What is an airdrop and how does it work?

An airdrop is when a project takes a certain amount of the project's cryptoassets and sends them for free to people who meet particular requirements. That definition might sound vague, but that’s because airdrops are used in a wide variety of ways. It’ll be easier to understand with examples.

What is a Token airdrop?

Token airdrop: A crypto platform, such as a decentralized exchange (DEX), decides to create a native token. To reward its current user base, the project sends half of the total token supply to users’ wallets based on the volume each user has traded on the platform.

What are exclusive airdrops?

Exclusive Airdrops: This is a “VVIP” airdrop. This stream is usually reserved for those who are loyal to a blockchain project and receive handsome rewards. Bounty airdrops: Similar to standard airdrops, participants are required to do more promotion work, usually on Facebook or Twitter, to spread the word about the project.

How much should I set aside for an airdrop?

The amount to be set aside varies depending on your filing status and the tax bracket. If the airdrop is a large amount, it is recommended to talk to a tax adviser and calculate the estimated taxes on the airdrop. Finally, you can entirely eliminate taxes by not claiming the airdrop at all.