#explain-card A crypto [[Airdrop|airdrop]] is a strategy used by blockchain projects to distribute free tokens to a large number of users. The goal is to increase awareness and adoption of the project. Airdrops are typically conducted in the early stages to attract new users and build a community. They can also reward existing users and encourage continued use of the project. ## Types of Airdrops There are several types of airdrops: * Standard Airdrop: Participants express interest and provide a valid [[Wallet|wallet]] address to receive the airdrop. No additional information is usually required. * [[Bounty]] Airdrop: Users perform tasks, often related to raising awareness of the project, to receive tokens. * Holder Airdrop: Participants must hold a certain amount of existing coins or tokens to qualify. The amount received may depend on the amount and duration of holding. * Exclusive Airdrop: Participants are selected or invited by the project team based on criteria like reputation, influence, or contribution. * Raffle Airdrop: A combination of other types, where participants earn raffle tickets by holding tokens, earning points, or expressing interest. A limited number of wallets are randomly selected to receive the airdrop. ## Airdrop Process The process begins with the project deciding the need for an airdrop, often for market strategies or to incentivize investors. The steps include: 1. Selection: Determine how the airdrop will be facilitated and who is eligible. 2. Public Campaign: For broad airdrops, launch a campaign to collect wallet addresses and possibly email addresses. 3. [[Snapshot]]: Identify eligible addresses based on criteria like holding a certain amount of tokens at a specific time. 4. Distribution: Use [[Smart contract|smart contracts]] to distribute tokens from the company's wallet to recipients. The transaction is often publicized for transparency. Recipients usually receive tokens directly but may need to add the token address to their wallet to view the balance. ## Advantages and Disadvantages of Airdrops ### Advantages Airdrops help projects stand out in a competitive market. They can reward loyal users and distribute tokens widely, which might not happen naturally. ### Disadvantages There are concerns about network safety, especially with suspicious websites. Some airdrops may be scams, luring users to buy more tokens before a "rug pull." Airdrops can also be seen as low-quality projects and may lack [[Liquidity|liquidity]], making them worthless if not tradable on exchanges. ## References * [What is a crypto airdrop?](https://www.coinbase.com/learn/crypto-basics/what-is-a-crypto-airdrop) * [Cryptocurrency Airdrop: What Is It and How Does It Work](https://www.investopedia.com/terms/a/airdrop-cryptocurrency.asp)