address. There may be only a certain amount of tokens available for the airdrop, so you need to get there early.

These crypto airdrops are hugely popular because you can participate easily and it is free crypto because of…