If you have followed the Russia-Ukraine war, you might have learned how crypto crowdfunding has become a source of raising funds. With fundraises, including the Ukraine crypto fundraise, “airdrops” have become particularly zeitgeisty.
In short, an airdrop is a gift of “free tokens” which are sent to your wallet – and they can be sent for participation in a fundraise, using a platform or protocol, doing work, or posting on your socials about a token, or any number of other things. And although the Ukraine airdrop didn’t actually pan out (as you read above), these free tokens are sent by crypto projects to their investors to encourage adoption and create awareness about the project.
Airdrops are like a lottery.
Given their lucrative value – “free money” – in the crypto ecosystem, crypto power users have become a lot more sensitive to seeking out protocols likely to do an airdrop. There’s usually no “heads up” when airdrop ‘screenshots’ are done.
On the flip, some airdrops performed by protocols or companies are out in the open – they’ll invite you to participate by performing a specific task such as posting about the token on a social media account, writing a blog post, or connecting to a particular member of the blockchain project. The goal is to stand out from the crowd and attract more and more investors to the project.
Where there is money to be made, there will be bad people.
Some airdrop tokens are nothing more than pump-and-dump schemes, in which the token price is artificially inflated in order to make a quick profit. Crypto scammers may send small amounts of Bitcoins or other cryptocurrencies to a celebrity, which is also known as a dusting attack.
Be cautious before investing in airdrop tokens.
Getting a gift of free tokens from a credible protocol is one thing – but many people seeking out more “free money” will find that there are limits to the generosity of others (namely, that there are very few generous people who are willing to give you thousands of dollars of free tokens.)
That’s why it’s crucial that you DYOR (Do Your Own Research) before investing in initial coin offerings or airdrops – and not just financially, but in an abstract sense: sharing it with your friends, sharing it on social media, or helping a protocol that might not have your best interests at hand is likely to go very poorly.
The value of a token goes along with how great a crypto project is and what its future holds. If you just look for the free tokens without doing your research on the coin, you might end up being scammed.