Chances are you missed the Ethereum ICO. It was on July 23rd 2014, it was a new way of helping to build a network, and very few people understood the power it would unleash. Now the new and improved model for achieving this has arrived…
What happened in the last wave?
Ethereum paved the way for 1000’s of ICOs as blockchain startups received funding in return for tokens.
There were some enormous returns, and investors flocked to them. For a period of time it seemed like every ICO was going 3-4x, you just needed to get in.
But the utility tokens themselves lacked value, and prices were being driven up by the greater fool theory, the irrational belief that you should buy something now, because someone else will want it later for a higher price.
What is the next wave?
We talked in previous emails about the power of blockchain and tokens as a rewards engine for users. In particular we talked about how this could be used by cryptocurrency exchanges.
2018 Trading Commissions:
Huobi – $483mill
Binance – $463mill
Their tens of thousands of customers capture very little of the wealth creation.
With the huge profits being made, the competition amongst crypto exchanges is at an all time high. So fierce that new exchanges need to offer substantial upside in order to draw users away from the incumbents listed above. They need to find unique ways to share the wealth with traders, rather than keep it all to themselves.
That’s where the world of ICOs end and the world of Community Token Lockdrops (CTL) begin…..
What is a Community Token Lockdrop (CTL)?
Launching an exchange is extremely expensive. Entrepreneurs faced a chicken and egg problem financially when undertaking such endeavor. When an exchange is launched initially, it goes live with zero liquidity. As a result, traders kept their distance from such exchange. Here comes Community Token Lockdrop (CTL) to help solve this huge problem.
CTL is a new, but unique token distribution structure. Started by Edgeware. In this scheme, a participant must lock his or her tokens for a period of time in a smart contract called Lockdrop User Contract or LUC. After that period of time, the tokens will be release into the entered Ethereum address.
What is the point?
This token distribution mechanism is intended to:
1. It help creates initial liquidity for the exchange by creating long term and committed participants.
2. Community Token Lockdrops (CTL) system distributes the tokens to the holders more fairly than previous distribution methods.
What does CTL achieve for the exchange?
1. It incentivizes market makers to furnish the liquidity the exchange needs to operate in exchange for greater amount of tokens. These tokens will be repurchased from the holders from revenue generated from trading fees the platform collected.
2. Secondly, traders from other trading exchanges will be motivated to move their trading activities to the platform in exchange for extra tokens.
This mechanism is fairly new, but very familiar to crypto users who have participated in staking. The main difference is the proof of stake (PoS), called Nominated-PoS (NPoS) is a new and unique mechanism.
The rumor is that a Community Token Lockdrop (CTL) participant can get the 10x upside without the risk.
Mathieu is a Information technology professional with over 15 years of experience. He started one of the first bitcoin blogs existed in 2010. He started writing about, investing in bitcoin and promoting the first cryptocurrency when only a few technological savvy people knew about it. Mathieu is a world traveler who enjoys culture, technology, finance, salmon, rice and beans. He’s cool, collected and knows a great deal about blockchain technology.