What is an Airdrop?
An airdrop is the distribution of free cryptocurrency tokens to a group of wallet addresses. Projects use airdrops to bootstrap adoption, reward early users, or decentralize governance.
How Airdrops Work
- Snapshot: The project takes a snapshot of eligible wallets at a specific block height.
- Claim: Eligible users claim tokens via the project’s website or app.
- Distribution: Tokens are sent directly to wallets or require manual claiming.
Common Types
| Type | Description |
|---|---|
| Retroactive | Rewards past users (e.g., Uniswap’s UNI airdrop) |
| Holder | Distributed to holders of a specific token |
| Bounty | Require social tasks or referrals |
| Testnet | Reward early testnet participants |
Notable Examples
- Uniswap (UNI): 400 UNI per wallet to anyone who had used the protocol before Sep 2020.
- Arbitrum (ARB): Distributed to early Arbitrum users and DAO voters.
- Ethereum Name Service (ENS): Rewarding ENS domain holders and early adopters.
Tax Implications
In most jurisdictions, airdrops are considered taxable income at fair market value when received. Always consult a tax professional.
Tips to Qualify
- Use protocols early and consistently
- Participate in governance votes
- Bridge funds across chains
- Avoid Sybil farming (creating many wallets)