Cryptocurrency & Blockchain Business

Liquidity.Network: The Future of Airdrop Campaigns

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Airdrop campaigns are an increasingly popular way to market new cryptocurrency projects before an ICO.

Steering several tokens to people through an airdrop is a good way to both get more people potentially interested in participating in a project’s ICO and also help to build out a new project’s community from scratch.

While there are a few existing projects competing to be the main platform for new blockchain projects, Ethereum is clearly leading the way on airdrop campaigns. Most new cryptocurrency projects are using ERC-20 tokens, which are smart contracts that run on the Ethereum blockchain. For these projects, it is relatively easy to send tokens to Ethereum wallets of the people who participate in the airdrop campaigns.

The main issue that project teams currently face is that even small payments sent via the Ethereum blockchain have high average transaction fees.

Because project teams must consider this fact when conducting airdrop campaigns, projects usually end up allocating a substantial amount of funds towards paying for the transactions.

Until now, there have been very few workaround solutions for reducing fees on micropayments. Liquidity.Network’s off-chain payment hub is going to change this by making ERC-20 token micropayments cheaper than ever before.

Gas and Current ETH Transaction Costs

Currently, Gas is the most popular way to pay for ETH transaction fees. Essentially, Gas helps to determine how payments are sent from senders to recipients. Gas limit and Gas Price determine the speed and costs of transactions.

While Ethereum might be moving to a Proof-of-Stake consensus algorithm in the future, blockchain transactions are still reliant upon Proof-of-Work. Under this system, miners actually get to choose which transactions they choose to verify and validate. At the very least, a low Gas Price equals longer transaction completion tims. If the Gas is too low because the sender of ETH wants to avoid high fees, there is even a chance that the P2P payment of ETH won’t even be completed at all.

For most project teams running airdrop campaigns, the relatively small amount of tokens being sent doesn’t justify increasing Gas Price in order to speed up payments to airdrop campaign recipients.

Additionally, due to the fact that payments are being sent to tens of thousands of wallets, any increase in Gas Price means that project teams waste large amounts of ETH. In a scenario where Ethereum’s value were to drastically increase, as it did in December 2017, project teams could potentially lose a lot of ETH that could be worth much more in the future.

Liquidity.Network for Better Airdrop Campaigns

While Ethereum’s technology is very beneficial for new cryptocurrency projects looking to create ERC-20 tokens (like our own LQD token), the fact that Ethereum’s fees fluctuate and often increase with higher transaction completion speeds presents a challenge for cryptocurrency project airdrop campaigns.

Liquidity.Network has an answer for that dilemma, by using an off-chain payment solution that significantly reduces the overall average transaction costs for micropayments.

How does this benefit project teams who want to run an airdrop campaign? Multiply a lower transaction fee per payment across tens of thousands of airdrops and the result could help project teams save up to tens of thousands of dollars in transaction fees.

By lowering fees, Liquidity.Network empowers project teams to allocate more funds to airdrop campaigns, giving each airdrop participant a higher reward or rewarding additional participants. In turn, this could potentially help project teams to build better communities and even gain more interest from potential investors.

Additionally, Liquidity.Network is already a highly scalable solution. While Ethereum’s average transaction fee can vary a lot depending on the amount of traffic that the network receives, Liquidity.Network can inherently handle 50,000+ transactions per second vs. Ethereum at only around 10 per second. Thus, Liquidity.Network is well-prepared to easily meet the marketplace demand for airdrop campaigns.

The Takeaway

No doubt, airdrops will continue to be a vital part of ICO marketing strategies. Airdrops are what the cryptocurrency community wants, and project teams will continue to use them as a way to procure more attention for projects.

As airdrops gain popularity and as the Ethereum blockchain gets more traffic, the average ETH fees of running an ERC-20 token airdrop will only increase if projects choose to send tokens via an on-chain solution.

Using Liquidity.Network to send ERC-20 tokens will not only reduce the transaction completion time for airdrops, but also significantly reduce the amount of fees that project teams have to pay in order to send tokens to their communities.

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Article by Liquidity.Network

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