In web3 space, the strength of a community often dictates the success or failure of a project. Over recent years, numerous web3 projects spent thousands of dollars in marketing campaigns without achieving significant impact. However, a shift occurred in 2023, projects started using a new way to market called airdrops, which really grabbed people’s attention and worked well.
What is an Airdrop?
An airdrop in web3 is when projects distribute their tokens for free to users, aiming to increase the token’s usage and popularity, much like giving away “Free money”. This is often done to increase the token’s adoption and popularity. To be eligible for an airdrop, users often need to complete certain tasks, such as engaging with the project’s platform, taking quizzes, and being active on social media platforms like Discord. However, even after doing these tasks, there’s no guarantee of receiving an airdrop, as projects have specific criteria for choosing recipients.
Platforms like Galxe and Zelle facilitate the promotion of these airdrop campaigns. Although the project team might announce an airdrop, it’s usually intended to be a surprise to prevent attracting bots and malicious users.
How to qualify to Crypto Airdrops
Crypto airdrops can be divided into two main types: active and passive. Active airdrops require ongoing tasks from users. For example, a decentralized exchange (DEX) planning an airdrop might ask users to complete a certain number of daily trades or reach a minimum trading volume. On the other hand, passive airdrops typically require a one-time action. For example, in the case of a platform focused on liquid staking, users may need to stake a specified amount of cryptocurrency on the platform and then simply wait to receive the airdrop.
Which are the advantages and disadvantages of each one?
Passive airdrops are generally easier to participate in because they require just a one-time action. However, the drawback is that the project may demand a significant amount of cryptocurrency to be staked, or there might be a large number of participants, which could result in smaller rewards for each user.
On the other hand, active airdrops demand more effort as they require daily tasks, making them more time-consuming. This higher effort often leads to fewer participants, increasing the likelihood of being selected for the airdrop and receiving a larger share of the crypto asset as a reward for each active participant.
Popular Crypto Airdrops
Several leading projects have utilized airdrops to engage their communities and encourage participation. Uniswap, the known decentralized exchange (DEX), distributed its governance token, $UNI, to active users, fomenting users’ involvement in its ecosystem. Similarly, Arbitrum, a popular Ethereum Layer 2 solution, rewarded early adopters with an airdrop exceeding 1 billion USD in $ARB tokens, enhancing its network’s growth and user investment.
Such initiatives not only reward existing users but also attract new participants, demonstrating the strategic value of airdrops in gaining user adoption and creating a strong community within the web3 domain.
My experience with Airdrops
How it started?
Around 2022, I started participating in free airdrops offered by various new and upcoming projects. These airdrops simply required me to perform small tasks, such as joining a Telegram group, retweeting posts, or using testnets. Most of the rewards were not so high but I saw how airdrops worked and they offered a risk-free introduction to the crypto space without any initial investment. Also with these airdrops I was able to earn ‘free money’ completing a small number of tasks, a way I recommend to build a diverse portfolio.
How It’s Going
As I grew more confident and knowledgeable about the crypto market, I started engaging in more profitable, though not always risk-free, airdrops. For finding airdrops you can follow popular crypto influencers or use websites such as galxe.com or zealy.io. These typically required a bit more from me, such as staking tokens or participating in main network activities. While many of these airdrops proved to be more lucrative, not all were successful, I encountered airdrops where the cost of gas fees and the time I invested did not match the eventual value of the tokens received.
With this in mind, if you start getting involved in crypto airdrops, I recommend allocating a portion of your portfolio to invest in them. Be aware that you might lose this investment, but it will allow you to have better control over your participation and your return on investment (ROI) from airdrops. Let’s analyze some other risks I learned during my participation in airdrops.
Crypto Airdrops Risks
As mentioned before, there are airdrops involving the use of crypto assets on testnets. I consider these types of airdrops to be risk-free; in the worst-case scenario, you would only lose the time invested in completing the tasks. With this in mind, for all other airdrops that require using the mainnets, the following risks are present:
- Over-saturation and Dilution: A high number of participants in an airdrop can lead to oversaturation, diminishing the perceived value of the tokens for each user. In some cases, the value of the airdrop may not even cover the fees incurred by the user for participating in the activities.
- Scams and Frauds: Some airdrops are designed to defraud participants by requesting an upfront payment and then disappearing.
- Token Value Volatility: Airdropped tokens can be highly volatile. Their value may plummet shortly after distribution as early recipients rush to sell their tokens for profit.
Conclusion
In conclusion, airdrops in the web3 are a compelling strategy for projects to enhance visibility, engage communities, and distribute tokens to early adopters. I consider airdrops are great opportunities for users who want to get involved in Web3 space with a small portfolio or any at all, it can be the key to success in the next bull run. Although it seems like a chance to get ‘free money’ by just joining in through passive or active participation, users must navigate these opportunities with caution, aware of the inherent risks of scams, market volatility, and regulatory concerns. Always proceed with caution and DYOR!
