What are Lockdrops? Are Lockdrops Worth it?


Many people are familiar with the term Airdrop in the cryptocurrency world. But have you ever heard about lockdrops?. This article is all about what are lockdrops and what’s the difference between lockdrops and airdrops. Let’s take a look at it in more detail.

What Are Lockdrops?

A lockdrop is a form of allocating tokens to a big network. This is similar to airdrops but Lockdrops are revised airdrops that demand some allegiance from the user to obtain free tokens. In a lockdrop, users stake one token for a particular time and obtain their staked tokens and another token after clearance. For example, token holders of a specific network such as SOLANA will lock their SOL token by utilizing a smart contract.

The longer their funds are closed in, the more tokens they will get from that new network after it launches. This is just like fixed deposits but the terms and durations are variable. 

The period of the staking is irregular. Tokens are locked in a smart contract, and the return is defined on a pro-rata motivation — the more and the longer users stake, the more they get in return. The purpose of lockdrops is to give users an incentive. If users lock in some of their tokens to some blockchain network’s security then they will be more curious about its success.

Lockdrops are formed via smart contracts, with every token that is sealed or locked in, another token is produced. After the network is pitched; the user can plead their initial funds and the new tokens. Another possibility is provided for users to show their backing for the project by logging their token address and obtaining a lower reward of tokens rather.

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Commonwealth Labs first launched the idea of a lockdrop on their Edgeware network and Polkadot blockchain. Edgewares lockdrop proclaimed to have delivered away more than 90% of their tokens via lockdrop in 2019.

Lockdrops vs Airdrops

We have already explained the difference between the two but it is important to understand how both work. Let’s take a look.

Lockdrops: Users lock some number of tokens (for example 50 XYZ tokens of a particular token) in a smart contract before the token is released. They obtain their 50 XYZ tokens and some free PQR tokens when the token PQR launches. The more and the longer users stake XYZ tokens, the more they get in return.

Airdrops: In this, users communicate with the project by testing it on the testnet, supplying liquidity, or other activities that are appropriate to its use case. They get free tokens based on those activities. 

The major distinction is that lockdrops demand a more increased extent of a stake. Users could obtain an airdrop as a motivation for backing the protocol. In the case of a lockdrop, users have to stake their coins with a unique protocol and incur an option price while it’s staked.

Edgeware Lockdrop