How do NFT Airdrops work?

Learn more about NFT airdrops. This article explains how projects are using them and why they are important.

How do NFT Airdrops work?

You may have heard about NFT airdrops or you may have received an NFT yourself that was directly sent to your wallet. They have become an effective means of promotion for NFT projects and the ways people can use airdrops continue to evolve over time as the NFT market grows.

So what exactly is an NFT airdrop, and how are NFT projects using them?

What is an NFT Airdrop?

Firstly, this is not the same as airdropping your friend a photo or a video. The term 'airdrop' within the context of NFTs refers to something different.

An NFT airdrop is a promotional tool that gifts early NFT project adopters free items like more NFTs or other tokens. For example, in a situation where an NFT project is thanking early users for participating in the community, that project might send free NFTs to each user's wallet address. This is known as an 'NFT airdrop.'

The NFT airdrop can be seen a marketing tactic for new and existing projects to encourage holders and investors to have confidence in the value of the project. The intention is that more people will want to own an NFT project if they know that holding it may result in them receiving future airdrops, kind of similar to being part of a valuable rewards program from traditional retailers.

How to Receive an NFT Airdrop

Depending on the project, there are a few ways to receive airdrops. To receive an NFT airdrop, you usually need to meet one of the following conditions. You can complete specific tasks to earn an airdrop, such as re-tweeting information from the account page about the project, which spreads the word quickly. Or you may be asked to leave a positive comment and tag a certain number of friends.

Another way to qualify for an airdrop is by holding a minimum quantity of tokens or another digital asset in your wallet. For example, Bored Ape Yacht Club (BAYC) NFT holders who held at least one Bored Ape NFT received an exclusive airdrop of the 'Mutant Serum' that allowed them to mint a new Mutant Ape Yacht Club NFT, the second project from Yuga Labs. The market value of the Mutant Ape NFTs have increased over time, making it more appealing to hold Bored Ape NFTs with the expectation that you may be eligible to receive future airdrops. This tool has been used by many different NFT collections as a way to reward and hopefully strengthen their community.

Receiving something of value as a free reward can help create excitement around a particular NFT project. Each project ultimately decide the requirements for someone to receive an airdrop - which may mean may having to complete certain tasks, holding a specific digital asset, or something else entirely.

Why Give Away NFTs?

As previously stated, NFT airdrops are used as a marketing tool. When an NFT project’s team is ready to make a big announcement or host an important event, airdrops can be a good way to bring attention to the project.

Besides the obvious promotional advantage, what other reasons could there be for a free NFT airdrop?

Some NFT airdrops are extremely rare, generating value for the holder and the broader community. And since the NFTs can be sold on secondary markets, holders can sometimes profit receiving an airdrop.

These drops can also be used to attract new users and build a community around an NFT project. If done correctly, the project will attract loyal users. These community members can help generate buzz around the project and make the asset more attractive to others in the space.

Some of these drops come with governance tokens that grant users the authority to vote on the direction in which they’d like to see the project move. Having a strong community helps keep the project relevant and strengthens its growth potential.

NFT Airdrop Scams

Scams appear in many different industries and it can be difficult for new users to know what’s legitimate or not. By educating yourself on the topic, you should be able to better distinguish between meaningful, high-impact NFT airdrops and potential scams.

Some of the common warnings to keep on eye out for:

  • Asking for private wallet information, secret phrases, and passwords.
  • Requesting a payment before you can receive the airdrop.
  • Required to share your screen to obtain the drop.
  • A new, unverified NFT airdrop.
  • Links that take you to a separate site where you sign in using your wallet.

Protect yourself and your wallet from being compromised by researching NFT airdrops thoroughly.

Types of NFT Airdrops

Here are different types of NFT airdrops.

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Standard NFT Airdrop

In standard airdrops, a percentage of the project’s native token is shared with all existing wallets in the community. You may have to complete a simple task like joining a whitelist or signing up for a newsletter, but you won’t have to spend anything to receive the NFT. An example of this is NFT marketplace SuperRare, who airdropped $RARE tokens to people who had previously sold or bought art on the platform.

Exclusive NFT Airdrop

Loyal, long-time holder may be rewarded with an airdrop. An exclusive NFT airdrop may require you to trade or list a particular digital asset in a marketplace before receiving the reward. Examples of this include the NFT marketplaces Blur and LooksRare, who each airdropped tokens to people who had previously traded NFTs. In order to receive the tokens, you had to list an NFT for sale on Blur or LooksRare.

Community NFT Airdrop

Holding a specific token in your wallet during a specified time frame will qualify you for a holder airdrop. Examples of this include RTFKT and Bored Ape Yacht Club NFT projects, that airdropped new NFTs to wallet addresses that were holding previously released RTFKT and Bored Ape NFTs.

NFT Airdrop – A Token of Appreciation

NFT airdrops can be a generous way to say thank you to the community supporting a project. The token of appreciation can be resold, giving users even more incentive to engage with NFT projects early on. Research the project to verify its authenticity before accepting an NFT airdrop to prevent scammers from obtaining your information. Airdrops can be a great way for NFT projects to gain exposure and establish a loyal community.

FAQs

Q: What is an NFT airdrop?
A: It’s a marketing tool used by projects to distribute NFTs to qualifying wallets that meet certain criteria.

Q: Is an NFT airdrop legit?
A: As with any high-value market, you should do your research to make sure any airdrops offered to you are legitimate.

Q: How do you make money with airdrops?
A: You can resell the NFT on the secondary market.