Beginners Guide to Crypto Airdrop
If you’ve been active in the crypto space recently, you’ve likely heard or come across the term crypto airdrop before. Airdrops have been a buzzword on social media platforms and mentioned in newsletters, usually following the announcement of a new cryptocurrency project.
In this article, we’ll be discussing a general overview of crypto airdrops, their purposes, and how you can potentially participate one in the future.
What is a crypto airdrop?
Within the context of cryptocurrency, an airdrop is the practice of distributing coins or tokens to numerous wallet addresses for free, or in exchange for fulfilling a requirement.
This requirement usually comes in the form of a small promotional service such as following a designated social media channel, reposting content related to the airdrop campaign, tagging or inviting other users, or anything in between.
What is the purpose of a crypto airdrop?
Airdrops are often used as a marketing strategy to promote upcoming projects, strengthen brand awareness, or build momentum for a cryptocurrency project.
A genuine crypto airdrop is executed purely for promotional purposes, not for seeking capital gain or investment in the currency. And as we prefaced above, to qualify for the airdrop recipients are usually required to perform a small promotional service to support the crypto project hosting the airdrop.
Additionally, a crypto airdrop can also be used to reward loyalty for subscribing to a certain cryptocurrency or blockchain. In this case, the recipient may need to hold a certain minimum quantity of the crypto coin or token in their wallet to receive the airdrop.
Advantages of crypto airdrops
Generate awareness and interest
As we mentioned above, recipients of crypto airdrops are usually required to perform a task involving some type of promotional service – whether that be a social media share or sending invites to their network of connections, etc. This in turn generates awareness and interest for the crypto project hosting the airdrop.
Build engagement with the community
Following the promotional tasks performed by recipients of the airdrop, more and more people will eventually get exposed to the crypto project itself. Whether that’s a new cryptocurrency, a new blockchain, or an ongoing project – this exposure generates engagement and discussions among the community and audience.
A win for both parties
Crypto airdrops are a popular marketing strategy due to the exposure and interest it generates with their customers and audience. The benefit goes both ways, in that recipients also receive a sum of coins or tokens to their wallet in exchange for the task they complete to qualify for the crypto airdrop.
Crypto airdrops in 2020
Earlier this year on September 17th, 2020, the Ethereum-based cryptocurrency exchange of Uniswap announced on Twitter that it will be conducting a crypto airdrop to everyone who has used Uniswap before the 1st of September, 2020. Uniswap has estimated that over 250,000 accounts are eligible for the airdrop.
As of this writing, Uniswap ranks #29 on Coin Market Cap’s rankings with a market cap of just over $1 Billion USD.
Ripple Labs, the company behind XRP, planned to add a new protocol to their blockchain in December of 2020 in order to compete with its rivals, namely Ethereum. This new protocol is the Flare Network, which will bring added support to XRP – specifically functionality pertaining to decentralized finance, or DeFi to its ledger.
To kickstart this new crypto project, Flare Network has distributed its native tokens called the Spark (FLR) tokens to anyone who had XRP tokens via airdrop as of December 12th, 2020.
The airdrop has given investors incentives to buy XRP following the airdrop announcement. Over 45 billion Spark tokens were distributed to eligible holders of XRP.
To summarize, crypto airdrops are effective marketing practices that provide promotional benefits and exposure to a crypto project and/or exchange, as well as benefits the recipients who are eligible to receive the coins or tokens during the airdrop.
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