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An airdrop is a marketing campaign that distributes a specific cryptocurrency or token to a specified audience. This creates awareness of a new protocol or is a way to distribute rewards to early users and adopters.

Wallets that already hold a certain minimum amount of a specific coin can receive the tokens. Sometimes the users need to participate in some activity such as engagement with a tweet.

Being a DeFi user that has actively been interacting with a specific service within a specified time period also helps. Many DeFi users anticipate this and start using some protocols, in order to maybe be eligible for a future airdrop.

There are both advantages and disadvantages to this token distribution method. On the plus side, it’s a great way to distribute a token to a wide market. Plus, if holding token X ensures airdrop of token Y, it gives users an added incentive to hold X.

However, on the flip side, airdropped tokens without proper incentives could be sold off immediately in the market, dumping the price.

Distributing airdropped tokens to the many eligible wallets is costly, due to the high gas fees. Therefore, nowadays most airdrops are actually claims, where the DeFi users have to pay their own gas fees in order to claim the tokens on the protocol’s site.

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