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Liquid airdrops

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A lockdrop model with immediate liquidity, using Uniswap

Yannick

Featured in Token Economy #91 (subscribe here)

Photo by Jong Marshes on Unsplash

Airdrops are coming back in vogue due to the regulatory uncertainty surrounding token sales.

Historically, the v1.0 model of airdropping tokens to random Ethereum addresses has proven to be largely useless. So teams are experimenting with new distribution models, particularly those teams that have raised private rounds and are now more nervous about a public sale despite getting closer to mainnet launch.

Livepeer pioneered Merkle mine, which has been widely dissected. Other teams are experimenting with variations of that ‘proof-of-work’ model. Edgewere is working on a lockdrop, whereby in order to get airdropped the EDG token one will have to lock up ETH into a smart contract for a certain period of time, after which the ETH gets unlocked (effectively giving up the opportunity cost of lending ETH on Compound/Dharma etc). DxDAO are planning something similar.

This post is a rough brain dump about a version of lockdrop that puts the idle ETH at work by leveraging Uniswap, a protocol for automated market making.

It roughly goes like this:

  • XYZ tokens available to be distributed are locked into a smart contract
  • smart contract can receive ETH contributions for up to a fixed period of time (contribution period)
  • after contribution period lapses, smart contract creates a market for XYZ/ETH on Uniswap and uses XYZ and ETH balances as liquidity pool
  • ETH contributors can withdraw ETH and XYZ from the smart contract proportionally to their ETH contribution, or keep earning a share of the trading fees from that market.

One potentially interesting aspect of this is the automated price discovery: a market price for the token is established without actually having to sell tokens or design a bonding curve. The total amount of ETH contributed during the contribution period sets the price of XYZ token in ETH terms (a potential issue here is ETH volatility during the contribution period). In that light, it could also work with a series of contribution periods, where the tokens are made available in subsequent chunks. So contributors in the second/third etc periods have a reference point on pricing. [Need to think more about this scenario].

The other interesting implication is obviously the immediate liquidity for the token enabled by Uniswap. In that light, the game theory is particularly intriguing. Many whom I’ve share this draft with raised the point that one would be incentivized to maximise the ETH contribution in order to get as many tokens as possible. However, for this actor to be able to then sell off the tokens and profit s/he would first have to withdraw most of the liquidity from the market, resulting in not enough liquidity to absorb the sale order. Imagine this actors contributed 99% of the ETH, he’d only be able to sell at best ~1% of this stash. Smaller ETH contributors on the other hand, if they knew there was a whale, would rush to sell the token, removing the incentive for whales to maximize contribution in the first place.

A few open questions remain:

  • Where would the equilibrium settle, if at all? Is there a chance no one ends up contributing for fear of others selling out before/to them?
  • Would the incentives change at all if ETH contributions were confidential until the contribution period lapses, as something like the Aztec protocol would enable?
  • On the more technical side, there’s the open question of how to distribute Uniswap liquidity shares back to ETH contributors from the smart contract that owns them. One way to achieve something similar could be for the smart contract to be a DAO agent interacting the Uniswap in the background and granting DAO shares back to the ETH contributors proportionally. Then there would be some governance around managing the liquidity and fees.
  • What are the regulatory implications of this model? Needless to say, PLEASE do not take this post as legal advice, I am not a lawyer!

Anyways, this is very rough and many details have not been thought true enough. But I thought I’d share to get some feedback before spending more time on it.

Thanks for the feedback Spencer Noon, Dillon Chen, Rob Bent, thibauld Favre, Richard Burton, Sowmay Jain, Patrick Mayr.

Source: https://tokeneconomy.co/liquid-airdrops-6df03114e172?source=rss—-fbbd350c08fc—4

Blockchain

Bitcoin Halving: Definitive Guide (In Just 5 Minutes)

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Bitcoin halving is often referred to as “Halvening”, it’s a formulated reduction in the reward coins offered to the miners using a predefined blockchain algorithm.

Bitcoin halvings take place once in every four – 4 years approximately, or for every 210,000 block transactions.

The process of halvening started in the year 2012, approximately after 4 years of the invention of bitcoin i.e 2008, but practically bitcoins came into play in the year 2009.

After the first bitcoin halving, the block reward of 50 bitcoins per transaction were reduced to 25 bitcoins per block or transaction, later this reward was further reduced to 12.5 and it has now fallen to 6.25 after halvening in 2020.

The main idea of halvening is to create scarcity for the coins and to control inflation, as bitcoins issuance is limited to 21 million coins as per the idea of Satoshi Nakamoto, inventor of Bitcoin.

The production of 21 million bitcoins involves 32 halvenings, we are now done with two halvenings and this might continue till or come to an end in the year 2140.

Investors from all over the world are excited and waiting for the Bitcoin price to increase, and the demand for bitcoins in the online gambling industry is high. Bitcoins are widely accepted at Bitcoin Casinos as they collect deposits in the form of cryptocurrency from their players.

To know the overview of Bitcoin Halving (Just in minutes), check out the following infographic developed by Abishai James at WinBTC.net in partnership with ACMarket.

bitcoin halving
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Blockchain

Santiment Reveals Top 10 Ethereum Projects by Developer Activity

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Despite record highs for network charges in February, development on some of the industry’s leading Ethereum based projects has continued unabated.

The research stated that development activity is an often-underrated indicator of project success. It demonstrates the ongoing commitment to creating a working product, continuously polishing and upgrading its features, and staying true to the long-term roadmap.

The research focused solely on pure ERC-20 projects that are currently committed to developing on Ethereum. It has used 30-day Github activity to track development status and action.

The Ethereum Project Top Ten

At the top of the list for developer activity in February is the decentralized prediction market platform Gnosis. Despite a 28% slide in GNO token prices for the second half of the month, the Gnosis team has been busy working on the product.

Gnosis launched on the xDai Ethereum sidechain, joined the Open DeFi alliance, and launched a new collaborative grants initiative for Gnosis Safe Apps last month.

Status was the second most developed Ethereum based project with a number of updates for the open source mobile dApp browser and messenger. SNT prices hit a three-year high of $0.125 in February.

Virtual metaverse and NFT protocol Decentraland was third in the list of developer activity with a number of features introduced to improve user experiences.

DeFi synthetic asset protocol UMA came in fourth with two main focuses for the month; getting some major protocols out the door, and there was a collaboration with BadgerDAO.

Coming in at number five for developer action was Chainlink which announced the official mainnet launch of Off-Chain Reporting (OCR). This significantly improves the efficiency of how data is computed across Chainlink oracles, reducing operating costs by up to 90%, it added.

“The most immediate benefit to DeFi and its users will be a 10x increase in the amount of real-world data that can be made available to smart contract applications.”

DeFi Dominates

These were the five most developed platforms in the Ethereum ecosystem for February 2021, and they were dominated by DeFi.

Also featuring in the top ten list was Skale Network, a decentralized modular cloud for running Ethereum-based dApps. MakerDAO, which is consistently in the top ten for development, was in seventh place.

Decentralized data exchange protocol Ocean, computing sharing economy Golem, and analytics platform Santiment itself rounded out the top ten.

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Source: https://cryptopotato.com/santiment-reveals-top-10-ethereum-projects-by-developer-activity/

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Blockchain

Blockchain in Sports Betting

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Wanna enter the Sports betting industry? Are you worried about the transactional data, security and entry charges?

Just relax and lean on to your chair. The amazing features of blockchain technology have reshaped the sports betting industry. It enhances safe and secure transactions as it is an open source decentralized network.

Basically, blockchain offers tremendous features like transparency, fast payouts, speedy transactions, independent in nature, etc. The most effective feature is the player’s account will not be restricted or blocked either personally or professionally  due to extreme winnings.

Blockchain is the most prominent technology ruling today’s betting industry. It’s advancement in the sports industry has laid a pavement for its enormous growth in recent times.

To get detailed information, checkout the following Infographic developed by WinBTC.net in Partnership with MrBet.me.uk.

Blockchain In Sports Betting Infographic
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