Introduction

Airdrops are a popular marketing strategy in Web3 projects. Typically, tokens are distributed for free to specific wallet addresses, encouraging user participation and interaction, and helping new projects grow their user base and boost visibility. However, the open nature of airdrops makes them a prime target for hackers who set traps. Many users have lost significant amounts of assets by falling into phishing scams.

In recent years, the rapid growth of the crypto market has attracted many investors. Bitcoin’s market value has reached hundreds of billions of dollars, and altcoin projects worth billions are becoming more common. Many users are eager to participate in airdrops, afraid of missing out on any investment opportunities, especially during market fluctuations, when promises of high returns become even more attractive. Scammers and hackers quickly exploit this enthusiasm, and airdrop scams have become widespread.

This article will explore common airdrop scams and provide practical advice on how to avoid them. By analyzing different scams and offering preventative tips, users can become more alert and better protect their assets while engaging in airdrops.

What is an Airdrop?

Definition of Airdrop

An airdrop is a Web3 marketing strategy where a project distributes tokens for free to specific wallet addresses to attract users and increase market exposure.

This approach helps expand a project’s user base and encourages user participation in the project’s ecosystem, enhancing interaction and activity. Airdrops are often paired with promotional campaigns to draw attention to new projects, making them a crucial tool for boosting brand awareness.

Types of Airdrops

There are different ways users can receive airdrops, and they generally fall into several categories:

Task-based airdrops: Users must complete specific tasks, such as sharing content, liking social media posts, or filling out surveys. This type of airdrop boosts user engagement and creates additional promotional benefits for the project.

Interaction-based airdrops: Users can claim tokens by performing token swaps, sending or receiving tokens, or cross-chain operations. These airdrops aim to deepen users’ engagement with the project and help them understand its features and services.

Holding-based airdrops: Some projects reward users who hold specific tokens by giving them additional tokens. This encourages long-term holding of the project’s tokens and increases market demand.

Staking-based airdrops: Users receive tokens by staking or providing liquidity. These airdrops encourage participation in the project’s ecosystem, improve token liquidity, and offer users potential earnings.

Overall, airdrops are a flexible and diverse marketing strategy. They increase a project’s visibility quickly and cater to users’ varied interests, making them more likely to engage with the Web3 ecosystem. However, users should stay cautious and be aware of potential scams that could threaten their assets.

What is an Airdrop Scam?

An airdrop scam is a fraudulent scheme where scammers pose as token or coin giveaway events to trick users into interacting with them. They lure users by offering fake airdrop opportunities, using the appeal of free tokens to get unsuspecting individuals to connect their wallets to malicious websites. Once connected, scammers can steal assets or sensitive information, leading to data breaches or financial loss.

A Real-Life Example

In January 2024, Jupiter, a trading aggregator in the Solana ecosystem, announced a $700 million airdrop to reward early users. However, before the event, an Ethereum-based token called JUP showed abnormal price fluctuations in the market, hinting at fraudulent activity.

On January 30, the day before the airdrop began, the price of JUP soared from $0.005 to $0.026, a rise of over 430%, catching the market’s attention. Shortly after, the price dropped back to $0.007. As this happened just before the Jupiter airdrop, scammers took advantage of the situation, drawing users in by convincing them to connect their wallets in exchange for fake tokens.

Source: CoinmarketCap

Scammers then used Jupiter’s popularity to impersonate official channels, sharing fake airdrop links and information. They tricked users into visiting phishing sites and connecting their crypto wallets. Once users connected, automated transactions were executed, draining the funds from their wallets, and leaving the victims unaware until it was too late.

Despite the Solana network’s impressive performance during the airdrop — processing 2.5 million non-voting transactions in just the first two and a half hours — many users faced problems using third-party applications like Phantom Wallet and Solflare. According to Austin Federa, head of the strategy at the Solana Foundation, the issues were caused by remote procedure call (RPC) nodes, leading to widespread user complaints and damaging trust in future airdrops.

While the Jupiter airdrop was ultimately a success, the scam overshadowed the event. The case highlights how hidden and harmful scams can be in the crypto market, reminding users to stay vigilant when participating in crypto activities.

Source: Jupiter/ X

Common Airdrop Scams

As airdrops become more popular, so do various scams. Hackers and scammers exploit users’ trust and their eagerness for free tokens to set traps. Below are some common types of airdrop scams, along with detailed explanations:

Fake Social Media Accounts

This is one of the most common scams, especially when hackers manage to take over a project’s official social media accounts (like Twitter). They often control these accounts or create fake project accounts, mimicking the social media style of well-known projects or Key Opinion Leaders (KOLs), and post fake airdrop information.

The success of this scam lies in its ability to take advantage of users’ trust in official channels and their excitement for free tokens, making them lower their guard. For example, when a well-known project announces an airdrop, hackers may immediately create a fake account that looks nearly identical to the official one and post what seems to be “official airdrop” information. This directs users to phishing websites disguised as real ones. Once users enter personal information or download files from these sites, they can trigger malware, leading to their wallet assets being stolen.

Source: academy.binance.com

These scams take advantage of users’ trust in popular brands and figures, especially during airdrop campaigns, when users are eager to grab free tokens and overlook potential risks. It serves as a reminder that when facing airdrop information supposedly issued by famous figures or official channels, one should not blindly trust KOLs. Users should always verify information through the project’s official channels to ensure their virtual assets are safe.

Fake Tokens

In this scam, hackers might send worthless tokens to users’ wallets to tempt them into interacting with them. Users are often redirected to a phishing website that steals their sensitive information or assets when they attempt to check or transfer these tokens. For example, hackers might send users a “fake airdrop notification,” claiming they must visit a phishing website to “unlock” the tokens, tricking users into believing it’s a legitimate process. Without knowing, users might enter their private keys or seed phrases, leading to their assets being stolen.

The danger of this scam is that users may not immediately realize their wallet has been compromised until they attempt a transaction, only to find their assets have already disappeared. This type of scam preys on users’ curiosity about new tokens and their desire for free assets, often lowering their guard while chasing potential gains, which increases the likelihood of falling victim to the scam. To avoid such risks, users should always stay alert, especially when receiving airdrop notifications, and never click on links or download attachments blindly. It’s also recommended that users regularly check their wallet transaction history to detect any suspicious activity early and take the necessary steps to protect their assets.

Source: medium.com

Malicious Contracts

Unlike other fraud tactics, malicious contract attacks focus on manipulating the Gas fees when users interact with contracts. Hackers design seemingly normal contracts but trick users into unknowingly approving excessive Gas fees.

These attacks are hard to detect, with most users realizing only after incurring unexpectedly high transaction fees. For instance, some malicious contracts may dynamically increase the Gas limit based on the user’s balance, making users pay higher Gas fees than expected during routine transactions. This leads to financial loss and sometimes even failed transactions while hackers pocket the excess Gas fees.

To minimize the risk of interacting with malicious contracts, users should be wary of any contract claiming to automate actions or increase returns, especially those promising “zero-cost purchases” or “automated interaction.”

Backdoor Theft

A “backdoor” refers to any method that allows users to bypass standard authentication procedures on a device or network, creating an alternative entry point for hackers to access resources like databases or file servers remotely.

In crypto, some airdrops may ask users to download specific plugins to complete tasks, such as viewing token rarity or translation tasks. However, these plugins might not have gone through thorough security checks and could contain “backdoor programs.” Once installed, hackers can remotely steal users’ private keys, seed phrases, or even take full control of their wallets.

In another scenario, some users use automated scripts to claim airdrops in bulk, trying to save time. While these scripts seem convenient, they come with significant security risks. Many are distributed through unofficial channels and contain unverified code, allowing hackers to hide malicious programs. These programs can log users’ actions and upload the data to remote servers, eventually stealing sensitive information.

Source: X

For example, on December 24, 2022, a hacker group called Monkey Drainer carried out similar attacks by disguising airdrop plugins, tricking users into downloading the plugin or entering sensitive information. Once users complete a transaction or download a script, the plugin immediately sends the users’ private keys or wallet authorizations, allowing the hackers to take full control of their crypto assets and eventually steal millions of dollars worth of crypto.

To avoid such risks, users should only download plugins from official sources and avoid unverified third-party scripts. They should also keep wallet software up to date and use reliable antivirus software to scan any downloaded files before installation to further reduce the risk.

Warning Signs

Unrealistic promises
If an airdrop project promises high returns without requiring any effort or investment, it’s often a red flag. Scammers frequently exploit users’ desire for quick profits by advertising tempting opportunities (such as investment schemes or giveaways). Still, their real goal is to trick users into participating and ultimately steal their assets. Users should remain skeptical of promises that seem too good to be true.

Suspicious requests
Any airdrop that asks users to connect their wallet to an unfamiliar website or provide sensitive information should be treated cautiously. Legitimate airdrops never ask users to disclose private keys, recovery phrases, or other personal details. Scammers often use fake requests to steal sensitive information, leading to asset theft, so receiving suspicious requests is a significant red flag.

Lack of transparency
Before participating in an airdrop, always check whether the project has clear documentation, a white paper, and trustworthy team members. If a project lacks transparency or its information is difficult to verify, it’s likely to be a scam.

Phishing tactics
Users must stay vigilant against phishing tactics, including fake websites, emails, and social media accounts posing as legitimate projects or influencers. Scammers take advantage of social media’s speed and users’ trust to spread fake information quickly, luring users to click on malicious links and steal personal information, which they then exploit for illicit gains.

Preventive Measures

For Users

Verify Information Sources
Verifying the authenticity of the information source is crucial to avoid scams before participating in an airdrop. Users should be wary of links shared randomly on social media and instead obtain airdrop details through official channels. When visiting airdrop websites, check the URL carefully to ensure it matches the project’s official site. Additionally, users can confirm the legitimacy of the airdrop by checking official announcements or reliable news sources.

Use a Separate Wallet
To reduce potential risks, users should consider creating a separate wallet specifically for airdrop activities while keeping their main assets in another wallet.
This separate wallet should only be used for high-risk activities, like participating in interactive airdrops or testing new projects. While keeping main assets securely stored in a cold wallet, this method helps minimize the risk of losing valuable assets to hackers during airdrop interactions.

Check Gas Fees
Abnormally high Gas Limits are often a sign that some parameters in the transaction have been maliciously manipulated to increase fees and profit illegally. This is particularly common during post-airdrop interactions, where some contracts take advantage of users’ lack of attention to Gas fees, leading them to pay significantly higher fees than expected. If the Gas fees seem unusually high, users should be cautious, as a malicious contract may be involved.

Avoid Interacting with Unknown Tokens
Hackers often airdrop worthless tokens to users’ wallets, tricking them into interacting with these tokens. Although the tokens may appear legitimate, their presence creates the illusion of a “free reward,” tempting users to authorize token transfers or expose private key information.
If users notice tokens in their wallet that they never requested, the safest action is to ignore these unknown tokens and avoid any interaction. Never approve any transactions or attempt to transfer such tokens, as this could trigger malicious contracts.

Use Antivirus Software
Users should install and activate trusted antivirus software, ensuring their device is always under real-time protection, particularly when downloading airdrop-related plugins or scripts. This helps prevent malware attacks by blocking them early.
Additionally, it is recommended that users use phishing risk detection tools like Scam Sniffer. These tools can automatically identify known phishing websites or malicious addresses and warn users, offering better protection against online threats.

For Projects

To prevent airdrop scams, project teams should also adopt comprehensive security measures, including:

Security Audits
Project teams should regularly conduct comprehensive security audits, especially at critical user interaction points. By systematically evaluating code and processes, they can identify and fix potential vulnerabilities promptly, enhancing user trust.
Regular audits also help project teams stay aligned with the latest security standards, ensuring the safety of user data and funds in the ever-evolving cryptocurrency ecosystem.

Effective Risk Alerts
Wallets should prominently remind users to double-check the target address before making a transaction to avoid scams where addresses have similar endings. Additionally, project teams could implement a whitelist feature, allowing users to add frequently used addresses to a whitelist to reduce the risk of such attacks.
Projects can also gather and share information about known phishing websites within the community, ensuring users receive warnings when interacting with these sites, which can enhance their security awareness and provide better protection.

Signature Recognition and Warnings
Wallets should have a feature that recognizes risky signature requests and alerts users, especially regarding blind signing. This can help users better understand what actions they are about to take, prompting them to be more careful when confirming transactions.

Enhancing Transaction Transparency
Before users execute a transaction, project teams should disclose the involved contracts and provide clear details, such as DApp transaction structures. This transparency helps users make informed decisions and lowers the risk of unintended security issues.
By providing this information, projects can build user trust, improve platform reliability, and help users better understand the ecosystem to avoid asset loss due to incorrect operations.

Pre-execution Mechanism
A pre-execution mechanism that simulates the outcome of a transaction before it’s carried out can allow users to preview possible results. This helps them evaluate whether the transaction is reasonable and safe. Based on the pre-execution feedback, users can decide if the transaction meets their expectations, making them more cautious and reducing the risk of impulsive decisions.

AML Compliance Alerts
Before transferring, project teams should monitor the recipient’s address through anti-money laundering (AML) mechanisms, ensuring compliance checks are completed before the transaction. Users should be alerted if the address triggers AML rules, helping protect their funds from suspicious accounts or sanctioned entities and reducing potential legal and financial risks.

Conclusion

As the Web3 ecosystem grows, airdrops remain a highly flexible marketing strategy with great potential for projects and users. However, the risks of scams must not be ignored. This article has analyzed airdrop definitions, common types, and fraud tactics, highlighting the need for users to remain vigilant when engaging in airdrop activities. At the same time, it emphasizes the responsibility of project teams to improve user trust and security.

With future technological advancements and ecosystem improvements, airdrop activities will likely integrate with more advanced security measures, creating a more transparent and trustworthy market. Through innovative protection mechanisms and user education, projects and users can work together to enjoy the benefits of airdrops while effectively mitigating risks, and driving the healthy development and prosperity of the Web3 ecosystem.