WHAT ARE CRYPTOCURRENCY AIRDROP AND VESTING PERIOD?
In this article, which is titled WHAT ARE CRYPTOCURRENCY AIRDROP AND VESTING PERIOD?, I would be explaining Cryptocurrency Airdrop and also an important aspect of Token Distribution which is Vesting Period.
WHAT IS CRYPTOCURRENCY AIRDROP?
An airdrop is a distribution of a cryptocurrency token or coin, usually for free, to numerous wallet addresses. Airdrops are primarily implemented as a way of gaining attention and new followers, resulting in a larger user-base and a wider disbursement of coins.
An airdrop is the giveaway of coins to those participants of the project who have performed certain actions specified by the organizers or meet certain eligibility criteria. There are two main types of cryptocurrency airdrops—automatic and incentivized.
An automatic airdrop refers to the situation when holders of a certain cryptocurrency receive new coins created as a result of a hard fork of the network. The main condition for getting such an airdrop is storing the pre-existing coin in the wallet or on the exchange that would support the fork.
An incentivized airdrop means that one receives coins for performing some tasks to promote the project, e.g., advertising, posting promotional content on the news resources, or leaving comments on the forums.
An airdrop, in the cryptocurrency business, is a marketing stunt that involves sending coins or tokens to wallet addresses in order to promote awareness of a new virtual currency.
Small amounts of the new virtual currency are sent to the wallets of active members of the blockchain community for free or in return for a small service, such as retweeting a post sent by the company issuing the currency.
A crypto airdrop is a marketing method employed by startups in the cryptocurrency space.
It involves delivering tokens to the wallets of current cryptocurrency traders, either for free or in exchange for a small promotional service.
The airdrop is meant to spread awareness and increase ownership of the currency startup.
While some are legitimate, other airdrops have been seen as fraudulent or scammy.
WHAT ARE CRYPTOCURRENCY AIRDROP AND VESTING PERIOD?
UNDERSTANDING CRYPTOCURRENCY AIRDROPS
The airdrop is a promotional activity typically performed by blockchain-based startups to help bootstrap a virtual currency project. Its aim is to spread awareness about the cryptocurrency project and to get more people trading in it when it lists on an exchange as an initial coin offering (ICO).
Airdrops are generally promoted on the company’s website, as well as on cryptocurrency forums, and the coins or tokens are sent only to current holders of crypto wallets, usually those of bitcoin or ethereum.
To qualify for the free gift, a recipient may need to hold a minimum quantity of the crypto coins in their wallet. Alternatively, they may need to perform a certain task, such as posting about the currency on a social media forum, connecting with a particular member of the blockchain project, or writing a blog post.
SPECIAL CONSIDERATIONS
A legitimate crypto airdrop never seeks capital investment in the currency. Its aim is purely promotional. On other hand, some crypto scams involve sending micro amounts of bitcoin or other cryptocurrencies to unsuspecting recipients in what is known as a dusting scam. Users should always be vigilant about unsolicited deposits into their crypto wallets.
ADVANTAGES AND DISADVANTAGES OF CRYPTOCURRENCY AIRDROPS
ADVANTAGES
Given the extreme competition among cryptocurrency startups, an airdrop is an attempt to stand out from the crowd. Some businesses devoted to crypto airdrops offer alerts to users and listing services to startups, plus a range of marketing services to fine-tune their airdrops. As always, there are good businesses and bad in this space.
Michael J. Casey, Chair of CoinDesk’s advisory board and an advisor at MIT’s blockchain research initiative, argued in a post on a CoinDesk blog that some type of marketing is essential if a cryptocurrency is to succeed. “A currency is nothing if it is not widely used. And that can’t be achieved unless people make some cost-incurring effort to encourage widespread usage,” he wrote.
DISADVANTAGES
However, there have also been warnings about cryptocurrency airdrops from others in the industry.
For example, Pierre Rochard, the founder of Bitcoin Advisory, tweeted a caution that crypto airdrops can be pump-and-dump schemes. That is, owners of the cryptocurrency could be artificially inflating its value in order to make a quick profit.
Rochard tweeted: “Watch out for give away scams like this:
1. Instantly pre-mine tokens for yourself and your friends
2. Trade the pre-mined tokens with each other to pump price
3. Bait retail investors with a ‘give away’ of the tokens
4. Retail evangelizes the token for you, dump.”
WHAT WAS THE FIRST CRYPTO AIRDROP?
The first cryptocurrency airdrop is attributed to AuroraCoin (AUR) on March 25, 2014. Intended to be the cryptocurrency for the nation of Iceland, every citizen or permanent resident who submitted their national ID received 31.8 AUR
WHAT IS AN NFT AIRDROP?
Similar to other types of crypto airdrops, an NFT airdrop credits #NFT holders with additional tokens. This is done to build a stronger community around certain NFTs, create buzz, and reward NFT holders.
DID THE COUNTRY OF EL SALVADOR DO A BITCOIN AIRDROP?
Yes. To encourage Bitcoin adoption as the country expanded its legal tender to Bitcoins, El Salvador credited everyone who installed the government-built wallet with $30 worth of BTC.
WHAT ARE CRYPTOCURRENCY AIRDROP AND VESTING PERIOD?
Vesting Period in Cryptocurrency
In cryptocurrency investment, Token Distribution is the most ignored metrics for determining the intrinsic value of any cryptocurrency be it coin/token.
What is a Vesting Period?
Vesting Period is the period a cryptocurrency Token airdropped, gotten from ICO or held by developer team is prevented from being swapped or transferred. It can also be termed Token Lockup period.
Why Vesting Period?
During token distribution of any cryptocurrency, the developers are likely to have more token allocated to them. Sometimes, much volume may have been offered as ICOs, IDOs or even Airdrops whichever way, some individuals must have received the token either for free or nearly free.
So, the purpose of Vesting period is an anti-dump policy to reduce sudden sell out of these tokens within the period when the project is yet to gain ground.
A typical example I can is $MUSK token. They locked tokens bought during their IDO, preventing earlier investors who bought cheaper from selling off until main launch date.
SEE ALSO : WHAT ARE CRYPTOCURRENCY MINING AND STAKING AND HOW DO THEY WORK?
Hope this post on WHAT ARE CRYPTOCURRENCY AIRDROP AND VESTING PERIOD helps?