Introduction.
Airdrops (airdrops) in cryptocurrencies is the distribution of tokens for free. It can be a reward for some actions or for meeting some requirements. For example, for registering on the cryptocurrency exchange Binance, a user receives 5 USDT. Similar one-time rewards were also on other exchanges, but these are not really airdrops, it’s more of a one-time bonus. When it comes to airdrops, they were usually just network management tokens of a particular blockchain. Participants received airdrops for certain actions from registration, to comments and advertising.
Sometimes airdrops were also used to launch a new blockchain: The community received the tokens, started using them for transactions and voting, increasing the price of the coins and growing the network. Usually, all that was needed to participate in airdrops was a cryptocurrency account or a cryptocurrency wallet.
How airdrops and the community are connected is clear and unquestionable. But what are the requirements to participate in airdrops? What types of airdrops are there? Do you need training for airdrops? How to find airdrop? This is what will be discussed in our article. After all, airdrops are very important, their concept is the foundation of marketing in the cryptocurrency industry.
How airdrops work
You might think that airdrops and ICOs are the same thing, but they are completely different things, although they share common aspects.
An ICO (from Initial coin offering) is the issuance of a fixed number of new tokens or koins to a company. The issuance is funded by investment. Investments come as a crowdsale and only as such.
Crowdsale is an investment, but there are no venture capital funds among investors, the amount of investment from each investor is equal and each investor will receive the same number of coins.
Airdrop does not involve buying coins or spending participants, often certain actions or matches are needed. Also, airdrop is initiated by the heads of the blockchain, the creator, the developer, not the community. The airdrop itself is not requested. Also, it is the distribution of tokens to multiple cryptocurrency wallets.
Types and purposes of airdrops
The main purpose of airdrops is the development of the project, by attracting new participants, increasing the community. But more than 70% of airdrops is a marketing move. Participants get tokens for free or for simple tasks.
There are several types of airdrops:
Once the tokens are distributed among the community members, the participants start trading, selling and exchanging them, which provokes demand, increases the price of coins and increases the liquidity of the projects.
Although in some cases, there is a risk that the impact of airdrops on the cryptocurrency market can be negative. For example, after airdrops, the price of tokens falls. This can happen if too many tokens are distributed, the market is oversaturated, the supply of tokens grows and the price falls.
Airdrops are also used as a loyalty tool. After all, the analysis of the effectiveness of airdrops on the project is based on such aspects:
- Increased interest in the project.
- Increasing the audience.
- The community learns its mechanics
- Users offer ideas on blockchain development, etc.
This means that the project is interesting to the community. Accordingly, if there is no activity, if people try to learn about airdrops but not about the project, if there is no loyalty or interest in the project, then this airdrop is just an opportunity for the community to get a little richer. Developers, in this case, need to start changing the project, and not only to attract investors. It is through airdrops that newcomers are attracted.
Marketing and strategic aspects
Airdrop marketing strategies should have some kind of goal. The project from which an airdrop is made must make sense and not be just another token giveaway for free. Otherwise, all participants, after receiving the tokens, will simply discount them by selling them at any price, causing the price to fall. I.e. airdrop marketing strategy should advertise the project, not airdrop. Blockchain networks that will start airdrops should be secure, fast, scalable, lightweight or have another advantage.
More than 70% of airdrops are used to attract attention to the project. Marketing and its strategy should depend on the target audience. It is unlikely that the bulk of the audience will read newspapers, and it will not be economically viable to use billboards. But if you use advertising in social networks such as X (formerly twitter), Telegram, Meta (formerly Facebook), YouTube, etc. It goes without saying that you should not buy adverts from channels whose subject matter is forests, hiking or sports. It is a big risk to buy advertising airdrops in the channel, where the theme of business or finance. But if you advertise in a channel with cryptocurrency topics, where they publish news, you can easily find hundreds, thousands or even tens of thousands of participants who will be interested.
It is the groups and channels in social networks that will be the answer to the question, “Where to find airdrops?”
Risks and legal aspects of airdrops
Also, you need to understand that although the tokens that participants receive after participating in an airdrop are free of charge, airdrops can be conducted using fraudulent schemes. This is not the only risk of participating in airdrops, but to avoid it, you should carefully check whether the platform is conducting token distribution or not. And there is no guarantee that you will get new tokens, you may get tokens that you have already used. And not just used, but used to finance crime or money laundering.
We advise you to check received tokens on AML through our service-exchange “AnyExchange”. If your concerns are confirmed – contact our manager and we will try to solve your problem. We also provide money transfer services. Our service will send you cash instead of your coins. This way we can exchange your tokens for coins that have never been connected with crime in any way.
Free-drops are risky. Scammers often use them to attract attention. They promise an airdrop for advertising, users advertise their product or company, and then the scammer blocks the participant. In another case, they ask to connect a cryptocurrency wallet to receive tokens. But immediately after getting approval to access the account, they steal all the coins.
The next issue is taxes. Airdrop – completely free, usually, but in developed countries, for example in the United States, airdrops can equate to income. After all, to get it, the user must at least be active. So, it is income, for which you need to pay income tax and income tax. It can also be a winnings, and you have to pay tax on winnings too.
At the moment (April 2024) there is no legal tax, no enforceable law, and no precedent. But at the same time the MiCA law becomes effective, in the USA there is a trial between Coinbase and SEC, the founder of the FTX exchange was sentenced to 20 years, the trial of CZ (founder of the largest cryptocurrency exchange Binance), etc. Regulators and courts are not planning to show any loyalty or leniency. So the precedent is possible, and then the law. Our service exchanger “AnyExchange” will publish current news on its blog and Telegram channel. So if there is a news related to law or taxation, we will publish and explain all the subtleties and aspects first of all.
Examples of successful airdrops
But despite the danger, there used to be frequent airdrops, especially free-drops. Nowadays they are unpopular, as they can negatively affect the value of the distributed coins, but airdrops and free-drops, at least those that used to be, are quite successful. We can remember: Uniswap in 2020, Tamadoge Air in 2023:
Uniswap, a decentralised crypto exchange (DEX), gave away nearly $6.5 billion worth of tokens with airdrop in September 2020! Each participant gave 400 UNI tokens to a certain group of users who collaborated with the exchange. Back then, the token was worth $2-4, a year later it grew more than 11 times, to $44.92. At the time of writing (April 2024), the exchange’s native token was worth $11.32. This event made the exchange one of the largest decentralised exchanges in the world!
Tamadoge Air – a blockchain game in 2023 gave away TAMA tokens worth the equivalent of USD 100 to each user who fulfilled 9 conditions: subscribe, post, tag Ilon Musk in X, etc. The main condition was to own TAMA tokens worth less than $100. This led to the development of the game.
The Future of Airdrop
Airdrop is a marketing move, advertising of the project, it can give an impetus to development. For example, there is a new L2 Starknet with ZK-Rollup technology and PoS protocol. Its technology allows Ether to scale, and STARK proof of concept can confirm hundreds of thousands of transactions! But its issue of 10bn tokens will be distributed slowly and gradually, of course that through airdrops.
So will be airdrops of post-quantum blockchains (resistant to quantum attacks). But even without them, at least 8 airdrops are planned for 2024 alone.
Apparently there will be airdrops in the future. But there will be almost no free-drops. If we give away part of our products, tokens, for activity, it will lead to a drop in the price of the project itself, and the community will react negatively to it.
Conclusion
Airdrops often act as advertising for cryptocurrency networks, and in 80% of cases this is the only purpose. But besides marketing, it demonstrates the real attitude to the project, feedback between developers and the community. You can conduct surveys, but the analysis of the project’s effectiveness and airdrops, can be done only after the distribution of tokens. If after the coins are just sold – you need to change the principles of the project, redesign the algorithm, create a new protocol, perhaps even introduce new tokens. For example, the principles of stablecoins contradict airdrops and they never existed. But stablecoins have a huge popularity, their capitalisation is up to 15-20% of all cryptocurrency capitalisation.
However, if the project is successful and the community is interested in its development. In this case, giving out tokens for free will improve the effect. In addition, perhaps one of the requirements for participation in airdrops, may be already some trading experience, have a number of coins, etc.
Meaning that airdrops as a loyalty tool and airdrops to attract attention are not the same thing. In addition, competent airdrops are the simplest and most effective way to resist network centralisation, which is one of the main distinguishing features of cryptocurrencies from fiat.
