Complete Guide to Cryptocurrency Airdrops [2025 Edition]

In the world of cryptocurrencies, the term “airdrop” is often heard, but what exactly is the mechanism behind it? Is it really profitable? Are there any risks? Many people may have these questions.

From 2024 to 2025, Layer 2 projects and AI-related projects are conducting large-scale airdrops, releasing billions of dollars worth of assets into the market. Now is the time when airdrops are attracting significant attention.

This guide will explain in an easy-to-understand way what an airdrop is, how to participate, and what risks are involved. By acquiring the correct knowledge, you can maximize your chances of obtaining assets for free.

What is an Airdrop and How Does It Work?

Basic Definition of Airdrops

An airdrop is an event where project operators distribute free cryptocurrencies or NFTs to users who meet certain conditions set by the project. Think of it as a “digital campaign” conducted by companies to promote their products.

For the project side, the goal is to increase awareness, grow the user base, and ensure liquidity in the market. For recipients, it means obtaining cryptocurrencies completely free of charge, without needing to purchase anything.

Recently, airdrops are no longer just one-time distributions; ongoing systems like point schemes and loyalty programs have emerged, encouraging long-term user engagement.

Reasons for Conducting Airdrops

Projects and companies have several objectives for performing airdrops:

Increasing Awareness of New Projects
To let as many people as possible know about new cryptocurrencies or NFT projects that are not yet well-known in the market. This method is more effective and trustworthy than traditional advertising.

Expanding User Base and Building Initial Community
Distributing tokens widely helps rapidly increase the number of users and build an active community, which forms a crucial foundation for future ecosystem development.

Securing Trading Liquidity
Newly issued tokens often have few holders initially, making trading difficult. Wide distribution reduces the bid-ask spread, allowing the market to function more smoothly.

Fair Initial Distribution During Hard Forks
When a new currency is created by splitting from an existing one, distributing the new tokens to original holders maintains fairness.

By implementing these strategies, projects can benefit in the long term through increased transaction fees and user growth.

Types of Airdrops and Participation Conditions

Airdrops come in various forms, each with different conditions. It’s important to understand which type you are dealing with before participating.

Snapshot-Based: Holding at a Specific Time

This method distributes tokens based on the holdings in your wallet at a specific date and time. For example, distributing new tokens to Bitcoin holders at a certain snapshot date.

Participants need to have purchased and held the relevant assets during a certain period, which involves gas fees, transaction costs, and price fluctuation risks.

SNS-Linked: Follow & Retweet to Participate

Participants can join simply by following official announcements, retweeting designated posts, or leaving comments. It’s the easiest and most beginner-friendly method.

Since no additional costs are involved, it’s ideal for those who want to try participating casually. However, because many people participate, the amount distributed is often small.

Service Usage-Based: Usage of Specific Platforms Required

Tokens are distributed to users who have used certain services, such as DEXs or lending protocols. For example, users of Uniswap receiving UNI tokens is a well-known case.

This approach targets users who understand the value of the service, making ongoing engagement after the airdrop more likely.

Hard Fork-Based: Automatic Allocation of New Coins

When a coin like Bitcoin Cash split from Bitcoin, the original holders automatically received the new coins. No action is required from users; simply holding the original asset entitles them to receive the new one.

Multi-Condition: Combining Multiple Criteria

Participants must meet several conditions simultaneously, such as holding specific tokens, engaging in SNS activities, and having transaction history. While more difficult, these often result in larger distributions.

Benefits of Airdrops

Acquiring Cryptocurrencies Without Investment

The biggest advantage is obtaining assets without spending money. Usually, you need to buy tokens, but with airdrops, you can get them just by fulfilling conditions, allowing participation with zero risk.

For beginners, it’s a valuable opportunity to experience what cryptocurrencies are like before making actual investment decisions. You can build a small portfolio and learn about market trends.

Price Appreciation Opportunities for Held Assets

Participating in snapshot-based airdrops by purchasing certain tokens can lead to increased demand, causing the token’s price to rise temporarily. Investors who already hold such tokens may see their assets grow.

However, many sell off after the snapshot, so short-term surges are common. It’s important to distinguish this from long-term holding strategies.

Early Access to Promising Projects

Participating in early-stage projects that are not yet widely known offers significant advantages. If you hold tokens of projects expected to grow, you might realize substantial returns after listing.

Many projects that were once obscure have gone on to list on major exchanges or partner with well-known companies, experiencing rapid growth. Developing the ability to identify future potential can maximize airdrop benefits.

Improving Overall Market Health

When many users hold a particular token through airdrops, overall market liquidity improves, making trading smoother. The bid-ask spread narrows, enabling more favorable transactions.

This has a positive effect on the entire investor community and contributes to market maturity.

Hidden Risks and Precautions in Airdrops

The Need to Detect Scams

Unfortunately, scams disguised as airdrops are common. Malicious actors may pretend to conduct airdrops to steal personal information or wallet private keys.

Red flags to watch out for include requests for your wallet password or private keys. Legitimate airdrops never require such information. If you encounter such requests, it’s almost certainly a scam.

Fake websites that mimic official sites and phishing attempts to connect your wallet are also prevalent.

Safety Tips:

• Double-check URLs carefully
• Never share your private keys
• Avoid connecting your wallet to suspicious sites
• Use a separate wallet dedicated to airdrops
• Only participate in projects you trust

Risk of Tokens Becoming Worthless

There are cases where tokens received via airdrops have no market value and end up being worthless assets.

For example, if you receive 1,000 tokens priced at 0.1 yen each, the total value is only about 100 yen. While free, if participating costs time or money (like high gas fees or purchasing tokens), the net result could be a loss.

Especially if you pay high gas fees or buy tokens to meet participation conditions, the expected value might turn negative. It’s wise to estimate roughly how much it will cost before participating to avoid misjudgments.

Tax Implications

A common oversight is that assets obtained through airdrops are generally taxable. They are not tax-exempt just because they are free.

If the market price at distribution is established, the value is taxed as “miscellaneous income.” The tax rate can reach up to approximately 55%.

In Japan, discussions are ongoing to unify crypto tax rates with those of stocks (around 20%), but this has not yet been implemented.

For unlisted projects without a market price at distribution, the entire amount may be taxed as profit upon sale. Managing records across multiple exchanges can be complex; using specialized tools or consulting a tax professional is recommended.

Difficulties in Selling on Domestic Exchanges

Most tokens distributed via airdrops are not listed on Japanese cryptocurrency exchanges. To convert to Japanese Yen, you often need to go through overseas exchanges.

This involves:

• Opening accounts on foreign exchanges
• Transferring assets between exchanges and paying fees
• Complex calculations during tax filing

Practical Steps for Beginners: Participating in Airdrops

Step 1: Assess Trustworthiness

Before participating, verify whether the project is genuinely trustworthy. Research the official website, social media accounts, white paper, and the background of the development team. Established developers or teams with a track record, and backing from mainstream investors, are good indicators.

Step 2: Prepare Your Wallet

For snapshot-based or multi-condition airdrops, a cryptocurrency wallet is essential. Prepare wallets like MetaMask (software wallet) or hardware wallets like Ledger. Hardware wallets are generally safer.

Step 3: Check Conditions and Act

Review the specific participation requirements and perform necessary actions (holding tokens, SNS activities, using services). Be careful not to miss deadlines.

Step 4: Post-Receipt Handling

Decide how to handle the tokens received. Will you hold long-term, sell immediately, or keep some? Make individual investment decisions accordingly.

Frequently Asked Questions

Who is suited for participating? Who is not?

Suitable for people who:

• Can spend time researching the market
• Have some skill in detecting scams
• Can accept potential losses mentally
• Can handle tax reporting properly

Not suitable for people who:

• Are beginners with little crypto knowledge
• Have low security awareness
• Cannot handle tax issues
• Expect quick profits

Tips for Easy Participation

Start with SNS-linked airdrops that require no costs. Gradually move to snapshot or multi-condition types as your knowledge improves. A step-by-step approach is safest.

Also, carefully select projects to participate in. Focus only on those with real potential rather than joining every airdrop.

Summary: Reconsider What an Airdrop Is

An airdrop is a unique phenomenon in the cryptocurrency market—a cleverly designed system that benefits both projects and users.

Key points:

• Airdrops allow free acquisition of cryptocurrencies or NFTs by fulfilling certain conditions
• There are various formats with different difficulty levels and risks
• The benefits (free assets, potential appreciation, early access) are significant, but risks (scams, worthless tokens, taxes, selling restrictions) must be acknowledged
• Basic knowledge and security awareness are essential
• Starting with simple methods like SNS-linked airdrops is recommended

To navigate the crypto market effectively, understanding airdrops correctly and making calm, informed decisions are crucial. Use this guide’s information as a weapon to participate safely and effectively.

Most importantly, accept uncertainty, verify information carefully, and make decisions aligned with your risk tolerance. Airdrops can expand your investment possibilities but are not foolproof. Always stay updated, remain vigilant about security risks, and act wisely to succeed.