What Is Airdrop?

An airdrop is the distribution of free tokens directly to cryptocurrency wallet addresses, usually without requiring payment. Protocols use airdrops as a growth and community-building tool, rewarding users for past participation, loyalty, or simply for holding a qualifying asset.

How Airdrops Work in Practice

Airdrops happen after a snapshot—a moment when the blockchain records which addresses are eligible. Projects take a snapshot of the blockchain at a specific block height, then distribute tokens proportionally or equally to qualifying wallets. Arbitrum airdropped 625 million ARB tokens to users who'd interacted with Arbitrum before a cutoff date. Jito airdropped JTO to Solana validators and delegators based on a snapshot. The distribution can be instant or subject to vesting schedules, where recipients unlock tokens gradually over weeks or months.

Why Airdrops Matter for Farming

For airdrop farmers, understanding how airdrops are distributed is critical. Farmers analyze protocols that haven't yet tokenized—projects on layer-2 networks, lending protocols, or new AMMs—to predict which activities might qualify for future airdrops. By farming yield on Uniswap before its 2023 retroactive airdrop announcement, early users positioned themselves to receive UNI tokens. Farmers also monitor points programs and testnet activity, as these often precede official airdrops.

Retroactive vs. Prospective Airdrops

Retroactive airdrops reward users for past behavior—the most common type. Hyperliquid airdropped tokens to historical traders retroactively. Prospective airdrops reward future actions, incentivizing continued engagement. Smart farmers differentiate between them: retroactive airdrops are lottery-like (you either qualified or didn't), while prospective airdrops are predictable farming opportunities.

Airdrop Eligibility and Risk

Eliminating sybil attacks—fake accounts farming the same airdrop—is why projects set eligibility criteria: minimum transaction volume, wallet age, or staking requirements. Farmers need to understand these rules; spreading activity across multiple wallets during a farming period risks disqualification if the project detects sybil behavior. Always read the exact criteria before farming toward an anticipated airdrop.