What are Lockdrops and How do They Compare to Airdrops?

A lockdrop is a way of distributing tokens to a large network, similar to ICOs or airdrops but without the need to raise funds. Token holders of a particular network —Ethereum for example— will lock their Ether using a smart contract. The longer your funds are locked in, the more tokens you will receive from that new network after it launches.

Who Introduced Lockdrops?

Commonwealth Labs first introduced the concept of a lockdrop on their Edgeware network and Polkadot blockchain. Edgewares lockdrop claimed to have given away more than 90% of their tokens via lockdrop in 2019. Lockdrops are created via smart contracts, with every token that is locked in, another token is created. After the network is launched; the user can claim their original funds plus the new tokens. Another option is given for users to indicate their support for the project by logging their Ether address and receive a lower reward of tokens instead. Edgeware founders Raymond Zhong and Dillon Chen said that they felt like the lockdrop would get the right set of experimenters compared to Airdrops or ICOs.

Lockdrop vs Airdrop

The first method of widely distributing tokens was through airdrops. In 2017, a banking service; OmiseGO distributed tokens to its community. Since then, the ecosystem has become aware of a few issues with this way of distributing tokens. Most notably, this method does very little to foster an active community past the initial ‘buzz’ phase. With an airdrop, in many cases, people don’t even notice their wallet has received tokens, or they are quickly sold on upon reception. An active community of followers is essential to ensure a successful project. A lockdrop means that people must temporarily lock up their assets, and are therefore somewhat committing to the longevity of the project.  

The main benefits of lockdrop when compared to previous distribution methods:

• Finds the most useful participants most likely to actually use the token.
• Increased security with decentralized and permissionless nature.
• Regardless of the state of the market, the tokens have the widest distribution possible.
• Strong chance of regulation compliance, no worry of being shut down.

What’s next for Lockdrops?

The lockdrop has been a complete success for the new Edgware project with billions of dollars already locked into the project. This proves that people are willing to invest and lock in their tokens for innovative projects. The crypto space will continue to develop new ways of distribution to ensure that tokens reach the most useful people possible to as projects start out their journeys.