Before diving into today's edition, it would be a good idea to have a basic understanding of tokens, cryptocurrency, and NFTs. Please read the footnote first if you want a primer on these terms.1
Airdrops are freebies of the Web3 world.
Free NFTs or cryptos are distributed to create awareness about a project or to reward people for social tasks like retweets, shares, etc, among other use cases.Ā
For instance, a TikTok-like short video platform, Chingari announced GARI token airdrop in early 2022. To get free GARI tokens, users had to create an account on Chingari, and watch videos for 15 minutes a day for a period of 5 days.
This type of airdrop is also called bounty airdrops because you are given crypto in exchange for an activity. Besides promotions, airdrops also create a sense of ownership in the recipients.
Letās say, you got GARI tokens during the Chingari airdrop. Now, if the demand for GARI grows over time you can make money by trading something you got for free.
Naturally, you will talk about Chingari with your friends and maybe even create content to earn more GARI tokens.Ā
How did it all start?
The first crypto airdrop took place in Iceland around 2014. A project called Auroracoin was launched with the vision to make it the national cryptocurrency of Iceland.
With the help of Icelandās national records, Auroracoin airdropped its native crypto AUR to everyone in Iceland. This accounted for about 50% of the total coins under the project.
The first crypto airdrop took place in Iceland around 2014.
This was done through a standard airdrop where every Iceland resident was given 31.8 AUR on registration. When crypto or token airdrop is executed in return for small tasks like subscribing to a newsletter or creating an account, it is called a standard airdrop.
While Auroracoin pioneered airdrop events, it fell short of its goal of becoming the first national cryptocurrency.Ā
Other types of Airdrop Events
Some airdrop events are done exclusively for a community. You can think of it as the exclusive iPhone launches for Amazon Prime subscribers.
Airdrop tracking platforms like AirdropAlert.com, and Airdrop.io do exclusive airdrops for their community members in partnership with various projects and companies. This helps new companies/projects to reach a wider audience through one partnership.Ā
Further, holders of a certain token or early believers of a product can also be rewarded through airdrops. For example, the top 1000 people who had WRX tokens (the native token of crypto exchange WazirX) were given Chiliz tokens in an airdrop event. Chiliz is a cryptocurrency fuelling the fan voting platform, Socios.com.
Such holder airdrops motivate people to hold the token for a longer time and sometimes also increase the price of these tokens.Ā In the case of the gaming platform Axie Infinity, a 2021 airdrop event increased the value of the Axie Infinity token (AXS) by 145%. The airdrop aimed to reward users who used the platform before October 26, 2020.Ā
A 2021 airdrop event increased the value of Axie Infinity token (AXS) by 145%
You can sign up on either of these sites to track upcoming airdrops:
Airdrop Scams
Like all free things in life, airdrops also come with a catch. There have been instances of fictitious tokens being airdropped into peopleās wallets. While trying to trade these mysterious tokens, users unknowingly approve transfer of their personal tokens to scammers.Ā
A popular example of an airdrop hack is what happened with Bored Ape NFTs (a popular collection of NFTs, shown below) in April 2022.
A hacker bought an old unused verified Twitter profile and uploaded some Ape NFTs. Using a fake website led people to connect their wallets and stole their personal crypto assets. A victim of this scam reported losing crypto assets worth over $500,000.Ā
A victim of airdrop scam lost crypto-assets worth over $500,000.Ā
You can follow Zachxbt on Twitter to keep track of such scams. This account regularly tweets warnings about ongoing scams and suspicious projects. Web3 is filled with stories of scams and hacking incidents, which is pretty common for any new technology/platform with high customer interest.
At one point, malicious links and fake accounts were rampant on social media too. It took us years to identify phishing attempts from genuine links. Sometimes we still fall prey to it. The best way to fight malicious actors is to stay informed. I hope this newsletter will be able to play a small role in your learning journey.
Thatās all from the A for Airdrop edition. If you can think of any other Web3 terms starting from the letter A, please leave a comment and I will include it in later editions.Ā
See you next Wednesday!
If you enjoyed reading this, you can now buy me a coffee at this page - https://www.buymeacoffee.com/yattisoni0N
Brief on NFTs, crypto, and Tokens:
To understand non-fungible tokens (NFTs), letās first learn what is NOT an NFT.Ā A 100 rupees banknote is not an NFT, because 100 rupees notes have the same value and can be replaced by one another. In the case of NFTs, each NFT is unique and cannot be replaced by another.Ā Ā For example, Rahul Dravid NFT does not have the same value as Sachin Tendulkar NFT. But a 100 rupee note in Dravidās pocket will have the same value as a 100 rupee note in Tendulkarās pocket.Ā
Cryptocurrencies are also not NFTs because each cryptocurrency (ex: bitcoin) has the same value as the other and can be exchanged or traded. Unlike the 100 rupee note which is organized by the government or financial institutions, crypto is organized by a technology called the blockchain.Ā
The most popular and oldest cryptocurrencies are Bitcoin and Ether, which are usually excluded from the definition of a token. However, in technical terms, a token is another word for cryptocurrencies. In web3 applications (or decentralized applications), tokens are used to perform every action from selling virtual land, to automating interest rates. Tokens can also be traded and held like crypto.Ā
We will discuss these terms in-depth as we reach the letters N, C, and T in alphabetical order.
How was today's edition?
Crafted with the help of many new and old friends.
Edited by Arushi Aggarwal.
Lead illustration by Keshav Chauhan.
Thank you for starting this. Looking forward to more.
This has been really informational for a noob like me, looking forward to more :)