An airdrop is defined as the distribution of a cryptocurrency token to numerous wallet addresses, in most instances free of charge.
Airdrops are primarily utilized as a way of a project garnering higher levels of attention and new followers. Such efforts are important in culturing a larger user-base and a wider disbursement of coins.
Airdrops can be seen as a marketing tool. They are usually used as a promotional effort to encourage liquidity in the markets for these coins, since users are more likely to trade them.
There are two ways that token creators select the recipients of air-dropped tokens.
Recipients can be selected in a randomized way, or rewarded for helping promote tokens. For example, publishing an event in airdrop-related bulletin boards or newsletters.
This was commonly used with Ethereum accounts whose value was higher than a defined threshold. In this instance, many accounts were gifted with unsolicited airdropped tokens.
As a more established marketing technique, several websites now also exist to help promote cryptocurrency airdrops.
Social media also is a powerful tool for airdrops, helping spread news and build up enthusiasm.
Airdrops are seen as a reward for promotional efforts by users. This symbiotic relationship helps all parties.
For example, cryptocurrency proponents can be rewarded with free cryptocurrency by supporting projects who release coins through an airdrop.
Airdrops traditionally have basic requirements such as joining a certain Telegram channel, retweeting a tweet, or inviting new users to a project.
Airdrops do not involve the contribution of capital towards any project however. Doing so is considered to be an Initial Coin Offering (ICO).