What is a crypto airdrop?

A crypto airdrop is a distribution of tokens to many wallet addresses at once, usually at no cost to the people who receive them. Projects use airdrops to reward early users, spread ownership of a new token and hand out voting power, and the project alone decides who qualifies and how much each wallet gets. Real airdrops are claimed on the project's own website or app, and none of them needs your seed phrase.

How a crypto airdrop works

MetaMask's help centre says an airdrop "consists of a token creator sending some quantity of tokens to Ethereum addresses", chosen "maybe at random, maybe from a list of users of a particular dapp or sidechain". The IRS uses a similar definition in its virtual currency FAQ: "a distribution of cryptocurrency to multiple taxpayers' distributed ledger addresses".

The two best documented airdrops, Uniswap's in 2020 and Arbitrum's in 2023, followed the same sequence:

1. The project sets the rules. It decides which activity counts, how tokens are split between wallets and which wallets are excluded.
2. It takes a snapshot. A snapshot is a record of wallet activity or balances at a fixed point. Uniswap's snapshot ended on 1 September 2020 at 12:00 am UTC; Arbitrum's was taken at block 58642080 on 6 February 2023.
3. The token is created. This is the token generation event, or TGE. Arbitrum dates its own to 16 March 2023. What is a TGE explains how it relates to claims and listings.
4. Eligible wallets claim. Neither airdrop was pushed into wallets: eligible users had to claim their tokens during a claim period. Arbitrum's claims opened on 23 March 2023 and closed on 24 September 2023, and its docs now say ARB "is no longer claimable".

A claim is a blockchain transaction, so it costs a gas fee paid to the network, not to the project. ethereum.org notes that "every transaction on Ethereum requires a small form of payment to process" and that the fee changes with network congestion. Layer 2 networks such as Arbitrum offer lower fees, according to the same page.

Why projects give tokens away

An airdrop puts a new token in the hands of people who already use a product. Three examples show the pattern.

Uniswap (UNI), September 2020. When Uniswap Labs introduced UNI on 16 September 2020, it minted 1 billion tokens and allocated 60% of them to community members. 15% of the supply, 150,000,000 UNI, could be claimed straight away by past users, liquidity providers and holders of its SOCKS token. Every address that had ever called the Uniswap v1 or v2 contracts could claim 400 UNI: 251,534 addresses in all, including about 12,000 that had only ever submitted failed transactions. The announcement said UNI would enable "shared community ownership" and a governance system run by its holders.

Arbitrum (ARB), March 2023. ARB is the governance token of the Arbitrum One network. The Arbitrum Foundation's distribution table gives 11.62% of the initial 10 billion supply, 1.162 billion ARB, to users of the network through an airdrop, and 1.13% to DAOs building on it.

Hamster Kombat (HMSTR), September 2024. The Telegram game's whitepaper (rev. 0.3, dated 12 September 2024) fixed the total supply at 100,000,000,000 HMSTR and said 60% of the airdrop's volume would go to players. It also promised "the largest airdrop in the history of crypto", which is the project's own description.

The main types of airdrop

• Retroactive airdrops reward what wallets did before the rules were known. Uniswap published its rules on 16 September 2020, 15 days after its snapshot closed.
• Points programs turn activity into points that the project may later convert into tokens. Arbitrum's own airdrop was sized with a points system: 1 point per qualifying action, capped at 15. Airdrop points programs covers the campaigns that announce points in advance, and Orange Finance is one listed here.
• Game and tap-to-earn airdrops reward play. Hamster Kombat's whitepaper said its first airdrop would depend on activity in the game, community interaction, "the quality of the friends you invited", achievements, wallet integration and reputation. Many of these games run as Telegram Mini Apps; see Telegram tap-to-earn airdrops and the Hamster Kombat page.
• Exchange airdrops hand tokens to users of a trading platform. Before HMSTR listed, Binance let users lock BNB and FDUSD for 3 days from 23 September 2024 to share 3,000,000,000 HMSTR, 3% of the supply, with KYC required.
• Unsolicited airdrops are tokens or NFTs that simply appear in your wallet. MetaMask describes them as a common scam setup: the token will not swap, and a message sends you to a website that asks for your recovery phrase or a malicious approval. Airdrop scams covers them in detail.

Who qualifies, and why some wallets get nothing

The project's rules decide everything, and they can be strict. Arbitrum's airdrop gave nothing to wallets with fewer than 3 points and between 1,250 and 10,250 ARB to those above the line. Points scored after its Nitro upgrade on 31 August 2022 were worth half as much, so the smallest allocation was 625 ARB.

Projects also screen out Sybil attacks, where one person runs many wallets to collect several allocations. Arbitrum took a point away from any wallet whose transactions all happened within 48 hours, and disqualified addresses identified as Sybils during the Hop protocol's bounty program. Hamster Kombat's whitepaper asked whether players had invited real friends or "bots".

Where you live can matter too. Binance's HMSTR announcement listed regions, including the United States, the United Kingdom, Canada and Japan, whose residents could not take part in the airdrop distribution through Binance. Airdrop eligibility goes through snapshots, filters and exclusions in full.

Are airdrops free money?

The tokens cost nothing to receive, but an airdrop still has costs and risks:

• Fees. The claim transaction costs gas, and so does moving or selling the tokens later.
• No guaranteed value. An allocation is a number of tokens, not a sum of money. Hamster Kombat's whitepaper says nothing in it "should be treated as a guarantee or promise" of the tokens' utility or value.
• Lockups. Some holders cannot sell at launch. Arbitrum's user airdrop was available from the start of distribution, but team and investor tokens were locked for 4 years, with the first unlock 1 year after the TGE. See vesting.
• Tax. The IRS FAQ says that cryptocurrency received from an airdrop following a hard fork is ordinary income, equal to its fair market value when it is recorded on the ledger and you can transfer it. Other airdrops and other countries can be treated differently: airdrop taxes sets out what the IRS, HMRC and ATO say, and a tax adviser can apply it to your own situation.
• Scams. MetaMask warns that airdrop scams are "actively being developed". ethereum.org's security guide says no legitimate service, support agent or website will ever ask for your recovery phrase, also called a seed phrase, and that offers to send you crypto if you send some first "are always scams". Read how to claim an airdrop safely before connecting a wallet to anything.

Where to find real airdrops

Start from the project's own website, docs or official channels, never from a link someone sends you. Arbitrum's docs show what that looks like: they name arbitrum.foundation as "the only official website" for the ARB airdrop and add "There is no presale. Don't ever share your seed phrase."

AirdropStop lists 14 airdrops, mostly 2024 Web3 gaming campaigns, each with its steps and a status checked against the project's own pages. Browse them on the airdrops page or by chain, for example TON or Solana.

Key takeaways

• An airdrop is a distribution of tokens to many wallets, usually free, under rules the project sets.
• Uniswap's 400 UNI in September 2020 and Arbitrum's ARB in March 2023 both rewarded activity recorded in a snapshot taken before claims opened.
• Claims cost a network fee, can close for good, and can exclude some wallets and countries.
• Value is never guaranteed, and in the US the IRS treats some airdrops as ordinary income.
• A real airdrop never needs your seed phrase.