Beginner’s Guide to Crypto Airdrops
Strategies for effective token airdrop farming
In this guide, we explore what a crypto airdrop is, why web3 projects do airdrops, how to find them, and most importantly, qualify for them. To close things off, we will share some pro tips and strategies to get the most value out of airdrops. Let’s dive in!
What is an Airdrop?
An airdrop is performed by a tokenless protocol (or a blockchain-based startup that has no token circulating) to distribute its tokens to specific wallet addresses. Airdrops are usually communicated through the project’s official channels such as X (formerly Twitter) and Discord.
Why do Projects Airdrop?
- Spread awareness about the project and encourage participation
- A marketing tool to encourage desired activities and foster community engagement through financial incentives
- Decentralize the protocol so that the tokens are widely held by users loyal to the project
How to Find Airdrops?
As explained above, Airdrops are a way for projects to distribute their token. DefiLlama has a tool for locating active web3 projects that have yet to launch a token:
- At DefiLlama.com, under “DeFi” submenu, go to “Airdrops”
- This page lists all projects without a token, their TVL etc.
- You can also filter this by Chain, a good way to look for projects on your favorite chain or a chain that you are familiar with
Another good way to through Airdrop Tracking tools such as One Click Lab’s Airdrop tracker.
- Visit: https://defi.oneclick.fi/airdrops/explore?page=1
- Use the filters on the left to filter by Tier, Status, Funding, Chain etc.
- Inside each project, OneClick Fi also lists out the steps / activities to potentially qualify for the airdrop.
- You can even mark these steps as complete for easy tracking.
How to Participate?
Participating in a project’s airdrop usually involves performing on-chain activities that the project deems desirable, some successful cases include:
Ethereum Name Service ($ENS)
- the project responsible for .ETH domains.
- Dated Nov 8, 2021
- 25% of Supply Airdropped
Eligible activities included:
- Registrant of an .ETH second-level domain
- Distribution based on the total time of the address’ past registration and future registration (the longer the more tokens)
- 2x multiplier for accounts that set their primary ENS name (or reverse record)
Arbitrum ($ARB) — an Ethereum Optimistic Rollup (Layer2).
- Dated Mar 23, 2023
- 11.62% of Supply Airdropped
Brief Eligibility:
- Bridging transactions into Arbitrum
- Number of months in which transactions were made on Arbitrum
- Number of transactions made or smart contracts interacted with
- Aggregate value of transactions
- Activity on Arbitrum One and Arbitrum Nova
Jito ($JITO) — a Solana liquid staking MEV Protocol
- Dated Nov 25, 2023
- 10% of Supply Airdropped
Eligibility:
- Staked SOL on Jito and had at least 100 Jito points,
- Solana validators operating the Jito-Solana MEV client
- Searchers who tipped at least 1 SOL
As demonstrated, different types of projects would have different “desirable activities” specific to the type of protocol, but a general rule of thumb for the different types:
Airdrop Tips and Tricks:
1. You can’t farm everything
One Click Labs’ Airdrop Tracker has over 360 airdrops, and there is sure to be others out there. Unless you have unlimited time and capital, you need to strategize and prioritize
2. Prioritise high conviction plays
The greatest value of the Tracker, besides having everything in one place, is the key metrics of each project. Each data point serves a purpose. Tier is an aggregate metric taking into account:
- Fit for popular narratives
- Funding
- Cost to Farm
- Dilution (over or under-farmed?)
- Lego opportunity (which I will get into below)
So you might want to focus on the top-tier projects first.
3. Budget your time and capital
Your resources, whether you’re a shrimp or a whale, are limited. You might be time-rich and capital-poor, vice versa, or both. If you have a low budget, look for the ones that are free to engage such as incentivized testnets.
If you have capital, providing liquidity to top tier projects on tokenless chains might have bigger payouts. Some say airdrop farming is for those just starting out or with low budget. I respectfully disagree. Airdrops still offers the best RISK-ADJUSTED returns in all of crypto, regardless of your capitalization.
4. Look for Many-in-One Legos
If you can chain your farming activities that hit multiple projects at once, you are being time and cost-efficient. An example is:
- Stake ETH on EtherFi and wrap it into weETH
- Bridge weETH via Stargate to Linea
- Deposit weETH into Mitosis
This string of actions hit EtherFi, Eigen Layer, Layer Zero, Linea and Mitosis (5 in 1)!
5. Your Goal should be to Increase your on-chain footprint
Increasingly some farmers are making use of bots and other QoL tools to automate farming using multiple wallets. Protocols are taking notice and they are filtering out Sybil (non-humans) by requesting PoH (Proof of Humanity).
Don’t underestimate the long-term benefits of having a high-quality wallet. This will become more and more valuable over time as crypto gets more and more mainstream.
At the end of the day, airdrops are a marketing tool, directing financial incentives towards their target customer, aka high-quality wallets.
6. Setup a Routine
Being consistent is the key to success in life and it is no different here. Once you have pinpointed your high conviction targets as I described above, build up a routine that you can easily follow on a daily, weekly or monthly basis.
Whether the market is up or down, you feel like it or not, or how busy you are during the day, if you have a routine and let that become a habit, the grind becomes easy.
Just stay the course and trust the process, you will be in the top 10% of farmers and reap the rewards.
7. Health first!
If you missed an airdrop or did not qualify, don’t stress! There is always the next opportunity! Just plant your seeds patiently and the harvest will come.
If you use the right tool and the right mindset, you might even “accidentally” qualify for an unexpected airdrop. The best airdrops are those that you least expect!
Risk Management
The inherent nature of airdrop farming is that you are mostly interacting with new protocols. This could subject you to a variety of risks:
- Smart contract risks
- Third-party risks
- Rug Pulls
- Oracle price feed risks
Always farm with money you can afford to lose, DYOR and be mentally prepared for the worst.
Beware of Scams! Due to the excitement and time-sensitive nature of airdrop claims, scammers are taking advantage and posting links to fake websites that look the same as the real ones. Always be on high alert when clicking links and use wallets such as Rabby Wallet which provides better protection than MetaMask.
I hope this guide has provided some insights into the Airdrop landscape and how you can maximize your returns from the time and capital invested. Stay tuned for more guides like this as we dig deeper into the world of Airdrops.
Disclaimer: This article, including insights on airdrop farming and other DeFi strategies, is for informational purposes only and should not be considered as financial advice, investment recommendations, or an endorsement of any particular investment or strategy. The cryptocurrency and DeFi markets are highly volatile and unpredictable. Past performance is not indicative of future results. One Click makes no representations or warranties regarding the accuracy, completeness, or timeliness of the information provided. Readers should conduct their own research and consult with independent financial advisors before making any investment decisions. By using this information, you agree that One Click is not liable for any losses or damages arising from your investment choices.
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