Airdrop and its purpose
Airdrop is a very popular marketing strategy in the cryptocurrency world, where a new or existing blockchain project sends their own tokens or coins to users' digital wallets for free. It's a bit like giving away 'free samples' of a new product at a shopping mall.
- How does an airdrop work?
Typically, a company gives away these tokens in exchange for certain conditions to promote their project. Participants usually have to do the following:
Follow the project's social media (twitter, telegram, discord).
Share or retweet their posts.
Use a transaction or testnet on their network.
Hold a specific coin (such as ETH or SOL) in advance in a wallet.
- Main Objectives of Airdrop
There are several business and strategic reasons behind why crypto projects give away valuable tokens for free. When a new project comes to the market, people do not easily learn about it. When an airdrop is given, thousands of people start practicing it. This quickly spreads the name of the project in the crypto community. The main foundation of blockchain is decentralization. If all the tokens are with the project owners only, it is not decentralized. Through airdrop, the tokens are delivered to the wallets of thousands of people, making the network stronger and more secure. Many projects give airdrops to thank their users who have been with them since the beginning. This is sometimes called a 'Retroactive Airdrop'. For example, Uniswap or Arbitrum gave their early users airdrops of tokens worth several thousand dollars. When many people have tokens, they start buying and selling them. This increases the liquidity of the token on exchanges and increases trading volume, which helps increase the value of the token.