Airdrops Reveal More Than Just Free Crypto

by Bruce Ng
By Bruce Ng

Bitcoin (BTC, “A-”) is still pulling back post-ETF launch. And it’s pushing the broad market into correction mode, as well. 

This is where I remind you that nothing goes up in a straight line. Not even in a bull market. 

Indeed, corrections in a bull market can be considered buying opportunities. 

But that doesn’t mean corrections are the only opportunity to add exposure to new cryptos. In fact, there’s a phenomenon in the crypto markets that rewards users with free crypto. 

It’s called an airdrop. 

That’s when small amounts of a new crypto are sent to the wallets of active members of the blockchain community, either for free or in return for a small service. 

There are five types of airdrops. Each one represents a different way you can qualify.

  1. Standard Airdrop

This is the simplest approach. In a standard airdrop, participants interested in receiving an airdrop simply express their interest to qualify. In all cases, the individual must provide a valid wallet address. The need for any additional information is up to the organizers of the airdrop.

Generally, standard airdrops have a set amount of tokens you can receive to a single wallet, meaning everyone usually gets the same reward.

  1. Bounty Airdrop

As the name implies, bounty airdrops are rewards for users who perform certain tasks. Said tasks usually raise awareness for the project, either by posting and tagging on social media, signing up for a project’s newsletter or following the project’s social media accounts.

Often with bounty drops, each task will earn the user a set number of points. The size of their reward will be based on the number of points they collected total. In some cases, users may even be required to earn a certain amount of points before they qualify for their airdrop. 

  1. Holder Airdrop

Holder crypto airdrops occur automatically based on who is holding existing tokens and how many tokens they hold. Because wallets and blockchain information are part of a publicly distributed ledger, all users of blockchain have full transparency into the wallets and distribution of tokens.
 The benefit of this type of drop is there is no additional action needed on your part to qualify.
 
 But there are two main downsides to this approach. 
 
First is that it can be easy to miss if you’re not paying attention and didn’t expect a drop.
 
Second, because there’s no way to opt in or out, you could receive an airdrop you don’t want. 

Alternatively, holder airdrops ensure that only the largest, most invested individuals receive the reward of free crypto. 

  1. Exclusive Airdrop

This is the next level of a holder airdrop. In essence, the recipients of an exclusive drop are also selected by a project, rather than having to sign up for themselves. The difference here is the criteria for selection are often about activity on the project, rather than what’s in a user’s wallet.
 
 In short, an exclusive airdrop is an even more centralized way of rewarding those closest to the project.

  1. Raffle Airdrop

In this approach, a project will state the number of airdrops they intend to give and encourage individuals to earn a raffle ticket. This ticket may be earned by holding tokens, earning points or simply expressing interest.

It should be said that usually, the amount you receive in an airdrop isn’t much. That’s because the primary goal of an airdrop is to market the new crypto. 

Still, there’s no reason to turn your nose up at free crypto. Especially when it can give you exposure to a new project that has room to grow. 

But there's another benefit to airdrops than just free crypto. Specifically, the information it can reveal. 

Let’s take the recent example of Manta Network (MANTA, Note Yet Rated)

Manta is a new Ethereum Layer-2 that dropped on Jan. 18. It has a market cap of $611 million and is currently trading near $2.40.

You’ll recall from previous Weiss Crypto Daily updates that L2s are scaling solutions. They are chains built on top of a base layer to increase transaction speeds and lower fees when the base chain gets too congested.  

Although it’s incredibly new, it’s already punching against heavyweight contenders like Optimism (OP, Not Yet Rated) and Arbitrum (ARB, Not Yet Rated)

Just take a look at its total value locked in the table below: 

Figure 1: Top 10 TVL of Layer 2s on Ethereum. Source: DefiLlama. Click here to see full-sized image.

 

Total value locked represents the liquidity stored on a network or platform. More importantly, it’s a representation of that platform’s usage and popularity. 

You can see that newcomer Manta is now ranked fourth of all blockchains in the Ethereum ecosystem based on TVL. 

That means it’s got Coinbase’s L2 beat and is hot on Optimism’s heels. For context, Optimism has been a leading L2, falling just behind Arbitrum, for the past two years.

We think this explosive start signifies a promising future for Manta. 

Its token, MANTA, was airdropped to users who bridged to the Manta blockchain in December and January. 

Now look at its price action directly after the airdrop: 

Figure 2: MANTA/USDT. Click here to see full-sized image.

 

You can see to the far left a solid green line soaring to the top of the chart. That’s when MANTA was listed on an exchange for the first time. Just one day after the airdrop. 

That pump was followed by days of sideways action. 

And that’s the key takeaway: Price action immediately following an airdrop can reveal a lot about investor sentiment.

Usually after an airdrop, you expect to see some downside action. After all, if the token was free and it pumps at listing, many airdrop recipients would consider selling to pocket some quick, easy gains with little effort and no initial investment. 

But sideways action following an airdrop means people who got this token for free aren’t selling. They’re holding. 

And that is a bullish sign that MANTA recipients are bullish on its future prospects. 

Remember, in the decentralized world of crypto, an active community is necessary for the success of new crypto projects.

Even if you missed qualifying for an airdrop, it pays to follow the fall out. That way, you can see for yourself which new projects have community support … and which are fizzling out before they’ve even gotten started. 

So, where can you learn about upcoming airdrops?

There are two main ways.

The first approach is to follow aproject’s social media accounts. Airdrop announcements and general community updates are often posted there first, so following your favorite projects on X, Reddit, Discord and the like is always a good first step.

Of course, that approach relies on you being informed of new and small projects already.

The second approach is more accessible: The use of websites like Airdrop Alert or Earn.Fi. These sites scour the crypto space to show announced airdrops in one place. 

Best,

Dr. Bruce Ng

About the Contributor

Dr. Bruce Ng is a literal rocket scientist who was among the first to write about DeFi. Today he applies the same mathematics and scientific methods to the crypto space to discover the world’s most promising, and potentially most profitable, altcoins.

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