What Is Airdrop?

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5 min read

What Is Airdrop?

2018 has revealed to us that there is no shortage of projects and currencies in the crypto world. A major way for companies to generate awareness and build a strong user-base for their blockchain projects is by incentivizing their community using airdrops. Simply put, airdrops are a distribution of free tokens to members who complete specific tasks.

These rewards help draw in members to the community who are willing to engage with the project. Since it costs the company very little, airdrops are a win-win situation for everyone involved. However, for those new to cryptocurrencies, it can be difficult to participate in airdrops or to fully understand how they work.


It’s pretty self-explanatory why a user or investor would be interested in participating, but what’s really in it for the company conducting the airdrop? There are many benefits for new projects to incentivize its user-base through airdrops, some of the most compelling ones are: expanding the community, creating a more engaged user-base, evenly distributing the token/coin supply, rewarding early investors, and using an effective marketing tool with zero cost to the company.

The main reason why companies conduct airdrops is obviously driven by marketing. Since introducing new coins and tokens that are exchangeable for assets is very cost effective for the company, airdrops are regularly used to compete against other currencies to generate a presence in the crypto space. Since certain qualifying conditions must be met to receive these rewards, the company can choose the level of engagement they require from their users. Not to mention, those who receive brand new coins will often be compelled to keep up with the progress of their projects. Therefore, airdrops can be a powerful tool for companies to stay competitive and generate buzz.


Every once in a while an airdrop can be very profitable. Take the example of Oyster Pearl that sent over 2000 PRL to some airdrop participants, which eventually went up in value to over $5 per token. At the same time, Polymath sent over 200-250 POLY to participants of airdrop, which has since hovered in value between $80-$200. In general, most airdrops offer a very small amount of tokens which are barely worth the gas to send it to an exchange.


It is important to remember that not all companies offering free tokens do so to build the value of community. Airdrops can also be used to propagate scams. Here are some airdrop scams to watch out for:

  • Private Key Scams

Private key scams are designed to trick you into giving out the private key to your wallet. A real airdrop asks participants for their wallet’s public address. A scam airdrop, however, asks for the private key to your wallet as well. Avoiding this scam is simple is easy. Never give out your private key for any reason.

  • Information Tolling

Another type of scam airdrop is designed to collect personal information, either to sell to third parties and/or to use for future phishing attempts. These scams claim to be giving away tokens but the projects are fake. The main goal is to get your email address, wallet address, social media info, etc. The best way to avoid an information trolling airdrop is to research the project that is supposedly behind it. Most do not even have a website, let alone a whitepaper or social media presence. Avoiding projects without online presence is key to not being scammed.


To be able to participate in an airdrop, you will need to download a wallet, create a social media account to anticipate future airdrops, and use a blockchain explorer to add tokens that you are eligible to receive. Here is a generalized step by step overview:

  1. Download an Ethereum wallet. There are many options and variety of wallets available to you, so it’s important to do some research before committing to a particular wallet. Also, remember to keep passwords and private credentials stored in a safe place.
  2. Create a social media profile to track any upcoming airdrops you may be interested in. Two major social media platforms to keep updated on cryptocurrencies are Twitter and Telegram.
  3. When an airdrop in which you have participated occurs, copy your public wallet address to search for the release of tokens on a blockchain explorer app. https://ethplorer.io.
  4. Locate and copy the details of the token address which has been released, but has yet to be added to your wallet. These details include the token’s contract address, its symbol, and decimals.
  5. In your wallet app, navigate to the setting that allows you to add custom tokens. This is where you can input the token details (make sure these credentials are an exact match) to add it to your wallet.


As we discussed in this article, the incentives offered by airdrops are not one-sided, they are mutually beneficial for the community members and the company undertaking the blockchain project. Remembering red flags and watching out for scams will help you filter for only legitimate and potentially profitable airdrops.

This makes it incredibly important for investors to understand how airdrops work, and stay updated on the details of the projects that offer them.

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