“Airdrop” is a word that excites many investors, and the concept has been around for quite some time now. A couple of years ago, Uniswap, the leading decentralized exchange on Ethereum, airdropped 400 UNI tokens to active Ethereum wallets. At its all-time high, this airdrop became worth a whopping $18,000 to each beneficiary! Snapshots are central to such giveaways, and you might want to know everything about them to prop yourself up for the next freebie.
What Is A Snapshot In Crypto?
A snapshot is the ‘state’ of a blockchain at a given block height. In layman’s terms, it’s a screenshot of all the transactions on the blockchain at the time of the snapshot. The term ‘block height’ is used here as a unit of time in crypto parlance, defining the last block added to the blockchain as the last set of transactions included in the snapshot. The following details are extractable from these snapshots:
- The overall state of the blockchain
- Individual wallet balances and tokens being held, including NFTs
- Transaction details of all tokens and NFTs
- NFT Metadata
A snapshot provides viewers all information about your wallet except your private keys. While this might sound scary, this is exactly how information is laid out even on live blockchain networks, and it can be used for varying purposes.
Crypto entrepreneurs who wish to gain traction on their applications must first incentivise and market the use of their tokens. A snapshot comes to the rescue for such problems. The project developers design criteria to incentivize specific users that closely align with their goals. These are identified by looking at user activity.
For instance, Uniswap used a very simple criterion for its airdrop; users had to have used the decentralized crypto asset exchange platform before September 1, 2020. A snapshot was taken on September 1st, 2020, and wallets that had interacted with Uniswap smart contracts before that date were gifted tokens (eventually) worth $18,000.
Snapshots are also used by projects to build a brand. The now infamous Bored Ape NFTs were originally minted for less than $100, and today cost well over $150,000. But that’s not it, each BAYC holder was airdropped Mutant Ape and Kennel Club dog NFTs, as well as APE tokens. Collectively, the ‘free’ airdrops were worth roughly another $150,000, sent only to wallets that met the criterion of holding a Bored Ape, ascertained through a snapshot.
Snapshots have another purpose – to ‘fork’ a blockchain. When miners or network validators cannot reach a consensus on which set of blocks represents the main chain, it results in the blockchain being ‘forked’ into two separate chains with a common origin.
This forked chain contains blocks rejected by the majority consensus participants of the blockchain. For example, Bitcoin Cash (BCH) was forked from the Bitcoin blockchain. In such cases, a snapshot is taken at the time of fork to top up the balances of all wallets holding Bitcoin before the fork with new tokens from the forked network, i.e. BCH in the example above.
Snapshots are also useful to DAOs, who can place restrictions on access to certain voting proposals based on various criteria. Snapshots are expected not only to help existing developers but also the innovators developing the next-generation blockchain utilities.
The uses of snapshots are still evolving, and Vitalik Buterin, the founder of Ethereum, has even talked about soul-bound NFTs that are inalienable from the wallets that earn them.
In a hypothetical (but a highly prospective) use case, such soul-bound tokens may even be used to send academic credits to students. Upon meeting the minimum credit criteria, a snapshot of the network could help institutes airdrop student degrees anywhere in the world with the level of authenticity only a blockchain can provide.
How Can You Get Your Foot In The Door?
A “do your own research (DYOR)” cliche is warranted here because thousands of projects are promising snapshot-based airdrops these days. In turn, you will be expected to perform some mundane marketing activities to help promote the project. In many cases, the airdropped tokens you eventually receive are worthless. Scammers also lurk around these parts and might try and trick you into signing a transaction or parting with your private keys under the garb of an airdrop, so please beware.
Most legitimate projects will have a working product before they start with snapshots. If you enjoy using a product, head on over to its whitepaper to learn about its tokenomics.
A project’s tokenomics explains the initial distribution of its tokens and how the remaining supply will be vested over time. A project looking to airdrop its tokens will inform the community of it in this section. In the example above, 12% of the token supply is being airdropped, but not all projects allocate the same amount to airdrops.
Make sure you read the project’s whitepaper carefully or join their Discord or Telegram communities to find out more about the airdrop criteria. This information can give you a better chance at scoring a valuable airdrop. Some projects may try to conceal their airdrops as marketing, or even perform stealth airdrops without divulging the criteria. Everything varies on a case-by-case basis, and getting that treasure will require some deep digging.
How To Get Started?
We don’t want to leave you hanging, so here are some resources to get started with.
- Airdrops.io is a good place to start prepping for snapshots.
- From what we know, biggies like Metamask and OpenSea will take the airdrop route soon.
- Many NFT projects that had launched near the close of the last bull run are waiting to airdrop further collections or tokens to their community. Some notable ones are Imposters Aliens Genesis (a blockchain version of Among Us) and World Wide Webb3 (building the first interoperable 2D metaverse on Ethereum).
- Some airdrops that arrived towards the end of the NFT bull run, like Cool Pets (airdropped to Cool Cats holders) or Moonbirds (airdropped to Proof holders), have retraced quite significantly. However, there is an expectation of further capital gains and snapshots in the coming months.
This is just to get you started, and with markets as volatile as crypto, nothing is known with certainty. Phemex is dedicated to giving you important nuggets of information like these to keep you ahead of the market. So start digging and don’t hesitate to let us know what you find! Until then, stay tuned.