Airdrop Farming: Everything to Know
By Beluga Research August 16, 2023
- Cryptocurrency airdrop farming involves offering free tokens to users, to market the cryptocurrency and platform associated with it
- The purpose of a crypto airdrop is to promote use of a blockchain project
- A platform may send users tokens with no strings attached, or in exchange for completing a task, like following a certain social media account
- It is common for new cryptocurrencies to use airdrops to drive adoption of their tokens
Cryptocurrency airdrop farming involves offering free tokens to users, to market the cryptocurrency and platform associated with it. A platform uses airdrops to raise awareness, promote adoption and incentivize users to explore the project's ecosystem. Airdrop farming typically involves a platform completing multiple airdrops to hit certain goals for engagement.
A Brief History
The concept of airdrops originated in the early days of the crypto ecosystem, to distribute tokens to a broad user base. The first notable airdrop occurred in 2014. Auroracoin distributed free tokens to the citizens of Iceland. Since that point, crypto airdrops and airdrop farming have become more sophisticated. The practice of airdrops has also become more common.
Crypto Airdrop Farming: Everything to Know
- Research and Select Airdrops: Airdrop farming begins with a platform thoroughly researching potential airdrop opportunities. A platform identifies reputable projects with a solid foundation, innovative ideas and a promising future. Various online platforms and communities provide information about upcoming airdrops. This allows users to stay informed and make practical decisions.
- Wallet Preparation: Most airdrops are based on the Ethereum blockchain. Users who want to receive airdropped tokens should use a wallet compatible with ERC-20 tokens, like MetaMask or MyEtherWallet. The wallet should be secure and set up to receive airdropped items.
- Completing Airdrop Requirements: Airdrops typically have specific requirements that participants must fulfill to be eligible for tokens. The requirements may include following social media accounts, joining Telegram groups, retweeting posts or referring friends. Users should read and understand the requirements to ensure compliance and maximize their rewards.
- Managing Multiple Airdrops: Airdrop farming involves a platform offering multiple airdrops, sometimes simultaneously. A platform must have the structure and involvement to keep track of different projects, deadlines and requirements. It can use spreadsheets or dedicated airdrop management tools to streamline the process. Airdrop farming-related tools for users can help users avoid missing out on opportunities.
- Token Distribution and Holding: A platform typically distributes airdropped tokens after users complete the requirements to receive the funds. Some projects distribute tokens immediately. Others have a vesting period or release tokens gradually over time. Users who receive tokens can hold onto them, trade them on exchanges, or explore other opportunities within the project's ecosystem.
- Risks and Considerations: Airdrop farming can be an exciting way to accumulate tokens but there are risks involved. Not all projects may succeed. The value of airdropped tokens can fluctuate significantly. A user should conduct thorough research, assess a project's fundamentals and consider the long-term potential before engaging in airdrop farming. Often it is difficult for a user to learn more about a new platform or coin. This means a user incurs a certain amount of risk to perform tasks to receive airdropped tokens.
- Find and join airdrop campaigns. Platforms typically announce airdrops to distribute tokens and raise awareness about what they offer. Users can learn about airdrops through various channels like social media, cryptocurrency forums and dedicated airdrop websites. They should be cautious and do as much research as possible to avoid scams and low-quality projects.
- Follow the instructions provided by the project team. Required tasks typically include joining a platform's Telegram group, following the platform on social media and referring friends to the airdrop. Such tasks are designed to increase a project's visibility and user base. Fulfilling the requirements makes a user eligible to receive a certain amount of tokens.
- Accumulate a diverse portfolio of tokens. Users should keep track of the tokens received. They should store them securely in compatible cryptocurrency wallets. Airdrops can also be conducted on platforms other than Ethereum. A user should have wallets that support specific tokens if they want to receive airdrops for those tokens.
- Low barrier to entry. Unlike traditional investment methods that often require significant capital, airdrop farming allows individuals with limited funds to participate and earn tokens. This inclusivity has made airdrop farming popular among crypto newcomers. It also makes the activity popular with enthusiasts looking for alternative ways to engage with the crypto ecosystem.
- Potential for discovering new and promising projects. Many airdrops are conducted by early-stage blockchain startups aiming to gain traction and attract users. Participating in airdrops offers users the opportunity to explore projects firsthand. Then they can identify hidden gems before becoming widely recognized.
- Airdrop farming can be a learning experience. Participation in airdrops gives users chances to gain exposure to different blockchain projects and their underlying technologies. This exposure can enhance general knowledge about the crypto space, allowing users to better understand the intricacies of different platforms and tokens. Additionally, airdrop farming often requires interacting with various decentralized applications (dapps) and wallets. These tools deepen user understanding of how blockchain technology functions.
- Opportunity for Free Tokens - Airdrop farming provides an opportunity to obtain free tokens by participating in airdrops. This can be an attractive prospect for cryptocurrency enthusiasts and investors looking to diversify their holdings.
- Potential for High Returns - Some airdropped tokens experience significant price appreciation over time. By acquiring these tokens through airdrop farming, participants can generate substantial returns on their investments.
- Portfolio Diversification - Airdrop farming allows users to expand cryptocurrency portfolios without incurring additional costs. Acquiring a diverse range of tokens through airdrops allows investors to reduce their exposure to specific projects or assets. This helps them mitigate risk.
- Early Access to Promising Projects - Airdrops often target new or upcoming cryptocurrency projects. Participating in airdrop farming allows individuals to gain early access to these projects and their associated tokens.
- Community Engagement - Airdrop farming encourages active participation in cryptocurrency communities. Participants typically need to complete certain tasks to be eligible for airdrops. The engagement fosters a sense of community. It can also lead to valuable networking opportunities within the cryptocurrency space.
- Token Value Volatility - Airdropped tokens are not immune to market volatility. Their values can fluctuate significantly. This can lead to losses if the token price drops after the airdrop. Users should carefully evaluate the long-term potential of a token before engaging in airdrop farming.
- Time and Effort - Airdrop farming requires time and effort. Users have to research and participate in various airdrops. Participants need to stay updated on upcoming airdrops. Often they must complete tasks to be eligible for free tokens. This process can be time-consuming. It is not suitable for individuals with limited availability.
- Scams and Fraudulent Airdrops - The cryptocurrency space is not immune to scams and fraudulent activities. Some airdrops may be created with malicious intent. Platforms may seek to collect personal information and deceive participants. Users should exercise caution and verify the legitimacy of airdrops before they provide sensitive information
- Inflationary Impact - Airdrops can lead to inflation. When a large number of tokens are distributed through airdrops, the increased supply can potentially dilute the value of the token. This impacts the token's price in the market. Inflation should be taken into consideration when evaluating the long-term prospects of airdrop farming.
- Regulatory Uncertainty - The regulatory environment surrounding airdrops and cryptocurrency in general is subject to change. Different jurisdictions may have varying rules regarding airdrops. The rules can affect the legality and viability of airdrop farming. Users should stay informed about the regulatory landscape and comply with changes.