sarath | Flipside Analyst

    sarath

    Joined Nov 14, 2021
    //
    0Upvotes
    LOCK DROP

    LOCK DROP

    Jan 25, 2022 - Cryptocurrency is a field and industry that is quickly expanding. From the core infrastructure to fundraising methods to regulations, everything changes. Therefore new ways to distribute tokens are also being introduced. Despite its faults, the initial coin offering (ICO) is a well-known technique for generating funds and distributing tokens. However, for increasingly obvious reasons, certain projects may opt not to launch an ICO. Instead, a project may actually wish to get their token to as many people as possible from the start in order to build a strong community and user base. The lock drop is a unique way to distribute tokens without having to raise funds. A lockdrop is a way of sharing a new network's tokens to a large number of holders or stakeholders. To do so, investors of tokens on one network, such as Eth, must lock their Ether into a smart contract for a set time in order to obtain tokens from the new network. The more time that existing coins are held in a smart contract, the more tokens that holder will receive on the new network. The original tokens are returned to the owner after the time period has expired.The lockdrop must be differentiated with the airdrop, which was the first technique of extensively sharing crypto assets without raising funds. The airdrop essentially gave tokens to random addresses for free in the hopes that more people would care about the token and the project if they had it. In reality, however, most airdropped tokens were either soon sold or went unreported in wallets. The lockdrop is a modified form of the airdrop in that it requires an action or non-monetary cost, which is the additional cost of temporarily locking up your crypto assets. Even if your crypto assets aren't being spent or destroyed, the fact that you won't be able to use them for a while displays your dedication to the cause. This should, in theory, result in new token holders who are more engaged and interested in the project from the start.

    sarath