Brought to you by the Liquid team to help you make sense of crypto.
What if there were a way to get tokens from promising projects free of charge? That’s exactly what crypto investors can do with airdrops.
Airdrops make it easy for anyone to get started with cryptocurrency while act as a marketing tool for crypto startups.
What is an airdrop?
An airdrop is a distribution of cryptocurrency tokens to a predefined set of users for no upfront charge.
Crypto companies generally execute airdrops to drum up interest in their projects. Airdrops can happen on a predefined schedule or spontaneously.
The airdrop process
When executing an airdrop, a cryptocurrency company will generally announce it beforehand. This gets the hype machine running early. Crypto companies will often run airdrops to reward loyal and active community members.
Occasionally, spontaneous airdrops do take place, but these are edge cases rather than the norm and usually occurs when a user is selected from a pool of users who have above a certain amount of another cryptocurrency (such as Bitcoin or Ethereum) already in their wallet.
To stay up to date on which airdrops are coming up in the near future, it’s advisable to follow any projects that are of potential interest, while closely monitoring crypto news sites as well.
On the date of the scheduled airdrop, the cryptocurrency project will release the tokens free of charge to members of the community who are eligible.
Tokens are usually transferred instantly to each crypto investor’s wallet of choice.
Sometimes, however, users will be required to perform certain tasks, such as tweeting about the project, joining a Telegram channel or filling out a survey. These are usually called “bounty airdrops”, as users are rewarded with tokens for completing a successive number of tasks.
What’s the purpose of doing an airdrop?
For crypto companies, the purpose of doing an airdrop is often to raise awareness about their project.
Airdrops are a popular marketing strategy and they provide nearly immediate ROI for next to no cost (minus the forfeited future value of any airdropped tokens). They’re commonly used as a lead generation strategy, and crypto companies will often run an airdrop to generate a list of prospects.
Airdrops are also the most effective way for crypto companies to get retail investors to begin using their tokens – a critical stage in the growth story of any token project.
As an added bonus, it helps companies evenly spread the distribution of tokens, so that no single investor holds an outsized amount of the token supply.
For retail investors, airdrops represent an attractive way to find out about potentially promising crypto projects at no risk.
What you might want to to participate in an airdrop
Participating in an airdrop is relatively straightforward. First of all, you’ll need a cryptocurrency wallet. Today, most airdrops are executed by projects that use ERC-20 tokens, so it’s advisable to have a crypto wallet that offers ERC-20 support.
Airdrops can be distributed on specific crypto exchanges like Liquid, so you'll need a verified account there.
Finally, you’ll want to ensure you’re following some airdrop-related news sources and channels to stay up to date with the latest airdrops on the horizon. For Liquid, Twitter is a good place to start.
How to stay safe when participating in an airdrop
Keep an eye out for dodgy airdrops and airdrop sites. Scams, hacks and fraud are common, with users being lured in by the promise of airdrops only to have their private keys stolen on malicious websites.
You should exercise a high degree of caution when participating in an airdrop on an known site. Remember, never give out your private key.
Resources for getting involved in airdrops
New airdrops are announced daily and it can be difficult to keep up with all of the new projects offering free tokens. If you're a Liquid user, you'll hear about our airdrops when we make announcements.
Other airdrops websites are also available. Search around.
In addition, many crypto projects tend to announce upcoming airdrops exclusively through their Telegram channels. You an join the Liquid Telegram group to stay up to date.
Airdrops are an exciting way for crypto traders to start discovering new tokens at no upfront cost. Keep an eye out for upcoming airdrops on Liquid.
This content is not financial advice and should not form the basis of any financial investment decisions nor be seen as a recommendation to buy or sell any good or product. Trading cryptocurrency is complex and comes with a high risk of losing money, particularly if you trade on leverage. You should carefully consider whether trading cryptocurrencies is right for you and take the time to learn how trading works and decide how much money you are prepared to lose.
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