What Is A Lockdrop?
Most crypto enthusiasts are familiar with the terms “airdrop” and “ICO” (Initial Coin Offerings). These methods distribute tokens to holders and participants, creating interest in the token amongst communities. ICO was the most popular method for both raising money and distributing tokens. However, more and more projects prefer not to conduct an ICO due to regulatory risks and the emergence of superior alternatives such as lockdrops.
What is a lockdrop?
A lockdrop is a model whereby participants lock a predetermined set of tokens (e.g. BTC, ETH, and BNB) and receive a protocol’s native token in return. Participants will receive more native tokens the longer that their BTC, ETH, or BNB are locked up in the smart contract. After the lockup period, participants are returned their original assets. Lockdrops can therefore be viewed as an upgraded version of an airdrop.
Why are lockdrops better than airdrops?
- Lockdrops invite commitment from community participants in the form of locked liquidity. This creates an engaging community environment.
- An airdrop can be received by participating in a simple marketing campaign or just by holding related tokens, while a lockdrop requires investors to stake crypto, ensuring valuable and committed participation.
- A lockdrop is more similar to an investment process based on a user’s portfolio preference and risk appetite. Investors can also receive more interest and rewards by increasing the lock duration.
- Proper lockdrops incentivize the creation of long-term liquidity, whereas airdrops simply produce a brief buzz that fades shortly.
How are lockdrops conducted?
Lockdrops are conducted via a smart contract, which distributes native protocol tokens in return for having users lock other tokens within the smart contract. After a certain period of time, community participants claim the new protocol tokens and then the locked assets.
Why should I invest in a lockdrop during a bear market?
- A lockdrop is similar to a time deposit offered by a bank, which means that investors will safely recover their full deposits and receive interest as rewards.
- Bear markets are the best time to HODL while participating and investing in new projects like Efficiency DAO. A lockdrop is therefore the perfect opportunity to HODL and lock what you have while receiving native protocol tokens in return.
- Lockdrop participants are the target audience and most valuable users of a new protocol. Thus, lockdrops quickly create a strong connection between projects and users in a bear market without unsustainable hype.
Why is Efficiency DAO doing a lockdrop?
Efficiency DAO believes in the value of community, and we think a high-quality user base is crucial for our project. As a DeFi protocol targeting unique use cases, such as long-tail assets and fiat lending, we want to attract early and engaged users and let users share their opinions.
How do I participate in Efficiency DAO’s lockdrop?
We are still finalizing plans for our own lockdrop. The best thing to do right now is to follow us on Medium and Twitter at @efficiencydao. We are also deciding what tokens to support in the lockdrop in addition to BUSD, USDC, ETH, BNB, and USDT. One community request we have received is CAKE, do you agree? Talk to us on Twitter and let us know what other tokens you want for this lockdrop.
As a reward for reading this far, here is a sneak peek at Efficiency DAO’s lockdrop!
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