What are Crypto Airdrops?

What are Crypto Airdrops?

Knowledgebase
13/12/2021 by Koinal
887
In such a volatile market, new investments are always risky. Crypto airdrop is a popular method to get crypto tokens with little or no cost or effort involved. What are crypto airdrops? Why are these great offers made to early cryptocurrency projects and crypto startups?
What are Crypto Airdrops?

Table of Contents

The cryptocurrency market is volatile, young, and thus it is always risky to invest in this industry. However, each day a new sector is popping up. Now the market has decentralized finance (DeFi) and NFTs while it is hungry for more. Who knows what we will have tomorrow? In this young and risky environment, crypto airdrops give small-scale young investors a chance to access new tokens at low costs.

Crypto airdrop is a low-cost or even free cryptocurrency token distribution that occurs, mainly when a crypto startup or a new crypto project incentive aims to distribute new tokens to a large number of crypto wallets. The purpose of doing this crypto airdrop may vary for every actor. Low-cost or free crypto token distribution should not be interpreted as worthless. Think about Bitcoin. While it was almost free in the beginning, today, it is worth more than $60,000.

Crypto blockchain airdrop works through a cryptocurrency wallet. The crypto project or the company behind this project announces a pre-defined phase and starts collecting cryptocurrency wallet addresses. Sometimes this might be performed by the users as well. However, the crypto tokens are airdropped with no intervention, and users might even be unaware that they will receive the coins.

Let’s talk about the reasons why the companies and crypto projects do crypto airdrops. The reasons are many and not necessarily the companies have only one motivation in doing that. Here are the most common reasons, which vary by project, why a company prefers distributing crypto tokens via crypto airdrops:

· The most significant factor behind why a company does crypto airdrop today is creating awareness. CoinMarketCap states that the market is large and there are thousands of cryptocurrencies inside. Therefore it is difficult for a new coin to stand out among bitcoin, ethereum, and many others. To be recognized by potential users, new crypto projects do crypto airdrops since offering access to something for free is often effective enough to attract interest!

· Another main reason why crypto projects do airdrops is decentralizing the cryptocurrency supply. The projects deposit cryptocurrencies to decentralized addresses in an existing blockchain and thus boost the protocol integrity.

· Crypto airdrops also performed as a way to reward users for their loyalty. Uniswap for instance, gave its token UNI to its long-time users.

The first crypto airdrop in the short history of cryptocurrencies was in March 2014. Auroracoin, also known as “cryptocurrency for Iceland,” was given to the country’s citizens. However, Auroracoin today trades at around $0.23, which shows that airdrops are not always successful.

If you would like to receive information and updates on crypto airdrops, you can download apps that have airdrop alerts and follow the relevant online forums, Reddit, and Twitter for the latest news.

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