An airdrop is a token distribution strategy where a project sends free tokens to eligible wallet addresses. Airdrops are commonly used to reward early adopters, incentivize protocol usage, decentralize token ownership, and build community.
Airdrop eligibility is usually based on on-chain activity — interacting with a protocol, holding specific tokens, participating in governance, or meeting other criteria. Some airdrops are retroactive, rewarding past behavior, while others require specific actions to qualify.
While airdrops can effectively bootstrap a community, they also create immediate selling pressure as recipients convert their free tokens to other assets. The percentage of airdropped tokens that are sold versus held is often used to gauge community conviction.