Lockdrop Vaults

What is a Lockdrop Vault?

Lockdrops are a unique token distribution method commonly used by DeFi protocols. Participants lock up their existing cryptocurrency for a predetermined period and, in return, receive a proportional amount of a new token. This allows for transparent and fair distribution without requiring participants to spend or “burn” their existing assets.

The lockdrop model is exemplified by protocols like Astroport, which distributes tokens to users providing liquidity in key trading pairs, and Mars, which allocates tokens based on stablecoin deposits to boost liquidity. Compared to traditional fundraising methods such as ICOs or IDOs, lockdrops are more regulatory-friendly.

How do Lockdrop Vaults Work?

Lockdrop Vaults allow users to lock their existing cryptocurrency or LP positions in a smart contract for a set period. During this time, they earn new tokens proportional to the amount and duration of the lock. Once the lockup period ends, users receive their original assets along with the newly acquired tokens.

At OruxAI, we combine lockdrops with airdrops, where users locking tokens for longer periods receive a larger share of the airdrop - following strategies similar to Yearn Finance and ve(3,3). This model incentivizes long-term commitment to the protocol, attracting users who actively contribute to its success.

Why Launch Using a Lockdrop Vault?

Launching through a lockdrop vault not only incentivizes long-term engagement with the protocol but also encourages active participation during its early stages. This approach helps create a supportive environment for growth, attracting committed users and stakeholders who contribute positively to the ecosystem. By balancing immediate token distribution with rewards for extended participation, lockdrop vaults foster community loyalty and sustained interest in the platform.