What is an Airdrop

Airdrops refer to the process where cryptocurrency projects distribute a specific amount of tokens for free to a large number of users. This method is a common marketing strategy in the crypto industry, consisting of two main types of airdrops: reward airdrops and promotional airdrops.

Reward airdrops are the more common of the two, aimed at rewarding loyal supporters and providing them with incentives to continue participating in the project. Recipients of reward airdrops are usually existing users of the project.

In contrast, promotional airdrops aim to increase awareness and expand the user base. Recipients of promotional airdrops are typically individuals who have not yet interacted with the project.

For example, DeFi protocol 1inch conducted two rounds of airdrops between late 2020 and early 2021. The first round was a reward airdrop, and the second round was a promotional airdrop.

In the first round, 1inch distributed tokens to Ethereum wallets that interacted with the protocol, as long as the address met any of the following conditions:

Completed at least one transaction,

Made at least four transactions in total, or

Accumulated at least $20 worth of transactions.

In the second round of airdrops, 1inch allocated tokens to Uniswap traders who had never used 1inch, based on the following criteria:

Traded on at least 20 different dates, and

Executed at least three transactions in 2021.

Through the first round of airdrops, 1inch aimed to reward its loyal supporters. In the second round, the protocol sought to attract potential users and encourage them to become users.

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