Airdrop
A distribution of free tokens to wallet addresses, typically as a marketing tool or reward for early protocol users.
An airdrop distributes tokens at no cost to a set of wallet addresses, usually determined by historical on-chain activity. Protocols use airdrops to bootstrap decentralised ownership, reward early users, and generate attention. Uniswap's 400 UNI airdrop to all historical users in 2020 was worth ~$1,200 at launch and up to $16,000 at peak — setting a standard that shaped DeFi culture.
'Airdrop farming' refers to the practice of strategically using protocols before their expected token launch in the hope of qualifying for an airdrop. Protocols have responded with increasingly sophisticated Sybil resistance (detecting fake/duplicate wallets) to target genuine users.
Tax treatment of airdrops varies by jurisdiction — many countries treat them as ordinary income at the fair market value at receipt, creating unexpected tax liabilities for recipients who hold the tokens through a decline.