Free Money
Money doesn’t just fall out of the sky, right? Wrong. You just need to know where to look.
Airdrops happen for many reasons but there are typically two categories:
1. Pro-active airdrops (sometimes called “bounties”)
2. Retroactive airdrops
Early Bird
New projects need to promote themselves in order to get users, grow the product base and stimulate trading. One of the classic marketing methods used is to pro-actively airdrop ‘free’ tokens to early community members, sometimes pre-launch, but mostly post-launch. This is direct reward for early holders or those who help promote the product to increase visibility via social media actions such as re-tweets and joining groups.
The key word here is ‘early’ and this requires either a bit of digging or having the right contacts. There are websites like CoinMarketCap, airdrops.io and WeBounty that show you which tokens are currently dropping to holders, and even have an ‘upcoming’ section too, but there are many airdrops that don’t appear on these pages or only appear when they’re full.
If you have a lot of spare time and are willing to research in a structured manner, then these type of airdrops may be for you. I give some more tips below on what to look for.
Giving Back
The other type of airdrop is a retroactive airdrop and these have really been gaining in popularity over the last year. This is where a product, protocol or service launches (usually) without a token and tries to get traction the traditional way (i.e. having a good product and traditional marketing). Later in time they launch a token and decide to reward people who have used their platform. Let’s look at a couple of examples:
- UniSwap — a decentralized spot exchange founded in 2018 that issued its $UNI token in Sep 2020, and airdropped 400 tokens to every wallet that had ever interacted with the service before 1st Sep. Those tokens would currently be worth ~$10,000 for anyone that made a single transaction.
- dydx — a decentralized derivatives exchange founded in 2018 that issued its token $dydx in Sep 2021, allowing past users to claim tokens proportional to the volume they had traded. As an example, “users who traded more than $100K in the past were eligible for about 6.4K DYDX tokens”, which are worth close to $100K today!
- ENS — a decentralized naming system on the Ethereum blockchain founded in 2017 that announced its token in Nov 2021. It’s airdropping tokens to all existing registrants (~170,000) and proportionally rewards them based on how long they had registered the domain for. This resulted in between 200–1000 token drops, which are now worth $10k — $50k.
The disadvantage here is that it’s not guaranteed that a product will launch a token and/or provide an airdrop to early users. However, if they do, at least they’ll be providing you tokens for a product that has some proven success and is more likely to hold value in the long term than a fresh, unproven project. DeFi Llama lists projects with potential airdrops.
Tips & Tricks
Some of the biggest rumors at the moment are about Hop Protocol, MetaMask and Arbitrum planning for retroactive airdrops. But there are so many bounties and airdrops out there that the best thing I can do is give you some tools to DYOR and stay safe:
- IF you don’t have a lot of capital, start looking for the bounty airdrops that only require social media activities.
- CREATE a separate wallet and email address dedicated to airdrops so you don’t expose your existing funds.
- START investigating the listings on aggregator websites like CoinMarketCap, airdrops.io and WeBounty to get a feel for how they work. Sometimes following aggregators on social media gets you the chance of exclusive airdrops when they promote projects.
- NETWORK on Twitter, Telegram and Discord. This is probably the most important rule to increase your chance of a positive return. You will find there are plenty of people dedicated to finding good airdrops and you can help each other out by researching different aspects.
- READ about a project to see if it’s any good before you jump in. Does it have a whitepaper, good website, credible team? In other words, will the project stick around?
- BE AWARE that if you want to participate in airdrops on multiple blockchains you will need compatible wallets and will need to hold native tokens to swap and move your funds
- BE AWARE that if you live in the U.S. your chances of receiving an airdrop from a reputable project are very low due to the regulation spotlight.
- IF it’s an open secret that a big project is going to issue an airdrop, consider the fact you may be too late to meet the cut-off date for eligibility before rushing in.
There are also a ton of fake airdrops, where people are just trying to phish information from you. So make sure you:
- NEVER provide your wallet seed phrase or password to anyone, or connect your wallet to an unknown user or site (this includes revealing your MetaMask QR code to another user, which is a recent trick for hackers to gain access to your funds)
- NEVER send money to a wallet first in order to receive ‘more’ back (such as ‘processing fees’, ‘admin fees’, ‘user validation fees’ or ‘community commitment funding’ or ‘donations’).
- NEVER participate in airdrops where the details are given in an image (typically a fake screenshot of a famous person’s social media profile promoting the project with fake ‘thank you it works!’ comments)
- AVOID projects with crappy websites, fake links and social media accounts only recently created.
- ALWAYS cross-check any website with multiple sources such as Twitter, Telegram, Discord etc. (e.g. if you are asked to fill in KYC details)
It’s clear that airdrops can have some of the best rates of return in the industry if you are willing to put in the time and spread your bets — some people spend all their time hunting airdrops and it’s vital you take a portfolio approach: you can’t expect every bet to pay off but the ones that do can more than cover the rest. Some of you may value your time as better spent on other activities, so in my Discord I’ll point you to a few guys that are doing a lot of work to build such a list of rumored airdrops and cut down the work you have to do.
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