By Ermos Kyriakides
According to the Cambridge Dictionary, an airdrop “is the act of bringing supplies or equipment by dropping them from aircraft”. An airdrop of this nature would probably not make you any ‘free money’, however, airdrops in the Cryptocurrency space will.
In this post I will give you the low-down of airdrops by describing what they are, the different types that exist, why they happen and some notable ones that have happened in the past.
What is an Airdrop?
An airdrop is the process in which Cryptocurrency projects decide to distribute some ‘free’ coins/tokens to users, given they meet the airdrop requirements.
Airdrop eligibility requirements, could include:
- Holding a certain coin/token — This is a very common airdrop mechanism, in which projects airdrop coins/tokens to users depending on whether they already own a certain coin/token. An example of such airdrop was the OmiseGo, whereby they airdropped OMG tokens to all Ethereum wallets holding at least 0.1 ETH.
- Post/share on social media — This mechanism usually includes carrying out a few very simple social media tasks, such as, sharing a post, joining a Telegram channel, etc.
- Subscribing to a newsletter
- Signing-up to their platform
Airdrops can come in two different forms:
- Surprise airdrops — In which a snapshot of the blockchain (i.e. the balances of every wallet at a particular date & time) is taken before announcing the airdrop. Then, for example, a project can launch a “hold a certain coin/token” airdrop based on that particular snapshot.
- Planned airdrops — These are airdrops which are announced beforehand with a particular date & time in which they will occur. This form of airdrop is usually executed by airdrops that require actions from the users.
A word of warning — if your coins/tokens reside on an exchange (rather than in your wallet), it’s in the exchange’s discretion whether they will distribute the airdropped coins/tokens. Some exchanges are more ‘airdrop-friendly’ than others. Binance usually does an excellent job with this. For example, users with EOS balances in their Binance account automatically received their IQ, DAC & EON airdropped tokens.
Reasons for airdrops
You might be wondering, why projects would give away ‘free money’. There are a few reasons why projects would do this, as outlined below:
- Community Creation — Institutions/individuals who own a project’s coins/tokens would normally come from the pre-sale, public sale and the team. By carrying out an airdrop, the number of people owning a project’s coins/tokens increases significantly. This helps in creating a community and network.
- Lead Generation — In marketing, lead generation “is the initiation of consumer interest or enquiry into products or services of a business”. Airdrops are an amazing mechanism to generate leads — you ask users for basic information and in return you reward them with some ‘free money’. This generated a strong lead database which helps driving future marketing campaigns.
- Raise Awareness — Facebook may not be covering itself in glory as of late, but its model has always been “if you’re not paying for the product, you are the product”. Airdrops create awareness and bring people on-board that wouldn’t have heard or owned any of its coins/tokens. This not only raises awareness but also created an endowment effect. This is “the hypothesis that people ascribe more value to things merely because they own them”
- Reward Loyal Followers — This form of airdrop is usually used as a retention strategy. What better way to reward loyal followers by giving them some free coins/tokens?
As of late, airdrops have become more and more prominent. Unfortunately, bad actors are trying to take advantage of this by creating fraudulent or ‘worthless’ airdrops, so do your own research before participating in any.
Having said that, there have been many successful ones performed by serious projects, including:
- Decred (DCR) — Decred announced their airdrop in December, 2015. Signing-up was available for nearly a month and had over 3,000 applicants. Each successful participant received more than 282 DCR, where each DCR was worth ~$2.45 a month later and is currently worth ~$63.
- OmiseGo (OMG) — In August, 2017, OmiseGo announced that they will airdrop OMG to every address on the Ethereum blockchain. 5% of the total supply of OMG were airdropped to wallets that held a balance over 0.1 ETH at a specific snapshot. This resulted in over 450,000 addresses receiving OMG which was worth ~$11.50 at the time.
- Ontology (ONT)— Ontology has actually performed 3 airdrops to date; the first one being the most important (and valuable). After deciding that Ontology wouldn’t carry out a public sale they decided to airdrop 1,000 ONT to everyone who subscribed to their newsletter. ONT was worth ~$2 when the ONT were distributed to subscribers and reached up to ~$10 a month later, potentially netting users $10,000.
- Polymath (POLY) —Polymath airdropped 10,000,000 POLY to eligible participants (that had successfully passed KYC). There were 40,000+applications from all around the world and resulted in 250 POLY being distributed per user. Shortly after the airdrop, POLY was worth ~$1.60.
An upcoming airdrop worth mentioning
WandX is an app for Decentralized Exchanges (DEXs) that will interface with the WandX DEX on Ethereum and NEO as well as the WandX Basket protocol.
In other words, WandX is building a platform (accessible via your web browser and/or mobile application) that will allow access to all DEXs on different blockchains, all under one roof.
WANDNEO is a token that will enable users to receive dividends (once these are staked), in the form of GAS, depending on the DEX’s transaction volume.
WandX will be airdropping WANDNEO to new participants, as well as, existing WAND holders. Existing WAND holders have a bigger slice of the pie, and will be airdropped WANDNEO tokens at a 1:1 ratio (see charts below).
This airdrop aims to raise awareness, create a bigger community, as well as, reward loyal followers. You can find their original announcement, here. In order to be eligible, you need to register before the 10th of August by following the steps below: