I want you to imagine waiting in line for a rollercoaster. I’ve been on some pretty fun roller coasters in the past, here locally our friends all visit Worlds of Fun. Anyways, if you’ve been to an amusement park, you probably know how they work.
You stand in a line of like 50 people who are waiting for the ride to finish so they can hop on and ride the rollercoaster. The best ones usually have longer lines, and sometimes it’s like 100 degrees out and you’re getting a sunburn… anyways…
Imagine if you’re standing in that line and some worker comes up to you and goes “Hey, you want some free lemonade?”. Since it’s 100 degrees outside, you immediately tell him yes, but secretly you wonder why he’s giving out free Lemonade.
So you ask. He says “We’re starting a lemonade stand down the road and figure giving free lemonade at this busy place is the cheapest and easiest way to advertise”. Now you understand as you sip away your delicious drink while the line grows shorter.
In this article we are going to explain what an Airdrop in crypto is, and how you can use them to get free tokens.
What is an Airdrop?
Airdrops are when the developer of a crypto platform gives out free tokens or coins. You may be wondering the purpose of this? It’s essentially a form of advertising and to spread the use of the coin.
Developers want people to see that the coin has been added to their account and then to possibly try out their coin. Sometimes, however, they are used to reward early adopters of an application or protocol. Uniswap did just this, actually.
Note: If you don’t want to read through this article, we have created an animated video that you can watch below instead.
Understanding Uniswap's Airdrop
If you don’t know what Uniswap is, we have a whole video explaining what Uniswap is and how it works, but in short they are a platform that allows you to exchange any ethereum token for any other ethereum token. Right now, they are the largest decentralized exchange by total value locked in their liquidity pool. Back in early 2020, Uniswap launched and allowed users to start swapping their tokens.
Now, you should know that Uniswap was actually a centralized application in the beginning - they had a headquarters and payrolled developers and such. Being in the crypto space, they wanted a way for their company to become more decentralized. To do this, they created a Uniswap token that was specifically used to vote on certain changes to the platform. This way the token holders (aka investors) could vote, instead of having one person make all the decisions. But why in the world would they sell their token? What if nobody wanted it?
This is where the Airdrop came in. Uniswap gave every wallet address that interacted with their application around 400 UNI. At the time, this was worth around $1000. For those that held, they now hold around $8000 in UNI.
To understand how they did this, you need to know some technicalities. First, Uniswap is an application run by smart contracts. Secondly, these smart contracts are out there for anyone to look at. So to do the airdrop, they literally just made a list of every wallet that interacted with their smart contract and then sent them the free UNI.
The Different types of Airdrops
1. Retroactive Airdrops
How Uniswap gave out these air drops was by a retroactive airdrop, because they looked back in the past and made a list of wallets, instead of using the current list of wallets - they only wanted to reward the early adopters and testers of the platform. A lot of times this happens with governance tokens - to give the community a way to vote on future changes in a fair way - they need to reward early adopters and not random users.
Another form of an airdrop is similar to how email leads magnets work. In the marketing world, email lead magnets are a simple idea where you give something for free in turn for a customer’s email.
For example, we could give you access to our discord, and all you have to give us is your email. Long term, we might want your email so that we can advertise paid products to you. This is the reason some companies might airdrop you a bit of their token. In reality, we don’t want your email, and our discord is free! Well, at least right now it is. Check our our discord in the sidebar!
Useful Airdrop Calendars
If you want to participate in some airdrops, there is a website dedicated to helping you with a calendar of certain coins and tokens that have upcoming airdrops. They also explain a little bit about how to get the airdrop. That website is airdrops.io and has been used by quite a few airdrop enthusiasts in the past.
We want to say that you should definitely research any project or token you plan on investing in… or erm getting for free.
Another website is CoinMarketCal, which we haven’t mentioned on this channel yet, but is very helpful. You can sort by airdrops, but they actually have other interesting dates, such as when certain coins go live, when they start staking, major updates.
This is a very useful tool for anyone wanting to do some research on new coins and even developed coins.
The Future of Airdrops
Now that airdrops have become more popular, they are starting to be associated with bad advertising and scams. For example, it’s really easy to send the last 10,000 active polygon wallets some of a “WhiteboardCrypto.com” token I could create. So when someone checks their wallet, they see they have some “WhiteboardCrypto.com” tokens and maybe they get curious, find out site, and then get hooked.
However, airdrops that are used for specifically advertising are pretty much telemarketers in the crypto world. Nobody wants your free tokens and they aren’t going to research what you’re promoting. Remember the lemonade example? This would be very similar, except instead of lemonade, you’re giving out chewing gum that’s already been chewed.
So now that you know what airdrops are and how they work… you should leave a like on this video and definitely consider subscribing if you aren’t already… because we (and by we, I mean Youtube) may retroactively send you some free notifications for our future videos quite similar to this one!