How crypto airdrops work, and how to spot the scams
What crypto airdrops are, how projects decide who qualifies, how to check a claim is real, the warning signs of fake airdrops, and the tax you'll owe in India.
- Checked against the rules: Jul 2026
- Sources cited · No buy or sell calls
Airdrops have paid early users of some protocols substantial amounts, which is why they attract so much attention, and so many scams. Here's how they really work.
Why projects do airdrops
Projects airdrop tokens to:
- reward early users who took a risk on an unproven protocol,
- spread ownership and governance votes widely, and
- attract attention and new users.
How eligibility is usually decided
Most airdrops look back at onchain activity before a snapshot: a block or date after which new activity doesn't count. Criteria often include:
- using the protocol: swapping, bridging, lending or providing liquidity,
- how long and how often a wallet was active,
- holding a particular token or NFT on the snapshot date, and
- participating in governance, testnets or community tasks.
Projects increasingly filter out "sybil" activity, meaning one person running many wallets, so farming with dozens of wallets is riskier than it used to be.
How to claim safely
- Start from the official source: the project's website or verified social account, never a link in a DM, comment or random group.
- Double-check the URL. Fake claim sites copy designs and use look-alike domains.
- Compare the claim contract with the one in the project's official docs.
- Read what you're signing. If your wallet shows a request to approve spending of your tokens, stop.
- Use a separate wallet for claims and experiments, holding only what you need.
Warning signs of a fake airdrop
- A site asks for your recovery phrase or private key.
- You're told to send crypto first to "unlock" or "verify" your reward.
- A countdown pressures you to act immediately.
- Unknown tokens appear in your wallet with a link to "claim" more. Don't interact with them.
- A "support agent" contacts you first. Real teams don't DM you.
What to do with an airdrop
You can hold, sell or use airdropped tokens. Many new tokens are volatile at launch, so decide your plan before trading. If you sell, you'll need an exchange that lists the token. See how to withdraw crypto to your bank.
The tax angle in India
Airdrops are generally treated as income when received, and gains when you sell are taxed at 30% plus cess. Read are crypto airdrops taxable in India? and keep records of the value on the day each airdrop arrives.
Frequently asked questions
Do I need a self-custody wallet for airdrops?
Usually yes. Most airdrops go to onchain wallets, not exchange accounts. See what a self-custody wallet is.
Are airdrops free money?
The tokens are free, but claiming can cost gas fees, farming takes time, and they're taxable. Many end up worth little. > If a claim page asks you to sign something you don't understand, stop.
Sources
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