What you need to know about cryptocurrency airdrops

The year 2024 in the cryptocurrency market began with a stir around airdrops. In the first three months, dozens of projects have already managed to “pour” tokens worth millions of dollars into early users. These include StarkNet, Wormhole, AltLayer, Jupiter, Aevo and many others, writes RBC Crypto.

At the same time, the minimum allocation per user was quite substantial. Even for small activity, traders at least received $1000-1500 in tokens of the project that carried out the airdrop. And this is just the basic reward: the earliest users often receive hundreds of thousands of dollars worth of cryptocurrencies.

Such generous airdrops are associated with money falling from heaven and cause a lot of skepticism. This begs a reasonable question: why would anyone throw away so much money and is it even possible to catch such a distribution?

Why do airdrops?

From the point of view of an ordinary trader, an airdrop looks like a gift. Often, the distribution of cryptocurrencies is perceived as encouragement from the project, where the user is the main beneficiary. Actually this is not true.

Crypto platforms “throw away” their tokens for a reason. On the contrary, it is always part of a pre-developed long-term strategy, the main goal of which is to make a profit, and the user is one of the key tools in it. To understand this, you need to look at the development of any project from the very beginning.

And it all starts with attracting investment. Behind almost any major platform you use in the cryptocurrency market are private investors who put in capital early on. Their presence often guarantees that the project will issue a token in the future (however, this does not mean an airdrop; tokens can also be released into the market through a token sale).

The token, in turn, is the main tool for return on investment. Investors of the project and its developers receive the issued coin and are extremely interested in ensuring that it deserves a high rating. The higher the cost of the project, the better the investment will pay off, and the more money both project developers and investors will earn.

For a project and its token to be highly valued, a good product is certainly needed. But what is even more important is listing on major exchanges. The presence of a coin on trading platforms, on the one hand, increases the degree of confidence in the project, since exchanges verify crypto-assets added to trading. On the other hand, listing helps the project and its token enter a new market, meeting new private investors.

However, often platforms, even with extremely well-thought-out and high-quality functionality, do not receive recognition from the market and are not listed on major exchanges. Why is that? It's all about the users.

Users are your most valuable asset

The main source of income for exchanges is trading commissions. Every time a user makes a trade, they pay a small percentage of it, usually around 0.1%. Therefore, trading platforms are interested in growing their user base, as well as the frequency and volume of trading.

Thus, attracting new users and retaining old ones becomes a pressing problem for any trading platform. And one of the solutions is the listing of new “hot” tokens. The emergence of such exchanges is both an opportunity to attract traders who received an airdrop and are looking for where to sell coins, and an opportunity to retain those who have heard about the release of a new cryptocurrency and want to invest in it.

Therefore, when a project conducts an airdrop, exchanges immediately evaluate the prospects for listing a new token. And one of the key evaluation parameters is the number of recipients of the cryptocurrency distribution. The more there are, the more the trading platform can attract to itself. For the same reason, exchanges try to add a token as soon as possible, or at least not later than other platforms, so that users do not leave for competitors.

Simply put, investors need their investments in the project to pay off; for this, the project needs to issue a token and achieve listing on top exchanges; for listings, projects need a large user base, and to attract the latter they need airdrops.

Who pays for airdrops?

So we came to the conclusion that, in essence, an airdrop is a tool for purchasing users. However, it may seem strange why crypto startups pay users thousands of dollars for little activity. Often, 5-10 transactions and several months of work on the platform are enough to participate in the distribution.

However, this contains one big misconception: the project, when conducting an airdrop, does not give out a single cent to users. The project distributes tokens. And other users already pay for them. Those who buy a new token in the hope that they will be able to sell it for more in the future. This is important to understand in order to be less skeptical about airdrops.

One of the best examples of dispelling doubts around who pays for the distribution of cryptocurrencies was provided by the Juice project. This is a landing platform on the Blast network, its airdrop took place on March 28th. The project developers made a truly brilliant move. Before the distribution, they organized a pre-sale (pre-sale) of their token among large users of the platform and thus raised about $1.1 million in Ethereum.

The collected Juice cryptocurrency was invested into a liquidity pool during the token's release so that it could be traded. And then the coins were distributed simultaneously to both the presale participants and the users who received the airdrop.

In other words, those who purchased Juice tokens during the pre-sale phase helped users cash out the coins received as part of the airdrop.

How much money do airdrops bring?

Over the past few years, users have received at least $1000-1500 as part of airdrops carried out by large projects. And at first glance it seems that this is a pretty solid reward. However, it is not correct to regard it as a permanent payment. It is more correct to imagine it in the form of a monthly salary.

To do this, you need to divide the size of the airdrop by the number of months that users needed to work on the platform to receive the airdrop. As a rule, this is about a year, sometimes several years. For example, Starknet users have been waiting for the distribution of tokens for almost 2 years.

And then the idea of ​​​​distributing airdrops becomes more down-to-earth. The user does not receive $1000-1500 “from heaven” in cryptocurrency. The user worked on the platform for about a year, increasing its trading volume and thereby helping it get listed on exchanges. And if he did everything correctly, then he receives a salary for it – a conditional $100 a month, simply paid one-time and with a long delay.

Of course, there are cases when users receive many, many tokens, worth hundreds of thousands of dollars. However, these are quite rare cases and, as a rule, such distributions go either to investors who have invested colossal capital in the project and kept it there for a long time, or to project insiders.

For example, Tron founder Justin Sun got very lucky in March. On March 14, he invested 120 thousand ETH (approximately $4 billion) into the Etherfi platform. A day later, the project conducted an airdrop. Sun was the largest recipient, receiving 3.45 million ETHFI tokens worth approximately $17 million.

Results

Real users really earn good money from airdrops. And there is no miracle or boundless generosity on the part of the projects. This is business. Startups lure users with hints or even direct announcements of distributions, which create activity on the platform and thereby ensure it will support exchanges in the future.

Airdrops are not given for nothing. Projects try to find some balance when selecting applicants for distribution. On the one hand, it is important for the platform to encourage as many users as possible in order to receive a positive response from the community and ensure listings on exchanges. On the other hand, the more you distribute, the greater pressure on the price will be exerted by users’ sales of received tokens. Therefore, projects are introducing criteria to encourage predominantly real users who contributed to the development of the platform, and to weed out unscrupulous “drop hunters” who cheat transactions on multiple wallets and accounts.

Airdrops should be regarded as trivial work. If you are a conscientious user, all you have to do is look for good platforms with solid investments and work for them. It doesn’t have to be a lot, it’s only advisable to maintain activity every month and gain an adequate volume of transactions, at least a couple of thousand dollars. In this case, if the project conducts an airdrop, it will most likely pay you for your support. And this should not be regarded as a gift, this is a mutually beneficial cooperation.

Source: Cryptocurrency

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