What Is a Crypto Airdrop?
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Contents 5
π TLDR;
- An airdrop is a coin distributed for free to users who meet certain conditions, without anyone buying or selling it.
- It's a strategy to raise awareness of a coin or token and diversify its holders.
- Eligibility for an airdrop is determined through a blockchain snapshot.
An airdrop means distributing coins to the general public for free. It's often targeted at people who hold a specific token or have an active wallet on a specific blockchain. Unlike the token sales held in initial coin offerings (ICOs), which were once popular in the community, airdrops are free.
Airdrops vs. ICOs: A Different Approach π
ICO events involve paying with other coins or tokens to purchase an asset. Airdrops, on the other hand, can be received for free as long as you're eligible. Airdrops serve a variety of purposes, but they're mainly used as a marketing strategy to raise awareness of the coin or token being distributed.
How Airdrops Work π
To receive an airdrop, you usually need to hold a certain amount of an asset in a public wallet at the moment a snapshot of the blockchain is taken. A snapshot captures the current state of the blockchain at a specific point in time. For example, if the rule is "users holding at least 1 ETH in their Ethereum wallet on September 4, 2023 are eligible for the airdrop," then new coins can be given out for free to those who meet that condition.
A Real Example: The OmiseGO Airdrop to Ethereum Holders ποΈ
OmiseGO, which has since (unsurprisingly) turned into a total scam coin but was once promising, carried out an airdrop on the Ethereum blockchain for Ethereum holders in July 2017. The airdrop distributed 5% of all OmiseGO tokens. The distribution ratio was set at 0.075 OMG per ETH. To receive the OmiseGO airdrop, you had to hold at least 0.1 ETH in your wallet at the time of the snapshot.
| Date | Blockchain | Distributed Asset | Distribution Ratio |
|---|---|---|---|
| July 2017 | Ethereum | OmiseGO tokens | 0.075 OMG per ETH |
Airdrops = Similar to Dividends π°
You can think of an airdrop as similar to what the stock market calls a dividend. Airdrops are a fresh way to energize a community and attract new token holders, and they provide added value to people who have invested in a particular crypto asset.
