[Article] Everything you need to know about Airdrops and how to create one

[einax]

You have probably seen a lot of airdrops and different projects giveaway their tokens for free left and right. Why are they doing it even though most of the giveaways require investing money on developer's side? You will find answers in this guide to Airdrops.

What is airdrop?
Airdrop refers to the free distribution of small amounts of certain virtual currency (often tokens) to the community members. Airdrops can be distributed for free or for performing small tasks (like follow developer's twitter, joining telegram group etc). The main purpose of Airdrops, however, is to increase userbase of the project and incentivize token holders to have a positive attitude towards the project they already received a share in.


Airdrop types

Back in 2013 crypto-community was booming with different Bitcoin Forks that was experimenting with the different methods of token distribution. One of the most important task for every project developer was to ensure that coins were distributed in proportion to the effort this project's audience invested in its development. The easiest way to do this was by implementing POW allowing everyone to invest power of their own PC to mine some coins at the launch. Some of the developers tinkered with block rewards, difficulty retargeting and implementing ASIC resistant algorithms (like Scrypt and later X11, X13 etc). Often developers made "premine" rewarding their own address with the substantial amount of coins that were later given away in form of bounties and giveaways to those who had no luck mining their own coins. This practice gave an opportunity to numerous altcoin mining pools and mining services to create platforms to resell hashing power in order to give an advantage to certain miners making POW distribution less and less effective for newcomers. At the same time, "faucets" became standard for almost every new coin release.

Faucets

The faucet is a script that receives and address and commands some node to send a fixed amount of coins/tokens to this address. Faucets were the direct predecessor of modern airdrops and often used today as a mean of coin distribution but mainly for coins with their own blockchain.
Faucets were born at the early days of bitcoin where certain websites rewarded users with a tiny amount of BTC for watching adds, solving captchas or performing other effortless tasks. However, since transaction fees increased dramatically Bitcoin faucets are almost died out. Due to technical limitation and network fees Faucets are also a poor way to distribute Ethereum based tokens.

Use cases:	Advantages:	Limitations:	Required Skills:
Faucets are great to make sure people have installed/compiled your custom wallet because it is often required to create an address that is required to receive coins from the faucet. This way you mostly reward participation in the network and maintaining the network. .................................................................	Great for supporting POW/POS altcoins. Cheap and easy to install for those who managed to compile and launch their own for of Blockchain-based coin. Not very newbie friendly but relatively cheap to maintain because it does not require to pay costly transaction fees.	Faucets are flat out bad for Ehereum based tokens because all token transactions are Ethereum transactions, and every faucet transaction will invoke additional costs for the developer. It is also impossible to ensure fair distribution of faucet coins because there are no limits to how much unique addresses users can create and faucet developers had to create their own limiting systems on top of the faucet (for example limiting faucets to giveaway certain amount per IP address or require user to confirm their transaction by solving captcha/clicking e-mail link). Requires moderate programming skills to install and maintain.	In most cases you need to know C++ in order to create your own fork of a coin, and some PHP or other WEB friendly language in order to attach your Node to your web-based Faucet. .................................................................

Conclusion:
Faucets are great a way of supporting newborn blockchain with nodes but do not solve "fair distribution" problem. Requires programming skills to set up and does not work on ETH based Tokens.
Here is a robust PHP based faucet code: https://github.com/phpfaucet/faucet

Ethereum Token airdrops

With the Ethereum rise, creating Tokens on top of Ethereum blockchain became almost routine. Over 60% of altcoins issued to date are initially made on top of Ethereum (over 70% of which are based on ERC20 or ERC20 compatible standard). The invention and adoption of Ethereum virtual machine and smart contracts brought an easy interface for altcoin developers to implement their own token without a hassle of compiling and launching their own Bitcoin-like fork. Being extremely user-friendly Ethereum, however, suffers from many cavities making it fairly expensive to work with a smart contract from a developer perspective. Since there is no set standard for ERC20 Airdrops many developers have to create automated scripts and tools to initiate token distribution. Another downside of using Ethereum platform is the fact that every token transfer is subject to an ever-changing gas fee (paid in Ethereum) and there is no easy way to create a transaction that would update balances of an arbitrary number of addresses at once. This is why Ethereum airdrops are often required Whitelisting (i.e. gathering and inviting potential receivers and their addresses beforehand in order to hardcode their addresses into token distribution smart-contract and partially avoid fees). Because of how Ethereum works, airdrop process involves much preparation and maintaining (like maintaining Google Forms and a list of their users).

Use cases:	Advantages:	Limitations:	Required Skills:
Ethereum airdrops are great to distribute a significant portion of the tokens to the future userbase without user's active participation (though it is usually required for the user to participate in social activities or perform KYC) .................................................................	Great for increasing userbase, and distributing token to a much wider audience (apart from Faucets, Ethereum based airdrops does not require anything besides ethereum address to complete token transfer)	Ethereum token airdrops are either hardcoded in smart contractor require to perform lots of individual transactions making it extremely not flexible and costly to operate. In addition to poor flexibility on-chain airdrops usually, require lots off preliminary work like Whitelisting and maintaining records that leave a lot of room for mistakes	You need to know Solidity (Ethereum language that is fairly similar to JAVA), and some basic JS knowledge so you can effectively interact with geth node. .................................................................

Conclusion:

Ethereum Airdrops are a modern and popular version of the token distribution that inherits both upsides and downsides of the Ethereum blockchain ecosystem. It remains the most popular modern way to create airdrops but does suffer from poor flexibility and high costs. Creating efficient ERC20 token airdrop also require knowledge of ethereum solidity language and significant efforts in maintaining userbase records.

Here is an example ERC-20 based airdrop.
https://hackernoon.com/how-to-script-an-automatic-token-airdrop-for-40k-subscribers-e40c8b1a02c6


Offchain airdrops

Another way to create your airdrop is by using a trusted 3rd party escrow to offload book-keeping and avoid unnecessary costs to perform transaction fees (however platforms usually enforce their own costs). Similar token distribution was used in early ICO's where exchanges were often utilized as a platform that served as a trusted agent to accept liquidity (usually Bitcoin) and distribute presale subject without making actual on-chain transactions. Modern exchanges, however rarely perform listings of new projects at the stages before initial coin offering/Airdrop has been already concluded and therefore off chain Airdrop practice has never really evolved (at least until einax.com launch). We have launched einax.com service to allow all token developers to create an easily accessible interface to Airdrops and bounties, lifting all hassle with solidity programming and creating costly on-chain transactions. Creating an Airdrop with einax.com is free (we don't even take a service fee for now) and pretty effortless process.

Use cases:	Advantages:	Limitations:	Required Skills:
Offchain airdrops are universal distribution services for all platforms/coins/tokens. .................................................................	Great tools for smaller teams that don't have enough resources to put into the task of maintaining an Airdrop. Takes away the hassle of creating customized smart-contract, maintain a track record of people who have received an Airdrop and whitelist users. Creating off-chain airdrop on einax.com takes no more than 5 minutes	Using a centralized service are always bare inherent risks. However, those risks are significantly less potent because Tokens value are undefined before Airdrop conclusion.	You have to know how to CTRL+C/CTRL+V to create your smart contract and how to send a message to our telegram group https://t.me/einax_exchange .................................................................

Conclusion:
Off-chain airdrops are the easiest way to create airdrops, however, you will be limited by the platform offering the service.

If you have any further questions feel free to ask here in this topic.
Cheers!  

PS: We've published a guide on how to launch your own AirDrops on einax platform. Good thing is that you don't even have to deposit anything to try out how to create off-chain airdrop because every new account registered at einax.com receives 100 free Welcome Tokens for service and features testing.

PPS: If you want your token to be listed on Einax - feel free to PM me any time!

[1714940673]

1714940673

[1714940673]

1714940673

[ZacharyComstock]

I kinda like an off-chain Airdrops idea. Much easier to hodl all airdropped tokens in one place where I could start trading them immediately after markets go live. Removes a lot of hassle with Myetherwallets and inherent transaction fees. Centralization is, of course, an issue, but I wouldn't be worried as much since I wouldn't be storing Bitcoins there anyway.

[einax_oliver]

I kinda like an off-chain Airdrops idea. Much easier to hodl all airdropped tokens in one place where I could start trading them immediately after markets go live. Removes a lot of hassle with Myetherwallets and inherent transaction fees. Centralization is, of course, an issue, but I wouldn't be worried as much since I wouldn't be storing Bitcoins there anyway.

Then you should sign up for our newsletter at einax.com - we will be announcing new Airdrops released on einax.

[Alleria]

A lot of airdrops don't seem to be really airdrops. They are like bounty. You need to retweet, join the telegraph group, post on the BTT forum, and sometimes need to help them vote on the exchange. To be honest, all It is still very difficult to complete.

[einax]

A lot of airdrops don't seem to be really airdrops. They are like bounty. You need to retweet, join the telegraph group, post on the BTT forum, and sometimes need to help them vote on the exchange. To be honest, all It is still very difficult to complete.

That is usually because creating on-chain transactions is costly for Airdrop devs so they are trying to make people work as much as possible. Doing Airdrops off-chain should be way easier for both developers and the community. And tasks like retweet/share can be done with better rewarded bounties.