You may have noticed in our article on the world first Liquidity Incentive Model, 10% of tokens are set aside for the Community Token Lockdrop. Here we explain what it is, what it means for crypto traders and how we think is going to be a completely new way to bootstrap rapid platform growth for businesses prone to network effects.
Important note: Before you read this, make sure you’ve read the whitepaper so you can understand what this token represents and what upward price pressure it receives as the exchange network value grows.
What is the Community Token Lockdrop?
The Community Token Lockdrop was born out of the belief that network effects aren’t created by whitepapers, they’re created by communities.
To bootstrap network effects for the exchange, we require actual users/participants to use our platform.
Within the crypto world, there are a lot of strong communities, on Telegram, Discord and TradingView that exchanges wish to engage as a group, rather than on an individual basis.
By providing big incentives to these communities in the form of future network value we can overcome the ‘cold start’ problem that most marketplaces face.
Where the airdrop fails…
An airdrop refers to the free distribution of small amounts of tokens from an issuer to its community members. It can be used to reward an existing community or bring a new community in.
Unfortunately these airdrops often fail to align incentives as they tend to attract speculators rather than active participants. Airdropped tokens often sit in speculator’s wallets, or are quickly sold adding little value to the network.
How the lockdrop works and why it is better…
The lockdrop requires communities to lock ETH in a smart contract. The exchange will then send a proportional amount of their exchange buyback token (lets call it BBCK) to that same smart contract.
The ETH and BBCK is then issued back to the community based on the following conditions:
- Community participants, or nominated market makers trade on the exchange. The amount of ETH and BBCK released back is proportional to the trade volume.
- When the mining period ends (360 days) ETH is released back to the contributers
This incentive will drive users, trade volume and real liquidity to the exchange. The communities capture the upside of the value they create in the form of BBCK without having to ‘buy’ the tokens as they would in an ICO. The value of the remaining BBCK tokens left in the smart contract will be measurable, it’s simply up to the community to earn it.
Perhaps the biggest benefit is that anybody participating in the CTL will receive double the amount of tokens in comparison to normal traders for the same trade volume.
Early traders who participate in a CTL will be able to capture a significant percentage of the exchanges token due to the beneficial emission rate.
Only 5 handpicked communities have the opportunity to participate in the worlds first CTL.