Over 9,000 coins are currently listed on CoinMarketCap, thus new cryptocurrency projects hoping to draw investors and supporters will need to use some pretty innovative strategies to set themselves apart from the other projects already in existence.
While it goes without saying and is essential that crypto developers heavily publicize their token projects via social media, press releases, and crypto blogs, other advertising strategies are also effective such as Airdrops.
Airdrops, which were formerly known as a unique type of guerilla marketing, have skyrocketed in popularity in the cryptocurrency world since 2017, with various projects employing the tactic to boost adoption, urge the community to assist promote a project, or reward devoted users.
And so, in this guide, we will take a look at all you need to know about CoinMarketCap Airdrops.
Key Takeaways
• A crypto airdrop is a type of marketing strategy used by cryptocurrency entrepreneurs.
• It entails giving tokens to current cryptocurrency traders in exchange for a minor promotional service or by giving them free tokens to put in their wallets.
• The airdrop aims to expand ownership of the cryptocurrency startup and raise awareness of it.
• While some airdrops are legitimate, others have been accused of being dishonest or deceptive.
How Do Crypto Airdrops Work On CoinMarketCap?
A CoinMarketCap crypto airdrop is typically a marketing strategy that uses the unrestricted distribution of brand-new cryptocurrency tokens to create communities and raise awareness.
It can also help establish a token’s value early on because recipients may start trading their airdropped tokens. As a result, airdrops are frequently employed by companies to fund their cryptocurrency ventures.
The announcement of a future airdrop is typically made on the website, Medium page, or third-party airdrop tracker of a cryptocurrency project, as well as shared on social media channels where many cryptocurrency users may see it.
An airdrop distributes small quantities of recently created cryptocurrency to users of a particular blockchain network. For instance, cryptocurrency start-ups might airdrop tokens to users of the NEO, Ethereum, or Bitcoin network who have wallets.
In some circumstances, a recipient might need to own specific tokens or keep a certain minimum balance to qualify for an airdrop. For instance, until February 2025, TRX holders will regularly receive BTT airdrops.
In other situations, users could be required to complete quick activities like posting about a project on social media. Note that cryptocurrency airdrops are distinct from initial coin offerings (ICO), which are classified as securities offerings in the U.S. because they are designed to entice individual investors. And so, airdrops are frequently used to increase awareness.
Reasons for Airdrops by Crypto Projects
Because they stand to gain the most from airdrops, cryptocurrency initiatives generously distribute rewards through Airdrops.
Let’s examine the underlying reasons why crypto startup companies run airdrop campaigns.
• Raising Awareness
Airdrops are mostly used by blockchain firms to raise awareness. ICOs dominated the early stages of crowdfunding. But issues soon surfaced.
During this startup gold rush, a deluge of businesses appeared, often with nothing more than a flimsy, largely copied white paper, oversaturating the market and scaring off potential investors.
• Users Incentives
Sad to say, many investors in the crypto ecosystem are solely interested in getting the best return on their money (ROI), and they have little regard for a project’s long-term viability.
To avoid adding any real value to the protocol, they jump from project to project, dropping their heavy bags after a pump and earning enormous gains off of small-time investors. In reality, this kind of conduct can harm a crypto platform.
To combat this, several businesses run airdrops to give away free coins as a way to thank devoted customers who either utilize their platforms or maintain a particular quantity of tokens in their wallets for predetermined amounts of time.
• Distributing Decentralized Tokens
Deep-pocketed investors may use their disparate riches to their advantage in the early stages of a coin’s life to achieve cheap pricing and hoard a sizeable portion of its circulation quantity.
The issue is that centralization, which is now one of Dogecoin’s biggest downsides, is caused by massive sums of coins in the hands of a select few.
In these circumstances, projects may decide to implement airdrops to balance the distribution of a coin.
• Investors Attraction
Most of the time, token offerings—ICOs, IEOs, IDOs, etc.—come after cryptocurrency airdrops. Airdrops are a brilliant approach to increase the cash raised without spending too much on marketing, as this tactic is linked to raising awareness.
The excitement that is created when a project begins and executes an airdrop, if successful, aids in raising the price of a token because most beneficiaries will promote projects that provide them with free money. Particularly in the modern internet market, where every interaction statistic, including popular Google search phrases, brand mentions on social media, and community followers, can be monitored and leveraged to draw investors. Big investors, or “whales,” use these analytics as an investment weathervane to assess a project’s prospects.
• Understanding the local community
Additionally, since some airdrops ask recipients to fill out forms with personal information like their email addresses, social network accounts, and opinions on crypto projects, airdrops allow companies to gather data from the cryptocurrency community. The team working on a project can use this data to create targeted marketing strategies.
Phishing and Dusting Attacks
Of course, scammers employ free crypto ways to exploit and steal. In 2022, cryptocurrency scams and hacks will be so advanced that they will fool even experienced investors. You can check the history of how dusting attacks started.
When directly searching for any cryptocurrency exchange or project on Google, please exercise extreme caution.
To entice victims, fake websites frequently purchase advertising space on search engines and social media.
You might even end up on a phony website if you mistakenly type the direct URL of an exchange incorrectly.
When in doubt, save CoinMarketCap.com to your favorites, conduct a search for the project there, and use the project’s provided URL as a verification tool.
How to Manage the Risks of Airdrops
Not every airdrop has good intentions. As a result, choose the airdrops you sign up for extremely carefully. First off, an airdrop is almost always a scam if it asks you to donate money to support its project.
Additionally, “dusting” attacks, in which you receive a small amount of cryptocurrency into your wallet and thereby give your public address to a potential scammer or hacker, are frequent.
These attacks use airdrops as a way to collect your personal information. A project’s members can quickly check your portfolio using blockchain explorer tools once they have your public address.
Theoretically, you may become a victim of phishing, SIM swap, and other hacking attempts, as well as actual extortion and violence, if you have a significant amount of cryptocurrency assets stored on that wallet address.
As a result, it’s advisable to make a second wallet just for airdrops. It’s not that difficult. Simply create a new address on services like MetaMask or MyEtherWallet to receive airdrops since the majority of them take place on the Ethereum network as ERC-20 tokens. You can also do this to distinguish between coins you paid for and “crypto money.”
Conclusion
Airdrops are a very important marketing ploy designed as a community incentive for new projects and their early backers. Even while they may at first appear to be little, they may end up being extremely valuable to cryptocurrency newcomers or enthusiasts hoping to invest for free in promising ventures early on.
Just keep in mind to watch out for phishing websites, save reliable websites to your bookmark, use various wallet addresses for your airdrops, and never, ever spend money to get an airdrop.
