The Beginner's Guide to Lockdrops | CoinMarketCap

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The Beginner's Guide to Lockdrops | CoinMarketCap
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You may be familiar with airdrops, but even many crypto-savvy users have never heard of or even participated in a Lockdrop. 🤔 Let CoinMarketCap explains! 👇

. The former actively incentivizes commitment while the latter can create a quick hype that can also wear off quickly. Also, airdrops often get sold quickly or even go unnoticed if the project is not high-profile.Lockdrops have slightly different mechanisms depending on the protocol, but they all have the following steps in common:You time lock your collateral in a smart contract. This can be ETH, aAt the end of the lockdrop period, you receive your collateral and your token allocation.

By locking your liquidity, you receive additional rewards and help the protocol with price discovery.was the first protocol to pioneer the lockdrop mechanism in 2019. It distributed 90% of its token allocation via lockdrops and only 10% went to the team. Users were able to lock ether in a dedicated "lockdrop user contract" that released the ETH collateral after three to twelve months.

From the protocol's perspective, this provided economic security and a higher degree of commitment from users. Furthermore, Edgewarethat its lockdrop helped achieve the protocol one of the most decentralized token distributions according to the Gini coefficient. Still, it is debatable how successful the lockdrop was compared to a regular airdrop.

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