What is an airdrop?
How many times have we heard our parents tell us, and in turn told our children, that no one (except Mom and Dad) ever gives you anything in life, much less money.
So, if there’s one thing that’s difficult to explain to those who aren’t familiar with the mechanisms of Web3, it’s what a cryptocurrency airdrop is.
Starting by simply explaining that an airdrop is a mechanism whereby you simply ask for money (cryptocurrencies) to receive it is guaranteed to first attract looks of pitying amazement and then resigned indifference.
However, while this is indeed the case, what we said in the first few lines also holds true. No one ever gives you anything for free, and if they seemingly do so, it’s for a specific purpose. Or, to quote a popular maxim in the world of the advanced internet, if it’s not clear what the product is, then you are the product.
Indeed, the Web3 airdrop is a (targeted) cryptocurrency giveaway. But beware, as you might imagine, it’s not being done for charitable purposes by cohorts of techno-benefactors. The goals are far less philanthropic and are intended to be a powerful marketing tool.
For goodness’ sake, the airdrop is generally reminiscent of previous provocative proposals made by illustrious mainstream economists, not like today’s techno nerds. John Maynard Keynes proposed that governments fill bottles with banknotes and bury them in old mines, letting people dig for them in order to stimulate the economy. Fed Chairman Bernanke (provocatively) suggested dropping money from helicopters to combat deflation.
There are well over 10,000 cryptocurrencies floating around Web3. Even Metablog showed some time ago how easy it is to create one.
Purpose of an Airdrop
With the exception of deliberately slick cryptocurrencies, which ultimately aren’t even that many, they all have a meaningful underlying project. Let’s remember once again (it’s been a while) that, with a few notable exceptions (Bitcoin, Monero, etc.), cryptocurrencies primarily serve to remunerate blockchain services.
However, these projects all face a fairly significant challenge in such a crowded world. The first is to make themselves known to potential customers/users, standing out from the crowd. The second is to reach a critical mass of users that will move them out of an embryonic phase and into the lucrative realm of Web3. Few, indeed very few, have succeeded. Consider that over 90% of the $3T+ market capitalization is made up of the top 10 cryptocurrencies, with Bitcoin and Ether alone accounting for 70%.
And there is a shared goal between developers and users. Yes, because these airdrops aren’t exactly million-dollar; in fact, in many cases, they’re measured in cents. So why do so many people rush to participate in airdrops if the reward, even if obtained without effort or cost, is so meager? Of course, because everyone secretly hopes to participate in a re-run of the Bitcoin celebration. They hope to hold a wondrous cryptocurrency that will quickly make them rich, with multiples in the thousands or even higher.
Types of Airdrops
Therefore, the path taken by many is precisely that of giving away cryptocurrencies through the airdrop mechanism, according to different implementation flavors.
- Standard/Announcement Airdrops—just hold a specific cryptocurrency (e.g., ETH, SOL, BNB) in your wallet on the snapshot date to automatically receive the new tokens.
- Holder Airdrops—similar to the previous ones, but require holding a minimum amount of tokens.
- Task-based/bounty-based airdrops — users must complete simple actions: following social media accounts, joining Telegram/Discord, retweeting, creating content, etc.
- Retroactive airdrops — the most valuable — reward users who interacted with the protocol early (swaps, liquidity providing, testnet, etc.), even months or years later.
- Exclusive airdrops — reserved for NFT holders, select community members, or high-value users.
