Airdrops 2024: Benefit Strategies and Risk Avoidance

Airdrops in 2024: strategies to maximise benefits and avoid risks

Airdrops primarily attract those who want to enter the world of cryptocurrencies, but do not know where to start. With the help of this tool, even beginners can learn the principles of token circulation and get into the basics of passive income and trading without any special financial risks or no investment at all.

From this article you will learn what airdrops are, what should be taken into account when selecting a project, who are drophunters and what is the situation with cryptocurrency airdrops in 2024.

Airdrops and the cryptocurrency community

Interest in airdrops remains very resilient. According to CoinGecko data, over the past 3 years, DeFi projects have given away about $30 billion worth of assets as part of 50 airdrop campaigns. Analysts estimate that airdrops are conducted by 10-15% of new blockchain startups. Such campaigns attract special attention when large and proven projects announce the imminent distribution of tokens.

An airdrop is a free distribution of a certain number of tokens within a certain period of time to users who perform certain actions in favor of the project. The conditions of airdrops can be very different. Their main objectives are to promote the product and attract new users, as well as to increase the activity and loyalty of existing network members.

What are the airdrops for?

In addition to the above-mentioned marketing tasks, we can also note the following goals pursued by projects:

Testing the network before mainnet. At this stage, bugs are looked for, blockchain functionality is tested, and airdrops attract users who are willing to interact with the project for the duration of the testnet. This category of users belongs to the category of “early users” who have certain privileges in the distribution of tokens.

Avoidance of legal restrictions by regulators. The ambiguity of the legal aspects of airdrops compared to commercial transactions with digital assets gives projects additional room for maneuver in the legal realm. The tax obligations of airdrops are not clearly defined; most countries do not currently tax airdrops.

Redistribute tokens for greater decentralization. This will allow the team to spread out the concentration of tokens and voting power of large holders, creating a more democratic environment for all participants in the network.

Perform a hardfork. In this case, a technical distribution of tokens takes place. This was the case in 2017 with the Bitcoin hardfork, when the branching of the main network automatically made every bitcoin holder the holder of a similar amount of Bitcoin Cash in addition to the main asset.

Increased liquidity and trading volume on DeFi. Airdrops in DeFi projects can be designed to increase liquidity or trading volume on DEX.

What is required to enter?

Have a cryptocurrency wallet.

Identify sources of information about upcoming airdrops that will allow you to make an objective decision about whether to participate.

Participate by meeting the terms and conditions of the project that announced the airdrop.

Basic requirements may inсlude:

Creating an account on the platform / installing the application, filling out the questionnaire, passing the verification (passing the registration in the airdrop);

Subscribing to e-mail newsletters and pages in social networks.

Popularization activity (retweets, reposts, writing reviews, creating content about the product).

Next, you need to perform the actions required of users participating in airdrop and confirm that the conditions are met. After some time, the earned tokens will be credited to the specified cryptocurrency wallet.

What you need to do to participate

Airdrop as an engagement tool presents different conditions to participants. Here are some examples:

Interact with the product. This could be exchanging tokens, executing transactions to add liquidity, or increasing trading activity in DeFi. This type of interaction may require the participant to pay commissions.

Testing the performance and security of the Product. Tracking bugs and errors in the systеm provides an opportunity for additional rewards beyond the pre-determined privileges for early adopters.

Ambassadorship. Participants promote the product through their platforms and social networks, creating content for promotion.

Criteria that increase the chances of success inсlude:

the number of transactions performed;

volume of transactions;

age of the wallet;

the current balance of the wallet.

How to choose airdrops

First of all, follow the rules of information hygiene and security. Study announcements on reputable aggregator platforms (specialized platforms for tracking airdrops provide detailed information about the distribution conditions and the project itself). Some of the most popular and proven platforms are Airdrop King, Airdrops.one, Airdrop Alert, Airdrops.io, Incrypted. As an additional source of information you can use profile channels in social networks.

Pros and cons of Airdrops

Pros

Getting tokens is usually a simple process. Either you just need to be an early user, or you need to complete a series of steps that don’t require any special skills.

Airdrop tokens do not cost the participant any money. There may be a small cost associated with maintaining the transaction.

Tokens received are usually immediately liquid. New tokens appear quickly on exchange listings.

You can make a decent profit on them. Active members of the ecosystem can receive impressive amounts of tokens for participating in airdrops of large projects with solid investors. Examples of successful airdrops show distributions of $10,000 and more per participant.

Time works for you. A successful cryptocurrency will increase in value.

Cons

The reward may not be commensurate with the time and effort put in.

Working with the project from the beginning does not always result in receiving tokens as a reward for the work done, as the airdrop may not be announced.

The risks of participating in airdrops are directly related to the high prevalence of scams and phishing in the niche.

Low liquidity of the new token.

Dependence of the token price on the actions of drop hunters, in whose hands a large number of tokens can be concentrated.

Limited terms for obtaining a token (often the token is available for no more than a few months).

Limits on withdrawals. Projects try to control the amount of money in the network in various ways.

What kind of numbers we are talking about

The order of reward amounts at airdrops of successful projects for lucky participants looks inspiring:

Compound rewarded liquidity providers with COMP tokens totaling over $80 million in a large-scale giveaway. It should be noted that one of the participants subsequently withdrew the COMP equivalent of $27 million.

The much-discussed Arbitrum giveaway yielded early participants in the $1,500-13,000 range. However, ARB assets from 1,500 wallets worth about $3.3 million were later consolidated in the hands of two participants.

The Aptos Foundation airdrop of 20 million APT tokens to 110,000 users netted community members between $1,500 and $6,000 per account.

The UniSwap, 1inch, dYdX, and Optimism token giveaways saw returns of more than $10,000 per participant in some cases.

What you should pay attention to when choosing airdrop

Only trust information about airdrops from reliable sources. sеlect and use trusted sites to track new airdrops.
Study the product. Make sure the project has been created by a real team, is backed by investors, and has plans for stable development. Then you can count on the token’s price growth. The ideal choice will be an already launched and successfully functioning product that does not yet have its own token.
Read the terms and conditions carefully. They should be clear and unambiguous. Because of unclear wording, participants may not get the result they originally hoped for. Also, any unfulfilled condition may disqualify you from receiving tokens.
Make sure that Airdrop does not ask you for personal information that you do not want to share.

How to avoid scams

Scammers actively exploit the hype leading up to major airdrops. And they do it very professionally. It is telling that not only beginners but also professionals fall victim to them: for example, the CEO of the Nest project (focused on wallet security) Bill Lu fell victim to scammers after losing about $125,000 by “participating” in the LFG airdrop.

There are many variations of fraudulent schemes. The most common are scenarios where the user is asked at the registration stage to:

Provide excessive personal information (details, passwords, keys, copies of documents);

Download special software.

Strategies to maximize the benefits of airdrops

Airdrops can hardly be considered as a way to make a steady income for beginners. Rather, it is a way to get seed money in cryptocurrency and gain knowledge and experience. However, for some users, giving away free tokens is a job that provides a very good income.

Drop hunters have made participating in free token giveaways their profession. Automating their participation in airdrops allows them to receive rewards from multiple projects and many wallets at the same time, using the principle of “multi-accounting” (managing a large number of accounts). Multi-accounting is considered a threat and fraud by project teams. They call this type of activity “Sibyl’s Attack” and try to fight it with all available means. According to research data, the average income of a multi-account hacker in the middle of last year was at least $10,000. As a result of the Sybil attack, drophunters received 48% of the total tokens distributed by Arbitrum and about 40% of the TIA tokens distributed for free by Selestia. So automating processes and efficiently managing an airdrop portfolio is undeniably a way to generate more revenue. And the more virtuoso drophunters create the appearance of “healthy” activity on the sites, the less likely their actions will be detected by the vigilant project team during the ongoing airdrop security check. And at this point, it’s hard to argue that the developers are winning this contest.

Conclusion

The influence of airdrops on project marketing policy remains strong, with many different airdrops planned for 2024. Among the most anticipated are the upcoming airdrops of the web-3 protocol LayerZero, the zero-disclosure layer-2 protocols zk-Sync and Scroll, and the Base protocol.

The future of airdrops in crypto looks bright at the moment, especially if projects manage to balance the influence of “easy money hunters” on decentralization and token value. Most likely, the market will tighten up methods to combat drophunters, by more closely monitoring links between addresses to identify potential Sybil attacks, and by making the requirements for participants more difficult.

Either way, airdrops are a useful tool for entering the cryptocurrency world and diversifying your existing portfolio. Use trusted sources of information, analyze the value of upcoming airdrops, study the risks associated with them and go for it!

Thank you for your attention!

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