What is Crypto Airdrop?

what is crypto airdrop

It can be challenging for new projects to stand out in the crowded world of cryptocurrencies. One popular way to accomplish this is through a crypto airdrop. But what is a crypto airdrop, and why is it vital for these projects? Let’s learn more in this article.

What is crypto airdrop?

Crypto airdrop is a marketing strategy where cryptocurrency projects give away free coins, tokens, or NFTs to users. The goal is to generate interest, promote a new project, attract new users, and encourage people to join the project’s community. The project aims to increase visibility and excitement by giving away tokens, a move that could potentially stimulate more trading activity when the token is listed on exchanges. This approach helps build a community and supports the project’s growth and success in the market.

Why does crypto need airdrop? An honest thought

In the world of cryptocurrency, airdrops have become a key tool for projects looking to make a splash and engage with various audiences. Airdrops involve distributing free tokens to users, and this approach benefits different groups in several ways. Here’s how airdrops can be advantageous for new users, project communities, and token trading:

New Users:

Airdrops attract new users by distributing free tokens. When people receive these tokens without any cost, they are more likely to check out the project and explore what it offers. This initial exposure can lead to greater interest and engagement with the project’s products or services.

Project Communities:

By giving away free tokens, projects can boost involvement within their communities. This free distribution encourages recipients to become more active, share information about the project, and invite others to join. As a result, the project builds a more engaged and supportive community that can help drive its growth and success.

The projects:

  • Airdrop is a new approach for crypto projects to attract users, boosting their TVL and trading volume, thereby generating higher revenue and increasing the project’s popularity.
  • Airdrops also benefit the trading of tokens on exchanges. When a larger number of people hold and use a token, it leads to increased trading activity. Higher trading volumes can help stabilize the token’s price and make it more appealing to investors, contributing to its overall market stability and growth.

However, it’s important to view airdrops objectively. Behind generous airdrops, projects often have clear marketing objectives. They aim to increase their reach, attract investor attention, and create FOMO (fear of missing out). Not all airdrops are profitable. Many projects are simply “pump and dump” schemes, resulting in losses for retail investors.

How crypto airdrop works in 2024

Before 2021: 

In the early days of crypto airdrops, the process was relatively simple. Users could receive free tokens just by filling out a form, following a project on social media, or participating in community activities. People often viewed these airdrops as genuine examples of “free money,” given their minimal requirements and the potential for significant rewards in the event of project success.

Notable projects for this period include: Uniswap (airdrop worth $6.4B ), 1Inch (airdrop worth $783M).

2022-2023: 

As the crypto industry matured, so did the mechanisms behind airdrops. The airdrop of Arbitrum (ARB) in 2023 marked a significant milestone in this evolution. Arbitrum introduced a more sophisticated and fair mechanism that rewarded users based on their actual engagement and contributions to the project. This approach ensured the distribution of tokens to active and loyal users instead of those seeking a quick profit. The success of Arbitrum’s airdrop highlighted the importance of a well-thought-out distribution strategy, setting a new standard for the industry.

Other notable airdrops, including: Optimism ($763M), Aptos ($432M).

2024: 

In 2024, crypto airdrops have evolved to be more sophisticated and targeted. 

Projects now include gamification, which requires users to complete tasks, as well as anti-sybil measures to ensure only real users participate.

The weight of depositing assets (providing liquidity, staking assets, etc.) onto projects is becoming a more important metric determining the contribution of users to projects, making it more difficult for users with low capital to be involved.

For example, Starknet’s airdrop strategy reflects these trends. Instead of simply giving tokens away, Starknet rewarded users who actively interacted with their ecosystem, such as by using their testnet, participating in governance, and especially providing liquidity. They also implemented strong anti-sybil measures, ensuring that only genuine users who added value to the network received tokens. This approach helped build a committed community aligned with Starknet’s long-term goals.

Airdrops are increasingly community-driven, with users helping decide distribution criteria and focusing on rewarding contributors like early adopters and long-term holders.

Airdrop also became more popular, and more new users joined the crypto world via participating in airdrop. 

Notable projects for this period include: zkSync (airdrop worth $1.1B), Wormhole (airdrop worth $1.1B), LayerZero (airdrop worth $470M).

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