How do crypto airdrops work?
While there are many different types of airdrops there are some common themes in how they all work:
Sign up: You will usually have to sign into the website using your crypto wallet, a Google account or an X account.
Do starter tasks: You will normally have some tasks that you will have to do initially to start.
Do recurring tasks: You will most likely have recurring tasks to do whether daily or weekly. These are perfect for the crypto airdrop tracker to monitor and give you notifications.
Claim rewards: After interacting the tokens will either be given to you automatically or a claim page will be present on the website. But be careful of scams if this is the case.
What is the point of airdrops?
Crypto airdrops often sound suspiciously perfect. After all, why would anyone give away “free money”? Here are some of the reasons why:
Governance: The airdropped tokens often represent some form of control or “decentralization” over the project. This allows people to vote and decide what the project does next with a voting weight related to their share of the tokens. This is what gives them value.
Increase participation: Probably the main motivator, an airdrop campaign can boost the visibility of a project tenfold in a very short space of time. People see a new airdrop campaign, get excited, and start tweeting about it.
Reward loyalty: People might have been using a project for many months and feel they should be rewarded for being “early”. This happens very often with projects like Jupiter and Wormhole. It can also encourage users to hold onto their tokens.
What are the different types of crypto airdrops?
Liquidity vs transaction-based
There are two main types of airdrops. Liquidity airdrops reward users who provide liquidity to the project’s token pairs on decentralized exchanges. So you deposit and virtually do nothing. Some examples have been Jito, EigenLayer, Parcl, and Dymension.
Transaction-based airdrops reward users based on their transaction history and activity level on the blockchain. The upside is much larger, with potentially up to 200-300x on fees spent. The downside is that you have to put in a lot more work. This can be by social tasks or transactions. Some examples are Arbitrum, Optimism, Wormhole, and Manta.
Holder airdrops
These airdrops are distributed to users who already hold a specific cryptocurrency. The tokens are often distributed proportionally to the amount held. For example, a new token might be distributed to all Solana holders based on the amount owned. Some examples which have happened were Pyth, JUP, and Jito.
Retroactive airdrops
Projects use retroactive airdrops to reward users who interacted with their platform or services before a certain date. An example is debridge. With this crypto bridge I used it for many months before they had an airdrop campaign active, and when it started I gained extra points.
Standard Airdrops
These involve sending tokens to active wallets to encourage more users to join, often requiring social media engagement or sign-ups to qualify. They are the most simple form of airdrop and not seen much nowadays.
How can I find crypto airdrops?
To find upcoming crypto airdrops you need a dedicated source for information. You will need guides on new airdrops, how to do them, and any updates which happen for that project. There are many websites but the only one with video-supported articles and regular updates is Solana airdrop guides.
First step: Decide whether you want to do free, paid, or free and paid airdrops. How much time do you have to spare each day. Which blockchains you prefer. And, finally what style they are.
Second Step: From there head to the airdrop page, put these filters on, and click on the relevant guides. For beginners, it is recommended to start with the free airdrops which are depin style projects. From here some liquidity-based airdrops can be a good choice.
Third Step: Make sure to read, watch the videos, and join the discord to learn exactly what to do. From here the most important thing is to start!
Pros and Cons of Airdrops
Pros:
- Free tokens with potential future value.
- Often minimal effort is required to participate.
Cons:
- Risk of scams and fraudulent projects.
- Potential regulatory implications depending on jurisdiction.
- Potential tax implications.
Airdrop Taxes and legal considerations
Receiving tokens through airdrops may be considered taxable events in many areas, often classified as income at the fair market value of the tokens at the time they are received. This can be a very complicated area so make sure to consult with a tax professional if you are worried about it at all.
Airdrop Scams
With the growth of crypto airdrops the number of scams has unfortunately increased too. Here are some steps to make sure you keep safe!
Verify Links: Always make sure you are pressing the correct link for the project and not a phishing link. Scammers often impersonate popular projects with offers that seem too good to be true. If in doubt, head to this website and click the link from here.
Don’t share wallet details: Never under any circumstances share your private key or seed phrase if a person or project asks. If they do it is most certainly a scam.
Don’t send money to unverified sources: Some projects may require you to deposit funds but never send anything to someone claiming to be from the project for free tokens.
Avoiding scams can be one of the most challenging parts when you are farming crypto airdrops. If in doubt join our discord or check back to this website for legitimate airdrops.
FAQs
Are crypto airdrops free money? While it might seem like free money, recipients should consider the potential tax implications and the risk of participating in airdrops. The value of airdropped tokens can vary significantly, and there are often conditions attached to their use or sale.
What are the common red flags in scam airdrops? Scam airdrops may ask for private keys or demand substantial amounts of personal information. They often promise unusually high returns and might require participants to send money upfront. Legitimate airdrops typically require minimal personal details and do not ask for your private keys.
How can I maximize my benefits from crypto airdrops? To maximize benefits, stay informed about upcoming airdrops through reliable crypto airdrop sources. Always ensure you are dealing with legitimate and well-regarded projects, and consider the potential growth of the token being distributed.
Can I sell my airdropped tokens immediately? The ability to sell airdropped tokens immediately depends on the terms set by the airdrop campaign. Some tokens may be subject to a locking period or other restrictions that prevent immediate sale. Always read the terms and conditions of the airdrop carefully to understand any limitations.
Do I need to invest money to participate in crypto airdrops? Participating in crypto airdrops does not typically require an upfront investment. However, you may need to incur minor costs related to transaction fees when moving tokens or claiming airdrop offers. Always be wary of airdrops asking for an investment as these could be potential scams.
