Crypto glossary
Airdrop
An airdrop is a free distribution of crypto tokens to wallet addresses, usually to reward early users of a protocol or to spread ownership of a new token.
Projects airdrop tokens to build a community, decentralize governance and reward people who used the product before it had a token. Eligibility is usually based on a snapshot of on-chain activity taken on a past date, such as the number of transactions, the volume traded or the time an address has been active. Recipients then claim the tokens through a website or receive them automatically.
Expectation of future airdrops has created airdrop farming, where users interact with new protocols mainly to qualify, sometimes using many wallets. Projects respond with filters against such Sybil activity and with points programs that track usage before a token exists.
Airdrops are a common bait for scams: fake claim sites ask users to connect a wallet and sign a transaction that drains it, and unknown tokens that appear in a wallet may lead to phishing pages. Free tokens can also be taxable income in many countries.
Example
In September 2020 Uniswap airdropped 400 UNI tokens to every address that had used the exchange before a set date, an amount worth over $1,000 shortly after the claim opened.
Related terms
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