Airdrops have become a relatively common phenomenon in the crypto market. With a plethora of crypto projects vying for public attention through such means, picking and choosing airdrops becomes an exercise in both discernment and discretion. To better serve you, our readership, we’ve undertaken the research necessary to present in this post a comprehensive guide to understanding the various types of airdrops.
We are shifting from an initial coin offering (ICO) to an airdrop.
1. Initial Coin Offering (ICO)
Attracting users to the nascent crypto currency market was, at first, an effortless proposition. The marketplace presented a diverse range of new digital assets that were eagerly awaiting acquisition, enticing participants with the promise of reward and profit. Projects would hold Initial Coin Offerings (ICOs) and offer their tokens as a kind of sweetener. You may not want to rush into this “revolution” yet; ICO tokens may only be worth something if the project or its promises are real. And herein lies the problem that ICOs found themselves tangled in.
They weren’t always real—and when they weren’t, participants in the marketplace had the carpet pulled from under them. Significant buyer losses led to a negative perception of the ICO model. Over time, this caused potential investors to become much more cautious about participating in ICOs. They were investing with the belief that safety was a premium. Consequently, numerous projects, seemingly destined for failure from the outset, found themselves unable to secure enough funding or draw in enough users to sustain their viability. Initially, these projects needed to explore alternative methods of raising funds, primarily through the distribution of free tokens to entice users to their platform.
2. Airdrop
Cryptocurrency projects use airdrops as a promotional strategy to spread the word about their new tokens or coins. The project gives away free tokens to potential users, hoping that they will use them and, in turn, help spread the word even more. This approach bears a resemblance to the tactics used by red-state politicians during their visits to the coast.
You qualify for an airdrop by doing something. What exactly you do might vary from airdrop to airdrop, but it will generally involve proving your membership in the target demographic. Once airdrop recipients have completed the qualifying tasks to the satisfaction of the project, they will have the tokens sent to their wallets.
3. Airdrops are becoming like ICOs.
Airdrops, once a high-quality method of token distribution, are increasingly becoming commonplace and appear to be of progressively lower quality. Lots of people and projects promise airdrops and have worked hard to get there.
But if hard work were a sufficient condition for receiving airdrops, then we would all be rich by now. Next, let’s look at the different flavors of airdrops that you might encounter.
Airdrop Guide: Types
There are currently or will soon be numerous airdrops. Our analysis reveals that two key components define the essence of an airdrop:
1. Capital. You must pay this amount to participate, which is often the biggest barrier for potential users. The higher the capital requirement, the higher the price.
2. Effort. This refers to the actual work that you need to perform—or may choose to perform—in order to complete the airdrop tasks. The more effort you invest, the bigger your reward. On the surface, it might seem like these two components are pretty limited from a classification standpoint. But in reality—based on a significant number of past airdrop occurrences—they’re the most important determinants of your “score” as a participant, which in turn influences the rewards you receive.
Great Capital, Great Effort
Projects in this category require both serious money and a lot of hard work to achieve result tokens. They are most evident in sectors like NFTFi, SocialFi, and Spot DEXs, where rewards are linked to how well one does. The user’s activity in these spaces translates directly into how many tokens they earn for their efforts. NFTFi is taking the lead in the integration of point systems into its products. Both Blur and Tensor have successfully implemented point programs that are driving trading volume. Both are achieving signals of success and, in Blur’s case, actual financial success, too. The NFTFi sector serves as inspiration for SocialFi.
The core idea is to merge capital with user effort. In this space, projects require users to hold and trade collections and log their platform activities. The best-case scenarios—if we ignore for a moment the potential for real human connection—are when users might earn a profit from those platform interactions. An example that comes to mind is the point system of FriendTech and Fantasy. These platforms allow users to earn points, ostensibly for working with the platform. The details of what makes both point systems unique would take up too much room here, so let’s move on.
In the decentralized exchange (DEX) sector, projects reward users with points based on their trading activities—how often and how much they trade and how much in gas fees they pay. This space usually imposes no limits on how many points you can accumulate. Still, the only space granting unlimited points does so on a basis that’s entirely serendipitous—trades you performed on the first day are worth just as much as trades you performed on the last day. To sum up, these projects require both money and hard work. Having both money and hard work in abundance allows you to live a luxurious lifestyle.
You not only work hard but also reap the super profits that not-so-poor people are in a position to pay. Consequently, a troubling aspect of these projects is the disparity in points among users. On the whole, the projects appear to serve poor users (who are really working for tokens); nevertheless, rich users get to live high because the projects’ tokens allow them to “print” precious points.
High Capital, Low Effort
This category of projects primarily awards points based on the amount of funds deposited by the users, necessitating minimal activity on their part to earn a substantial number of points. This style of rewarding is almost like putting the user’s funds in 12-month CDs, with the paying bank not able to touch those funds for a year. From the user’s perspective, they might as well earn these points since the projects’ conditions under which they earn points seem so simple, and the potential rewards from the projects could be significant. Whales are the obvious target for these incentive programs since they possess a lot of capital to move around. Yet even small-time users who take on lending positions for the long haul can reap the rewards since these programs are almost “set it and forget it.”
Moderate Capital and Moderate/High Effort Metrics
Projects classified as “bridges” tend to nudge users toward active engagement in order to coax them into boosting trading volume. Take Owlto Finance, for instance. It offers a 1.5x multiplier for users who manage to scrape together over 100 transactions. If you only have 10, you’re not in line to earn a healthy harvest of governance tokens. Now, let’s not get carried away.
The tasks in the Bridge sector are straightforward and have little to no complexity. In fact, they are mainly about trading volume, trading fees, and trading frequency (i.e., how often you hit the buy/sell button). In theory, you could choose chain A or chain B; what matters is that you transact.
Minimal Capital but Maximum Effort
This category of protocols demands a lot of work from users but very little in the way of resources. Its projects include Layer 2, Perp DEX, and crypto wallets. Perp DEX lets you turn a tiny bit of capital into something larger, allowing you to play with the “whales” by gaining leverage. However, Layer 2 and wallet projects simply require you to send them a small transaction fee. Overall, these projects typically select relatively simple tasks for novice users to earn token rewards and gain a basic understanding of cryptocurrency. I believe they don’t employ “proper” airdrop mechanics due to the potential lack of value in the tokens. Of course, that’s just my opinion.
Low Capital and Low Effort
Some projects in the crypto space demand very little from users in terms of capital or activity. These are mostly projects that revolve around simple tasks and either employ or are about to employ basic automated systems for assessing completion by users. People often describe these tasks, such as sending a tweet with a specific hashtag, as “no effort” or “low effort” due to their ease of execution.
Until now, however, the “no effort” tasks that have gained popularity among crypto users have been those that involve “social proof” (e.g., you’re much better off as a crypto user if you just keep your laptop open and running, thanks to the Grass project).
Airdrop Guide: How To Win
If you’re wondering how to get the most airdrop profit, listen up. There are various strategies you can adopt to score airdrop wins, but which one you should use largely depends on how much time and money you’ve got to throw at the problem.
If you have a lot of capital
If you have a lot of capital, projects in staking, restaking, lending, and liquid restaking are for you. These areas are currently very popular and attract serious investment from funds. Consequently, airdrop values in these projects can range from a few hundred to tens of thousands of dollars, depending on the project and your engagement with it.
For instance, EigenLayer has attracted significant investment from “whales” and has distributed attractive airdrop values. Similar projects include KaraK and Solayer.
For Ample Time to Spare
If capital is a concern for you, then consider Perp DEX, Layer 2, and Wallet, which are appropriate for a low- or no-cost participation model. While the simplicity and large user base of these airdrops may not yield significant profits, they offer a convenient way to participate in the crypto ecosystem. As for what to check out, well, there’s Movement, with plenty of runway and an airdrop that just might swell its incoming user base, and then there’s Sonic, which is noisily preannouncing a large-scale airdrop.
Considering both capital and time?
If you have both capital and time, then investigating facets of NFTFi or a spot DEX might suit your fancy. These are the platforms most likely to benefit from the next wave of crypto innovation and the bull market that will hopefully accompany it.
They are probably the least likely projects to suffer from the death spiral in which many current crypto projects seem to be stuck. Some specific platforms that might be worth investigating include BSX and KiloEx.
When you have no money and no time.
The decentralized physical infrastructure (DePIN) projects could be a perfect fit for you. With them, almost all you need to do is install the platform’s application and operate a node to qualify for the distributions of free tokens (mostly called airdrops). Some people mistakenly refer to the airdrops as “passive income,” but in reality, you earn them by contributing to the platform you live on. Otherwise, you don’t need to do much.
You can even take the tokens and sell them for quick cash. That’s not a disastrous way to go if you need some immediate funds. In this article, I’ll first quickly name the best DePIN projects performing airdrops. Then I’ll give a brief overview of each and provide simple, step-by-step instructions on how to have a shot at receiving the airdrops.
What is the rationale behind developing an airdrop hunting strategy?
Formulating a hunting strategy for airdrop tokens enables you to take full advantage of a seemingly simple token distribution mechanism. To make the most of it requires a plan. Otherwise, the sheer number of airdrop tokens and names of otherwise unknown projects you encounter on a daily basis are likely to overwhelm you.
This is especially true when you consider that many of these projects have begun to favour distributed and nearly meritocratic airdrop mechanisms that reward participants for engaging with them both before and after the airdrop event. The rivalry between the NFT marketplaces OpenSea and Blur exemplifies this transition well. Although OpenSea has yet to issue a token, its competitor Blur has been booming. Unlike OpenSea, Blur has a shiny, new, unregulated “season” point system.
This incentivizes users to rack up points every season. Nobody quite knows what the point system does or what will happen to the tokens associated with it once an actual utility is named. Nevertheless, we award ourselves points.
