What is a crypto airdrop?
A crypto airdrop is a free distribution of a project's tokens to wallet addresses. Most go to people who used or tested the project before its token launched. The project decides who qualifies, how much each wallet gets and when the tokens can be claimed.
The name comes from the idea of tokens arriving in your wallet without you buying them. In practice you usually have to do something to qualify, and you nearly always have to claim.
How do crypto airdrops work?
An airdrop has three stages. First the project takes a snapshot, a record of which wallets did what up to a certain moment. Then it publishes the rules that turn that record into an allocation. Finally it opens a claim, usually at the token generation event (TGE), the moment the token starts to exist and trade.
Arbitrum's airdrop shows the sequence. The snapshot was taken on 6 February 2023, claiming opened on 23 March 2023, and 11.62% of the supply went to people who had used the network. Uniswap's in September 2020 was simpler: each of 251,534 addresses that had used the exchange could claim 400 UNI.
Some airdrops arrive unlocked. Others are locked or released over time, so read the terms before you count on a number.
Why do projects give tokens away?
A project that keeps every token has no outside owners, and a token nobody else holds isn't much use for governance or fees. An airdrop spreads ownership to the people most likely to keep using the product.
It also works as marketing. A points program gives people a reason to try an app before launch, and the project gets users, trading volume and feedback in return.
Types of crypto airdrops
A retroactive airdrop rewards past users without warning, as Uniswap's did.
A points airdrop is announced in advance. You collect points for activity, and the project converts them into tokens at launch. Variational works this way.
A testnet airdrop rewards people who try a network before it goes live, using free test tokens. Push Chain is an example.
A holder airdrop goes to wallets that hold or stake a particular token at the snapshot.
An NFT airdrop gives out NFTs instead of tokens. Yakkamon plans to send Monster NFTs to its top 5,000 players.
Are crypto airdrops free?
The tokens are free, but qualifying can cost money. Testnets and quest programs need only time, and we list those under free crypto airdrops. Points programs on exchanges need a deposit and carry trading risk. Nearly all claims cost a small network fee.
Are crypto airdrops worth it?
Some have been worth a lot, and many have been worth little or nothing. Three things work against you. A project can run a points program for years and never launch a token. The value of an allocation isn't known until the token trades. And fake airdrops are common, which is why you should read how to spot a fake airdrop before connecting a wallet.
Airdropped tokens can also be taxable. The rules differ by country, so check with a tax professional where you live.
Crypto airdrop terms explained
- A snapshot is the record of wallet activity or balances at a set moment, used to decide who qualifies.
- TGE stands for token generation event, the point at which a token is created and can be claimed or traded.
- Pre-TGE describes a project that hasn't launched its token yet. See our list of potential airdrops with no token yet.
- Points are a project's own score for your activity. They have no fixed value until the project says how they convert.
- A testnet is a trial version of a blockchain that uses tokens with no market value.
- Sybil means one person posing as many users with multiple wallets. Projects filter these out, as the airdrop farming guide explains.
To take part yourself, start with how to get crypto airdrops.
Sources
- Introducing UNI Uniswap Labs,
- Airdrop eligibility and distribution specifications Arbitrum Foundation docs
This article is general information, not financial or tax advice. No airdrop is guaranteed.