What is a Crypto Airdrop: Why Projects Airdrop Crypto?

Crypto airdrops occur when new tokens are freely distributed to different wallets in order to drive initial growth and build a community. They represent a popular marketing tactic that new projects use to spread awareness of their brand and products in the cryptocurrency space. An airdrop is a useful way to promote a token and its utility to the market. It can also be used to reward users for completing simple tasks such as posting a campaign on social media or reviewing a particular feature.

The benefits of a cryptocurrency airdrop are numerous because it helps teams and end-users build sustainable long-term communities surrounding blockchain-based projects. In a nutshell, airdrops occur when a project decides to distribute tokens for free. Usually only small amounts are given out, but they might appreciate to a significant value if the project takes off.

How Crypto Airdrops Work

Cryptocurrency airdrops are usually scheduled in advance and work in two ways: automatic transfers and registration-based transfers. With automatic airdrops, tokens are sent directly to the recipient’s account. Registration-based airdrops require users to offer their personal details in order to collect tokens.

Accounts become eligible for airdrops through various criteria, some of which include whether or not the account holder has:

Used the application or the product
Some amount of a specified token
Registered for the airdrop
Completed tasks required to qualify for the airdrop

Why Do Companies Airdrop Crypto?

There are many reasons to conduct or take part in an airdrop. Projects that want to raise a public coin offering may use airdrops to generate awareness and improve their chances of receiving funding. Airdrops can be a clever way to stand out given how rapidly the industry is growing and the number of projects popping up each week.

Though participants are usually required to perform tasks to receive the airdrop, sometimes it will be sent out with no pre-conditions. For example, last month, the Flare Network distributed its Spark tokens to XRP holders on Ripple’s XRPL blockchain. It also included those holding assets on exchanges like Phemex.