Crypto airdrop season: Why people are making thousands for 'free'

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To a pleasant surprise the spirit woke up on Christmas Day. It wasn’t an unexpected gift in his Christmas stocking, but an unexpected warning on his phone. A new cryptocurrency had launched, and that deserves to claim something for free.

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It sounds like a scam, no more sophisticated than an email from an alleged Nigerian prince. But it was not so. Seoul, a recreational trader in his 30s who did not give his real name, struck a “claim,” paid a transaction fee and saw $2,000-worth of tokens flow into his wallet.

In the shocking world of cryptocurrency, this is called an airdrop. They are not as rare as you might think.

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Many traditional companies raise money by going public and offering stock to the public. organizations working on web3, the blockchain-integrated internet, goes a similar route by launching a token that people can buy and sell on exchanges. Some of these token launches are accompanied by airdrops. If you used the tools provided by the web3 organization, you get a bunch of tokens in your wallet. Imagine if Adobe went public and sent 100 stocks to anyone who used Photoshop in the last 12 months, to raise awareness.

“Airdrops can be thought of as a customer acquisition cost,” explained Alex Gedevani of the Delphi digital research firm. Their usefulness is twofold. First, they act as a form of marketing. Nothing attracts attention like the prospect of free money. Second, it has become etiquette that blockchain apps will do an airdrop when they list the token. So punters experiment with new apps with the knowledge that, if the app is successful, a lucrative AirDrop is likely in the future.

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Soul, who has been trading as a hobby since 2020, said, “It makes me super hyped for Web3.” “Airdrops encourage you to dip your toes in everything.”

The company behind the Christmas Day airdrop is called OpenDAO. Anyone who bought or sold on OpenSea, the largest NFT marketplace, can claim OpenDAO’s $SOS token. As of Jan 12, 300,000 wallets have claimed the airdrop. (Unusually for an airdrop, OpenDAO is not officially associated with OpenSea. OpenDAO is intended to support merchants in ways that OpenSea does not – but that’s a whole other story.)

The more money users spent on OpenSea, the bigger the airdrop they were eligible to receive. Anyone claiming the airdrop will see a Spotify Wrapped-Style Infographic Details of your NFT trading data from 2021 onwards. Soul spent $25,000 on NFTs through OpenSea, which put him in the top 6%.

Airdrops received by the top 1% limit on porn. Crypto Whale published its infographic on Twitter, claiming to have airdrops worth thousands of dollars. Many traders had bought so many NFTs, and spent so much on Ethereum’s notoriously expensive transaction fees, that they were able to claim $140,000 worth of SOS.

OpenDAO became the newest token, on December 26th $650 million worth of $SOS is being traded. now it has one market cap $312 million, is listed on several major exchanges and is one of the largest DAOs on the market. (the DAOs are decentralized autonomous organization, which work by issuing tokens that double as voting rights – token owners then vote on how the DAO’s treasury is spent.)

If there is one thing that can be counted in cryptocurrency, it is that success is immediately emulated by others. OpenDAO garnered an enormous amount of attention, and airdrops have been flowing ever since.

come in drops

Airdrops are not anomalies, but they are usually spread out over a period of months. Before Christmas, the last big one came in November courtesy of Ethereum Name Service, a tool that allows users to change their wallet number to a wallet name — like Daniel.eth. However, since Christmas, there has been a flurry of airdrops that have tried to mimic the success of OpenDao. The first was GasDAO, where traders were given tokens based on how much they spent on Ethereum transaction fees. The price of Seoul’s airdrop was $1,300. Others got much more.

“How I Made Over $250K in the NFT Space in December, Analysis of Unique Opportunities in the Space,” Tweeted by a prolific businessman, “I have claimed $SOS and $GAS.”

On Monday, January 10, Looks Rare followed. It is an NFT marketplace that hopes to compete with OpenSea, and has issued an airdrop to raise awareness. Anyone who buys or sells NFTs in 2021 is able to claim $LOOKS tokens If They list an NFT on the Looks Rare platform. The lowest level of the airdrop was $400, although more active traders received much higher.

Then came Fees.wtf, Thursday 13 January, an analytics tool that shows traders how much money they have spent on transaction fees. AirDrop is designed to promote an analytics dashboard tool that charges.wtf will launch soon.

Yet not all airdrops are created equally. Its purpose is not to get people to sell their tokens, but to hold them and buy more. Some tokens become more valuable over time, while others fade into obscurity. Looks are tokens of rare doubled in value since Monday’s airdrop, while the $GAS token kept their value for a few days Before that most airdrops became useless.

“After the success of OpenDAO, many people have imitated,” OpenDAO creator 9x9x9 told me. “But they use OpenDAO success to raise money for themselves.”

9x9x9, speaking on condition of anonymity, said airdrops are often used to enrich founders. A team will reserve tokens for itself, launch an airdrop to promote, and then sell the reserved tokens at a higher level. He did not name the airdrops he was referring to, but claims that OpenDao is a passion project and that no tokens were reserved for the team.

As is always the case with cryptocurrency, there are risks and scams. A flaw in Fee.WTF’s smart contract caused the token’s price to drop in less than an hour, a disaster for early investors. The allure of free tokens is strong, and shady developers can take advantage of it, creating dodgy smart contracts that can withdraw funds from wallets claiming airdrops.

“Always question free money of any kind you receive in crypto,” said Delphi’s Gedevani. “Airdrops coming from public-facing teams can easily be identified as legitimate, but in the past there have been a handful with malicious intent, mostly from unknown sources, that have led to the loss of user funds.”

Spirit is ambivalent about risks, and is instead eager to keep the money flowing. “These airdrops make me want to buy into every new tool.”

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