Airdrop
In simple terms
An airdrop is when a cryptocurrency project gives away free tokens to people's digital wallets. It's like a company handing out free samples to promote a new product.
Definition
Free distribution of crypto tokens, usually to promote a project.
In depth
An airdrop is a distribution mechanism where a blockchain project sends tokens directly to wallet addresses, typically recorded on the distributed ledger. Projects use airdrops to bootstrap user adoption, reward community members, or ensure decentralized token distribution across a wider holder base. The transaction is recorded on-chain, and recipients gain immediate access to the tokens in their wallets. Airdrops often include eligibility criteria based on snapshot dates, previous token holdings, or wallet activity to prevent Sybil attacks. Some projects use smart contracts to automate airdrop distribution at specified block heights or through merkle tree verification.
How does Airdrop work?
A project decides which addresses qualify — past use of its protocol, holding a related token, or testnet activity — and takes a snapshot of chain state at a chosen block. Eligible addresses and amounts are usually committed on-chain as a Merkle tree, and recipients claim through an official page by submitting a proof and paying the network fee. Some projects instead send tokens directly to wallets. Claim windows commonly expire after weeks or months, with unclaimed tokens returning to the treasury. Unsolicited tokens simply appearing in a wallet are frequently bait rather than a real distribution.
An example
A protocol snapshots every address that traded on it before a set block. Someone who made four trades qualifies for 400 tokens and claims them by connecting to the official site and paying about $3 in network fees. In many US situations tokens received this way are taxable when received, valued at that moment, though rules vary — a tax professional can confirm what applies. Figures are illustrative.
Figures are illustrative only.
What beginners get wrong
- Clicking a link embedded in an unexpected token's name or description, since these often lead to sites requesting approvals that drain the wallet.
- Connecting to a claim page found through a search advertisement or a direct message rather than the project's verified channels.
- Assuming free tokens carry no tax consequences, when treatment varies by country and circumstances and is worth asking a professional about.
- Unclaimed tokens often expire, because most airdrops set a claim window of weeks or months and return the remainder.
Related terms
Part of
What is tokenomics, and why does token supply matter? — the subject page for tokenomics and supply, with all 14 of its definitions in one place.
Educational only — not financial advice.