What is an Airdrop? (Explained)

Last Updated:
August 11, 2022
What Is an Airdrop Feature Image

An airdrop is a distribution of NFTs, tokens or cryptocurrency that can be sent in either an unsolicited or solicited manner to web3 wallets. They are commonly used for both promotional and loyalty purposes.

A quick introduction to airdrops

What is an airdrop?

An airdrop is the process by which creators send NFTs, currency or tokens directly to wallets. 

Why airdrop?

There are many reasons a creator might run an airdrop:

  • As part of an initial coin offering (ICO)
  • As part of a bounty campaign
  • To run a free token giveaway 
  • As a reward or perk for holders of NFTs from a certain collection.

In this article we will be focusing on the final point - creators airdropping to existing holders of an NFT collection.

What is the difference between airdropping and dropping NFTs with an allowlist?

There are 2 primary ways in which creators can give wallet owners access to an NFT collection:

NFT drop with allowlist


Owner pays gas

Creators will often give wallet owners on an allowlist exclusive access to mint NFTs. This seems like an attractive option as it pushes the gas costs onto the buyer since they are responsible for writing their ownership of the token to the blockchain.

Considerations:
  • These kinds of drops can lead to a prolonged minting process as it takes some time for members of the allowlist to mint all of the NFTs. This means it takes a longer time for the market to stabilise and determine the value of the collection.
  • The hype generated by an allowlist is less concentrated than in an airdrop.
  • If the aim is to reward NFT holders, getting them to pay the cost of minting detracts for the feeling of winning.

Airdrop 

Creator pays gas

In an airdrop, the creator writes the ownership of NFTs onto the blockchain, meaning they cover the cost of the gas to do so. Airdrops are often a batch transfer executed using ERC-1155, which allows an array of NFTs to be transferred to an array of wallets.

Considerations:
  • Airdropped NFTs appear directly in an owner’s wallet - no action or cost is required from them in order to access the token.
  • Airdropping can cost $$$ for each NFT minted; for large collections an airdrop can cost many tens of thousands of dollars.
Overall, airdrops provide a better user experience for NFT holders;

They are free to receive and appear in all owners’ wallets automatically and simultaneously. However, up until now they have been prohibitively expensive to run. 

Could you airdrop on a cheaper platform, like Polygon, rather than Ethereum?

Yes, it is possible, but we would always recommend Ethereum.

ETH is regarded as the final settlement layer. There is social consensus that it is the authentic version of a digital asset. In addition, a lot of the biggest name NFTs are on the platform, creators can interoperate with other contracts and run owner cohorts on the biggest brands. It also has the largest NFT liquidity. 

Is there a way to reduce the costs of airdrops?

Yes, with Metacommerce Airdrop creators can send drops to current token holders for a fraction of the cost, by leverage Phantom Airdropping technology. Read about it here.

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