What is Airdrop? Everything you need to know about the Airdrop in 2022
- 1. What is Airdrop?
- 2. What is the difference between Airdrop and Bounty?
- 3. The Airdrop was born for what?
- 4. How does Airdrop work?
- 5. Types of Airdrops
- 5.1 Exclusive
- 5.2 Holder
- 6. Popular Forms of Airdrop
- 6.1 Retroactive
- 6.2 Hold and Stake
- 6.3 Performing tasks
- 7. Advantages and disadvantages of Crypto Airdrop
- 7.1 Advantages
- 7.2 Disadvantages
- 7.2.1 Potential for many fraud risks
- 7.2.2 Takes a specific time to experience the product
- 7.2.3 Number of Split Rewards
- 7.2.4 Uncertainty of Transparency
- 8. How to do an effective Crypto Airdrop
- 8.1 Step 1: Preparation
- 8.2 Step 2: Search and research information
- 8.3 Step 3: Carrying out the task
- 8.4 Step 4: Waiting for results
- 9. How to do Airdrop successfully?
- 9.1 Airdrop implementation with little capital
- 9.2 Implement Airdrop with large capital
- 10. Mistakes that are easy to make when performing Airdrops
- 10.1 Unpredictable costs
- 10.2 Performing a Half Airdrop
Airdrop is a pretty hot keyword in today's Crypto market. Therefore, there are many questions about it, such as What is Airdrop? Is Airdrop Coin safe? How to avoid being a "scam",... In this article, BHO Network will answer all for you. Click here to see it now!
1. What is Airdrop?
What is Airdrop Coin? Crypto airdrop is the donation of digital assets from a Crypto project to various wallets. By giving out Coins or Tokens to existing or potential users, the project will increase awareness among the public.
Usually, Tokens are distributed for free, but some Airdrops will require users to do tasks to receive Tokens. Crypto airdrops gained popularity during the initial coin offering (ICO) craze in 2017. It remains a marketing strategy used by many Crypto projects to this day.
2. What is the difference between Airdrop and Bounty?
It is essential to note the following primary point: Airdrop often gives free Coins with simple requests such as leaving information or sharing articles, while Bounty requires users to do tasks to earn Coins.
Bounty is when we hunt for bonuses based on completing tasks that the project offers. Tasks include finding bugs, designing, translating, and writing content. In return, users are rewarded with Coins or Tokens.
With Crypto Airdrop, users often can't be sure of the time of the release of Coins and Tokens. They only hope for rewards from new projects.
3. The Airdrop was born for what?
Airdrop is a promotional activity usually done by Blockchain startups to launch a Crypto project. It aims to increase awareness of the Crypto project and attract more traders when it lists an Initial Coin Offering (ICO) on the exchange.
Airdrops are often advertised on the company's website and Crypto forums. Coins and Tokens are only sent to existing Crypto wallet holders, usually BitCoin or Ethereum traders.
To be eligible for the gift, the recipient may need to secure a minimum amount of Crypto in his wallet. In addition, they sometimes need to perform specific tasks, such as posting about currency on a social media forum, connecting with a particular member of the Blockchain project, or writing a post on the blockchain blog.
Crypto Airdrops come in both good and bad — beware. A legitimate airdrop will never call for investment; its purpose is advertising.
There will always be some Crypto scams like the Dusting attack, where the user is sent a small amount of Crypto and exposed to the hacker when using this amount. To prevent Airdrop scams, be wary of strange deposits going into your Crypto wallet.
4. How does Airdrop work?
There are different types of Crypto Airdrops, but they usually consist of a small amount of Crypto being distributed to several wallets (usually Ethereum or Binance Smart Chain). Although less common, some projects give away NFT instead of regular Crypto.
Some projects will issue Crypto Airdrops without asking for anything, while others will ask you to do a simple task before claiming.
These tasks include following social media accounts, signing up for newsletters, or keeping minimal money in your wallet. However, users are not always sure of receiving the Crypto that the project Airdropped.
Sometimes, airdrops are only awarded to wallets interacting with the project's platform before a specific deadline. 1INCH and Uniswap are typical projects that have used this approach to support early adopters. Unlike regular airdrops, these airdrops are worth thousands of dollars.
5. Types of Airdrops
As we have seen, there are different ways to conduct a Crypto Airdrop. In addition to the standard Airdrop that transfers Crypto to some wallets, there are also Bounty, exclusive, and holder types.
An exclusive Airdrop that sends Crypto only to specified wallets. Typically, recipients have a long history with the project, such as being active community members or early project supporters.
In September 2020, decentralized exchange (DEX) Uniswap issued 400 UNIs to each wallet that interacted with their protocol before a specific deadline. These governance tokens grant its holders the right to vote on matters related to the project's future development.
The holder is an Airdrop exclusively for those who hold a certain amount of Crypto in their wallet. The project side will save the wallet balance information of all users at a specific time. If the reconciliation finds that this balance reaches a minimum, the wallet owner will be entitled to claim free Tokens.
6. Popular Forms of Airdrop
Airdrops are taking the popular forms Retroactive, Hold and Stake, and Mission.
Retroactive is a form of Airdrop Crypto for users who have owned, supported, or contributed to product development. This type of Airdrop usually rewards users with tokens.
This form became popular when Uniswap started Airdropping UNI - Uniswap's Token for users who used to interact with the project.
At that time, the UNIs that have just been sent to the user's wallet will be listed on Binance for about $3-4, which means each wallet will receive ~$1,600. Then, 1INCH with two Airdrop Coins for users value ~$1,700 for the 1st time and ~$2,400 for the 2nd time.
With this Airdrop, the Token will be in the hands of actual users. Usually, they will keep them for project administration purposes.
6.2 Hold and Stake
This is the holder holding and locking (hold and stake) several Tokens to receive rewards. Users were able to receive the Crypto Airdrop without any further action. For example:
- LUNA: You only need to use the LUNA key to receive Airdrop of new projects in the Terra ecosystem. The number of projects that will be Airdropped is 14 and can be increased in the future.
- CRV (or veCRV): This Token comes from locking CRV. Users will get EPS Airdrop, Elipsi Token, Curve fork (stable coin exchange), and other Curve support.
- SNX: Synthetix-based projects such as Lyra, Thales, and Aelin... will gradually let users lock Tokens and receive Airdrops.
Previously, many Airdrops for Token holders were made. However, the trend has been raised in which users must lock the Token to receive the Airdrop. This helps the primary Token reduce circulation, creating positive price fluctuations. Security will be enhanced for the blockchain's native Token.
6.3 Performing tasks
Besides the above two ways, we can do tasks to receive Coins or Tokens from projects. Some typical tasks:
- Answer questions: Find the correct answer to a set of Crypto-related questions to receive a bonus Crypto Airdrop, typically taking a quiz on the CoinMarketCap platform.
- Participating in competitions: Users participating in top trading volume competitions and similar competitions on exchanges will also receive an Airdrop.
- Fill out the form: Most Crypto projects set this task and attract many users to participate because it is straightforward - fill out the form and wait for the results. For example, the SOS Airdrop on the Solstarter Blockchain platform.
7. Advantages and disadvantages of Crypto Airdrop
BHO Network will analyze and evaluate the pros and cons of Crypto Airdrop for investors' reference. Continue to follow the content below.
The main reason to organize a Crypto Airdrop is to promote a Blockchain startup, project, or service. By handing out Tokens to users, the team can kickstart its project and ensure a fair distribution of Tokens among its community from day one.
Furthermore, the recipients of these Tokens are incentivized to raise awareness and help the project reach a wider audience once the Token starts listing on the exchange. The more attractive the Token, the more likely it is to increase in price.
Airdrops often gain traction by promoting the launch on the project's website, Crypto forums, and social media. This is no different than receiving a food voucher with a discount code in an email, as those campaigns are designed to drive more people to the platform through financial incentives.
Legitimate Crypto Airdrops will never require users to make any investments. Instead, the project uses the Airdrop to stand out from the crowd that raised funds before issuing the Token.
Although Airdrop is a sure way to make money in most cases, traders still need to keep a few things in mind.
7.2.1 Potential for many fraud risks
Since Crypto Airdrop is easy to join and many people choose, this is also a scam opportunity for hackers. These can include tricks such as enticing users to click on a phishing link, asking for a private key or passphrase. Therefore, be careful with any links you are about to relate.
7.2.2 Takes a specific time to experience the product
Airdrops that require users to try the product are only suitable for those with a lot of idle time. If you are the type of person who is busy or does not like to give yourself, then this is a rather annoying way to make money.
7.2.3 Number of Split Rewards
These Coin/Token distributions always attract a lot of users. Moreover, each person can own multiple wallets. As a result, the rewards will be split between five and seven, which is detrimental for users holding fewer wallets.
7.2.4 Uncertainty of Transparency
There is a theory that users cannot verify the projects implementing Coin/Token distribution if they are proper to their original claims because the Crypto Airdrop is a free reward distribution. At the same time, it is difficult for anyone to know the details of the project's activities.
8. How to do an effective Crypto Airdrop
The following is a detailed guide to Airdrop Coin and Token to help improve the ability of users to hunt for rewards, even for new projects without much information.
8.1 Step 1: Preparation
Each different form of Crypto Airdrop hunting requires appropriate preparation. However, in general, users need to have a multi-chain wallet. Each chain has at least one wallet and has that Blockchain's Coin as a fee for transactions.
The Testnet blockchain also has its coin. In addition, a basic understanding of how to use Defi decentralized financial products is required.
8.2 Step 2: Search and research information
Information about Airdrops has two types: confirmed and unconfirmed.
- Confirmed information is the official news from the project with conditions and deadlines for receiving rewards. This information is available to everyone, so the return value is usually not high.
- Unconfirmed information is the judgment of the user based on experience. They choose projects that do not have Tokens to try the live experience and bet on a possible Crypto Airdrop in the future. This type of news, if accurate, will bring high profits because very few people can grasp it and compete for rewards.
8.3 Step 3: Carrying out the task
Step 3 is when the user applies the knowledge mentioned above. You need to understand what each project belongs to and what it includes. For example, Lending includes borrowing activities, and DEX has swap (token conversion) and liquidity. Once understood, users only need to follow all the project instructions.
8.4 Step 4: Waiting for results
With confirmed projects, users only need to wait for results to know if they have received Coin/Token. For projects that have not yet confirmed information, users need to wait patiently for the official announcement, or at least the report of the Token. After the Token Launch, the previous information is wrong if there is no Crypto Airdrop.
9. How to do Airdrop successfully?
The following capital classification is more or less subjective, depending on the judgment of each user.
9.1 Airdrop implementation with little capital
With little capital, users need to compensate by time and effort to experience the product. Many projects have simple requirements, such as swap or liquidity. Some projects require more complexity and need more operations and Coin testnet for each network.
The effort of low-capital users can still bring significant benefits. For example, the Perpetual Protocol only requires users to own a small portion of the ETH testnet, chart, and enter a long/short. Two hundred wallets have received at least 100 PERP worth 1000$. Besides, users will get many exciting and memorable experiences when pursuing Airdrop with limited capital.
9.2 Implement Airdrop with large capital
Users with large capital should not invest time and effort to experience testnet-type products because the results are uncertain. Instead, keeping and locking the Token (hold and stake) is advisable.
Most master Tokens are from big projects, so locking this Token is also an investment. Large projects will likely suck up many small projects, leading to multiple Crypto Airdrops. Users can make good profits if one of these projects is a big success.
It should be noted that because the officially announced Airdrops will have a lot of participants, the rewards for each wallet will be minimal. To make a big profit, users need to own many Tokens or buy at an average price and secure a good position.
10. Mistakes that are easy to make when performing Airdrops
Below is a summary of mistakes that users likely make when performing Airdrops that BHO Network collects. Please read carefully so as not to get caught.
10.1 Unpredictable costs
Some Crypto Airdrops require project users to pay a fee to operate. When participating in these tasks while not ensuring about the capital required, users will likely waste on projects that do not have Airdrop or have but bring too little money.
10.2 Performing a Half Airdrop
When performing a half-hearted Airdrop, the user has not done enough to receive the Airdrop. For example, a common mistake is swapping tokens with few orders, low value, or too much liquidity.
Although there is no official standard to evaluate the operation's quality, users should do it many times with a great deal to avoid not receiving the Airdrop.
Above is the content of the article "What is Airdrop? Everything you need to know about the Airdrop 2022" by BHO Network. I hope readers have gained new knowledge about Airdrop. If you have any questions, please contact the Website: https://bho.network for answers!
Published on January 04, 2022
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